Expanding Role of Microfinance Institutions to Combat Multidimensional Poverty
Using ‘basic needs’* approach, an organogram is proposed that depicts role of Microfinance Institutions (MFIs) to go beyond providing business loans to the ultra-poor** by offering them an array of products and services that can materially and socially have a positive impact on their quality of life. It is a multi-staged approach to eradicate poverty. The paper is based on feedback organogram model. Initially, in the pre-organogram stage, the MFIs work with Non-Governmental Organizations (NGOs) to identify un-banked individuals, with entrepreneurial potentials to offer them business loans. Once the initial client base is established, the organogram model kicks in. Through feedback mechanism from the clients to MFIs, this model shapes the policies of MFIs to create skills and knowledge based communities through a framework of coordinated dialogue between its clients and its banking operations. This paper examines Pakistan, India, and Bangladesh’s MFIs as a case study based on these propositions. The model delineates a feedback mechanism between the lending institutions and their clients to develop quality control mechanisms to ensure best practices and bring self-sustainability to their banking operations.
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