Institutional Challenges in Micro Finance Sector By

In Indian Scenario, the present structure of microfinance technology reveals that it is poised for an economic transformation and livelihood restoration of the rural communities. Whereas the fact is obvious that there is gap in best practices in credit delivery, lack of product diversification, customer overlapping and duplications, consumption and individual loan demand with lack of mitigation measures, less thrust on enterprise loans, collection of savings/loans and malpractices by Self Help Groups (SHGs) and Micro Finance Institutions (MFIs) and highest interest rate prevailing in micro finance sector. All these are clear syndromes, which tell us that the situation is moving without any direction. The system does not any longer like to follow the traditional discipline and there is no Government Regulations to regulate the micro finance industry. On the contrary, microfinance practitioners (MFIs) are not seemingly prepared for commercialization but the situation is pushing them towards it, beyond their knowledge. There is no alternative to commercialization as it is the crux of competition. Competition here refers to the market share among the financial intermediaries that are targeting a market comprising customers having similar needs or wants. Clearly, to be successful, the Micro Finance Institutions marketing strategy must meet the customer’s requirements