Question

4. To what extent do you agree or disagree to the statement that “ Microfinance Institutions hide behind poverty to exploit the poor”

Answer 1

Micro financing is usually a mix of business and development and providing banking facilities for the poor people and small business. They provide funds for the individuals and small scale industries and one of their aim is to reduce the poverty. Microfinance should be useful to the poor people and these funding must be genuine and for the development of the poor.

But here there is also a business element is there. Here we can see that they provide funds to the poor household but there we should focus on one point that is the higher interest rate. This is a part of the business and they charge higher interest for the money they lend. But at the same time we should think about the collateral. They did not ask for the collateral so that there is chance of non payment of cash and bad debts. So we can not fully say this is business or charity. Here we can see the mix of business and development. Both factors are included in micro financing.

ThankYou.....