Microfinance Institutions - Entity Issue

This paper attempts to give a broad overview of the different types of existing microfinance entities, in order to enable a microfinance initiator to choose the type of entity that would be suitable to the mission, vision and objectives of the proposed microfinance institution (MFI).

The paper lists the different types of legal MFIs that can be formed under the following three broad categories:

• Not-for-profit MFIs;
• Mutual benefit MFIs;
• For-profit MFIs.

It describes the features of the following types of MFIs:

• Society;
• Public Trust;
• Company;
• Cooperative societies;
• Mutually aided cooperative societies;
• Non-banking finance company (NBFC).

The paper concludes by examining the problems faced by the following entities:

• Non-government organizations (NGOs);
• Cooperatives;
• NBFCs.