InvestorQ : What exactly do micro finance institutions do?
Swapnil Sarang made post

What exactly do micro finance institutions do?

Manisha Mehta answered.
3 years ago

Micro finance institutions, or MFIs, are financial institutions working towards the upliftment of the needy and underprivileged section of the society by providing short-term loans to help them set up their own venture.

These institutions take very calculated risks and fund the interested borrowers to help them get trained, setup and run a small-scale business.

MFIs not only provide financial help to these people, they also educate people about the current market trends and help them compete in the present market.

The reason MFIs stand out among other lenders in the market is because they do not take any guarantee or ask for any kind of collateral or security from the borrower against the money they are lending.

As banks are in the business of making money, they are quite reluctant about lending money to the poor unemployed crowd as they are considered high-risk components. In contrast, MFIs are specially dedicated to provide all the necessary financial help to the weaker sections of the society.