BASIC STRUCTURE OF A MFI:
Fig-1.1(Basic Structure of MFI in India)
• The MFI structure is basically a hierarchical structure with the Daily/Contractual workers at the bottom of the hierarchy. The work of these is to identify the people who are in the need of loan assistance.
• Next in the hierarchy are the middlemen and frontline staff. There work is mostly related to establish an amiable connection with the people who are in need of loan.
• Then after a successful interaction it is the duty of the area manager who controls all the transaction of the particular area will decide on the term and structure of the loan to be sanctioned.
• The area manager is controlled and headed by a District Manager who is further headed by the Branch Head.
The financial assistance provided by MFI’s mainly includes the following group of people:
• Budding entrepreneurs
• Small scale investors/businesses
• Areas where …show more content…
The challenges faced by MFI’s are listed below:
• The deliver cost of MFI has been unusually very high. So this adds to a lot of pressure on the MFI which is not so among banks.The operating cost is around 7.5% for visiting a client.
• Most of the MFI’s are facing infrastructure issues which lead to a very high initial installation cost.
• The difficulty faced by the MFI’s has been to understand the issues faced by the rural people. So, the credit understanding of the rural people is convoluted.
• The interest rates charged by the MFI’s have been very high as compared to the bank because the MFI’s borrow the funds from the commercial banks. They pay around 12 per cent of interest to the banks on the money they borrow. This can be attributed as one of the reason why rural people often sanction loans from bureaucrats and landlords. So, the MFI’s must devise strategy to cut the interest rates.
• One of the major impediments is lack of education and information among the rural
Fig-1.1(Basic Structure of MFI in India)
• The MFI structure is basically a hierarchical structure with the Daily/Contractual workers at the bottom of the hierarchy. The work of these is to identify the people who are in the need of loan assistance.
• Next in the hierarchy are the middlemen and frontline staff. There work is mostly related to establish an amiable connection with the people who are in need of loan.
• Then after a successful interaction it is the duty of the area manager who controls all the transaction of the particular area will decide on the term and structure of the loan to be sanctioned.
• The area manager is controlled and headed by a District Manager who is further headed by the Branch Head.
The financial assistance provided by MFI’s mainly includes the following group of people:
• Budding entrepreneurs
• Small scale investors/businesses
• Areas where …show more content…
The challenges faced by MFI’s are listed below:
• The deliver cost of MFI has been unusually very high. So this adds to a lot of pressure on the MFI which is not so among banks.The operating cost is around 7.5% for visiting a client.
• Most of the MFI’s are facing infrastructure issues which lead to a very high initial installation cost.
• The difficulty faced by the MFI’s has been to understand the issues faced by the rural people. So, the credit understanding of the rural people is convoluted.
• The interest rates charged by the MFI’s have been very high as compared to the bank because the MFI’s borrow the funds from the commercial banks. They pay around 12 per cent of interest to the banks on the money they borrow. This can be attributed as one of the reason why rural people often sanction loans from bureaucrats and landlords. So, the MFI’s must devise strategy to cut the interest rates.
• One of the major impediments is lack of education and information among the rural