Microfinance Loan Officer

There are certain attributes which contribute to the effectiveness of the MFI’s staff members.

Effective Microfinance loan officers usually exhibit the following:

 

(i) Motivation – the desire to:

  • Assist borrowers to avoid over-indebtedness
  • Grant good loans which will be repaid
  • Contribute to the maintenance and success of the MFI
  • Maintain the professional standards required of a Microfinance loan officer

 

(ii) The incentive to:

  • Provide a secure and increasing income for him/ herself, and family
  • Be seen as a respected, responsible member of the community
  • Help others, and in so doing, contribute to the development of South Africa

 

(iii) The knowledge to understand:

  • The microfinance sector
  • The rules and regulations pertaining to lending in the microfinance industry
  • The business dynamic
  • The micro-credit process
  • The dynamics of an MFI
  • The role of the Microfinance loan officer

 

(iv) The skills to perform the tasks required in terms of the MLO job description.

Best Financial Software for Microfinance Companies

A major part of the India’s population still lives their everyday life with less than Rs.100. No government can change the situation overnight. It’s the Microfinance companies in India that are trying their best to offer these people the necessary financial freedom through providing loans, saving schemes, micro-insurances and money transfer facilities.

 

It’s a consistent and unremitting process to help the less-fortunate people alleviating poverty. Microfinance Software Company has participated in the mission through developing cost effective and efficient money management software for these Microfinance companies.It’s the skill, experience and hard-work of our team members who have designed and developed this financial software through extensive research using all Microfinance companies.

 

Micro Finance Software Features


1) Branch Area
2) Product Management
3) Collection Officer Management
4) User Management
5) Insurance Management
6) Member Registration
7) Loan Processing
8) Loan Disbursement
9) Loan Recovery
10) Financial Accounting
11) Fund Management for HO
12) Fund Management for Branch

Is a change in clients’ income the host indicator of the impact of microfinance?

 

  • Most client impact assessment studies focus on income generation through microcredit,

  • Enhanced income is, however, only one of the potential welfare impacts from enhanced access to financial services, and not always the main purpose of borrowing.

 

  • Few studies assess improvements in clients’ financial management, which is the main justification of microfinance.

 

  • Evaluations of microfinance programs should evaluate both the client-service relationship and the financial performance of the MFI.

Microfinance Business Plans

Many microfinance institutions have business plans. But these plans are sometimes of poor technical quality. They are often overambitious, because the underlying projections are insufficiently detailed to reveal the hurdles that the institution must overcome in order to expand.

And if they are prepared by outsiders, as they often are in response to requirements by potential funders, they usually remain on the shelf once funding is received rather than serving as an ongoing management tool.

 

Microfinance-oriented banks/regular banks engaged in microfinance operations – banks that offer a broad range of financial services, such as deposits, loans, payment services and money transfers, to the poor and low income households for their microenterprises and small businesses.

Microfinance institutions – institutions engaged in the delivery of micro financial services such as credit, deposit-taking, insurance, money remittances and transfers.

 

Microinsurance – a risk management tool providing protection and social security to low income households and workers in the informal sector against specific perils in exchange for small regular insurance premium payments proportionate to the likelihood and cost of risks involved.

Possible scenarios for supporting microfinance include the following:

  • Expand. The donor makes microfinance a strategic priority and invests significantly in developing an agency-wide vision and strategy, technical staff capacity, systems for accountability, and knowledge management.

 

  • Delegate. The donor decides that it has a limited comparative advantage, but wishes to remain involved in microfinance. It forges co-funding or other types of agreements where the design, implementation, monitoring, and evaluation of microfinance projects are delegated to an agency with a clear comparative advantage in helping to build inclusive financial systems.

 

  • Phase out. Based on its limited or nonexistent comparative advantage, the donor decides to stop developing new microfinance operations and winds down its existing portfolio. Resources previously used for microfinance are reassigned to other development sectors where the agency can be more effective.

 

  • Consolidate. The donor decides to retain the same volume of microfinance spending and specialize in particular niche markets (geographical or technical) where it has a comparative advantage. The concentration of its portfolio yields greater impact for the same amount of funding.

What is Microfinance?

“Microfinance can be broadly defined as:

 

“The provision of small-scale financial services such as savings, credit and other basic financial services to poor and low-income people”. According to United Nation (UN)

 

The term “microfinance institutions (MFI‟s)” now, refers to a wide range of organizations dedicated to providing these services and includes non-governmental organizations, credit unions, cooperatives, private commercial banks, non-bank financial institutions and parts of State-owned banks.”

 

Poor people are not able to access loans from commercial banks normally because of lack in guarantee and collateral. But there are many other reasons also involved for which commercial banks were not willing to finance poor. These reasons are included that poor have less education, no proper experience and training, high expenses on transactions of small loans and lower rate of profit. Therefore limited option to access loan leads to push poor people in more poverty.

This situation resulted in emerging the idea of micro lending and microfinance. Microfinance, therefore, a way to finance people, those have no collateral or any property for guarantee.

 

Microfinance is the term of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to deprived and low-income households and, their microenterprises.

 

Microfinance services are provided by three (3) types of sources:

  • Formal institutions, such as rural banks and cooperatives
  • Semi-formal institutions, such as (NGO‟s) nongovernment organizations
  • Informal sources such as money lenders and shopkeepers

 

Institutional microfinance is defined to include microfinance services provided by both formal and semiformal institutions. Microfinance institutions are defined as institutions whose major business is the provision of microfinance services.


Microfinance is a way of financing to poor for their business, to alleviate their poverty, empowering them, giving social benefits on sustainable way. According to Agion & Morduch, due to microfinance, there are many possibilities have emerged including extending markets, reducing poverty and fostering social change. But there is wide spread confusion that microfinance is just lending loan to poor but as we mentioned that microfinance is no more only loans but covering the issues of poverty alleviation, putting social impact on poor and educating poor to savings.

Therefore, MFIs, today, not only NGOs but serving as a complete banking system. This discussion lead to us that microfinance is a form of financial services for poor to help them for their business activities by giving micro credit.

Understanding the Financial Market System

For any organization involved in financial market development—for-profit companies, NGOs, governments, investors, donors, and other development practitioners—an understanding of the financial market system is important when considering their objectives and roles.

Building on a detailed understanding of market systems and a clear vision of the future of financial inclusion, the market systems approach guides stakeholders to address systemic constraints and bring about large-scale, sustainable change.


It is through the development of inclusive and sustainable financial market systems that financial services will make a meaningful difference in the lives of poor people and promote economic growth.

 

The financial market systems framework recognizes how different players fit within the system, including their main functions and the relationships between them. Although the central function in market systems is to provide a space for transactions, the nature and efficiency of those transactions are shaped by formal and informal rules and a range of supporting functions.

 

While supply-side factors (offering financial services) are crucial to making the financial system work better for the poor, achieving this goal is more complicated than a straightforward equation of supply and demand; it involves the many other functions that influence transactions—attitudes and values, skills, product and organizational development, regulations, and policies. These provide information, knowledge, and incentives that determine behavior and practices and shape relationships.

 

The players in the system thus extend well beyond the “simple” duopoly of clients and providers to include government, private sector service providers, associations, and communities. When the functions and players in financial market systems work well, benefits follow. When they do not, consumers, especially the poor, are likely to receive limited or temporary benefits.

 

Sustaining the benefits of access depends on the stability of the financial system and its ongoing ability to provide services and, indeed, ensure that people’s savings are not put at undue risk. A functioning and inclusive financial market system, therefore, is characterized by strong and sustainable performance—demonstrated by size and outreach (number of clients and number and variety of providers), depth and quality (poverty level and degree to which products meet client needs)—and the capacity and competence of rules and supporting functions, allowing the market to learn, adapt, and develop in a sustainable manner.

Difference between “Microfinance” and “Microcredit”

Although the terms Microcredit and Microfinance are often used interchangeably, it is important to recognize the distinction between the two.

 

Microcredit refers to the act of providing the loan. Microfinance, on the other hand, is the act of providing these same borrowers with financial services, such as savings institutions and insurance policies.

 

In short, microfinance encompasses the field of microcredit.

 

  • Benefits of Islamic Microfinance
  • Riba Free Operations
  • Shift of Focus to TRADING MODE
  • Better Internal Controls
  • Reduced Miss utilization of Money in Non-Productive Activities
  • Overall Benefits to Economic Environment
  • More Social Acceptability

what is microfinance

Microfinance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group. In some regions, for example Southern Africa, microfinance is used to describe the supply of financial services to low-income employees, which is closer to the retail finance model prevalent in mainstream banking.

For some, microfinance is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers.” Many of those who promote microfinance generally believe that such access will help poor people out of poverty, including participants in the Microcredit Summit Campaign. For others, microfinance is a way to promote economic development, employment and growth through the support of micro-entrepreneurs and small businesses.

Microfinance is a broad category of services, which includes microcredit. Microcredit is provision of credit services to poor clients. Microcredit is one of the aspects of microfinance and the two are often confused. Critics may attack microcredit while referring to it indiscriminately

Copyright ©by the https://en.wikipedia.org

Financial Inclusion

What is financial inclusion?

Financial inclusion is a broad term used to describe the provision of savings and loan services to the poor in an inexpensive and easy to use form. It includes opening of bank accounts for those that have never had one, and allowing people to send and receive money easily.

The main objective is ensuring access to formal credit for people who depend on informal means for their financial needs and also financial education to ensure that the poor and marginalised make the best use of their money.

Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable. An estimated 2 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions.

For example, in Sub-Saharan Africa only 24% of adults have a bank account even though Africa’s formal financial sector has grown in recent years. It is argued that as banking services are in the nature of a public good, the availability of banking and payment services to the entire population without discrimination is a key objective of financial inclusion.