MICRO FINANCE INSTITUTION:- CHALLENGES

Micro finance Institution (MFI) provide small loan to poor pepole. it is famous in developing countries because of poverty. it do work as a grameen bank but it is  not be exactly grameen bank. it is differ from bank but one thing is common both provide loan.
at prsent scenario, Micro Finance Industry is not in full shape because it begun unsystematically, their is no complete drafting about how to perform well in rural & urban area for the poor pepole. at present their is not strong regulatory to monitor MFI. some MFIs are doing work under a trust, NGO that kind institution is doing work badly. some MFI registered  under section 25 of companies act 1956 and some are doing work as NBFC. NBFC register from RBI and regulated by RBI also.

challenges are many, MFI are harreshing the BPL and poor pepole because in some area like eastern uttar pradesh their is four to five MFI are doing work in main stream. their approaches to same BPL & poor client who have taken loan from other MFI. scenario is one poor & BPL client have taken loan from two or three MFI. it create pressure to that client for repayment. so situation is that she (client) will feel harresh to repay the loan to MFI with high intrest if she will not utilise money smartly & promptly then she will not repay loan. if it will be continue going on then situation will be worst. it can not remove poverty but it will increase poverty because most MFI do not give proper sugestion to utilise loan.

so i think if government will not make hard rule & regulation then MFI will make worst situation in rural and poor areas. i hope micro finance bill 2007 will strengthen the micro finance industry.

another side, MFI are facing the some  problem  like:
1. Lack of professional who will drive and do work professionaly in MFI.
2. Crisis of good salary (mfi employee)
3. lack of technolgy
4. MFI do work traditionally.
5. top management receive high salry compratively middle & lower rank of employee in MFI.
6.Lack of regulator.
7. lack of govt. intervention.
8. their is no investment part occur in MFI.

so at last their is big challenge in MFI. if govt. will not adress this points. then rural economy going to bad way and ultimately we can not improve living standard of poor pepole.