InvestorQ : What are the different types of MFIs? What are the main differences between them?
Gauravi Patel made post

What are the different types of MFIs? What are the main differences between them?

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Manisha Mehta answered.
3 years ago
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Microfinance institutions (MFIs) operate in a number of forms and shapes, at least in India.

The different types of MFIs in India are:

  • Joint Liability Group or JLG
  • Self Help Group or SHG
  • The Grameen Bank Model
  • Rural cooperatives

Although these MFI’s vary in their forms and structures, but they all service the financial needs of the marginalised population in the society.

The table below should be able to highlight all the differences between the different types of MFIs:

Parameter

Joint Liability Group

Self Help Group

Grameen Bank Model

Rural Cooperatives

Size

5-10 members per group

10-20 members per group

Starts with only 2 members per group in a village, eventually increased after loan is successfully repaid

70-80 members per group

Services

Generally lending only, irrespective of savings amount

Regular savings in deposit accounts with the financial institutions.

Savings and deposits to extremely poor sections of the society for business, health and housing

Primarily lending services for agricultural purposes

Model

Members invest loan amount for different purposes, but are guarantors of each other

All individuals of group work together on the same activity

Field Manager visits villages to form groups of 5 and lends to 2. Amount recovered is reinvested in further lending and infrastructure development in villages

Cooperative society consisting of members are formed for a singular purpose; such as real estate, agriculture, infrastructure, etc.

Structure

All members interact with the financial institution individually

More formal with defined positions in each group like treasurer and secretary

Formal structure consisting of Unit Manager, Field Manager, etc. Who interact with every family in a village

All members interact with the financial institution jointly

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