Microfinance Services: Requirement on a Continuous Basis but Provided by Projects which Have an End!

Ensuring sustainable access to financial services
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This paper explores whether a project can continue to provide financial services to the poor even after it has ended.

Projects have been one of the main methods to help poor people access financial services. Earlier, supply-driven projects focused on funding agricultural credit. The limitations of supply-led interventions led to the development of projects that could provide financial resources in a sustainable manner. These second generation projects provided savings services for diverse purposes and focused on building capacity and institutions to provide financial services. The new delivery paradigm for sustainable microfinance works with:

  • Professional non-bank rural financial intermediaries, who provide specialized financial services to the poor;
  • Range of other organizations such as NGOs, civil society organizations, farmers’ organizations, specialized apex bodies and agri-businesses;
  • Responsive technical service providers such as specialized capacity-building and regulatory and supervisory institutions.

Projects that provide sustainable microfinance services work within an existing environment, focus on best practices in the industry and develop an in-built institutionalization process. The increasing focus on institutionalization helps microfinance projects of short duration build the necessary infrastructure to ensure sustainable service provision.