Discuss What You Believe to Be the Two Most Important Basic Characteristics of Microfinance Institutions That Enable Them to Effectively Serve Poor Clientele.

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(Deshpande, 2006) emphasized that despite significant evidence to the contrary, many financial institutions policy makers do not believe poor people save money. They tend to assume that poor people are “too poor to save”, that they prefer to consume rather than save excess income, or that when they do save it is only to access aloan. This argument however is highly debatable because in various studies it has been shown that the poor tend to save a greater portion of their income as opposed to the upper class. For this reason and many others makes the concept of microfinance a reality. Micro-lending or microfinance is a type of banking service offered to low income individuals or groups,the unemployedand entrepreneurs in impoverished countries who would otherwise have no other means of obtaining credit in order to help them to become self-reliant by providing a means ofborrowing, saving money, investing and insurance. (Ehow.com 2012) states that the significance of microfinance to the individual is to enable poor impoverished persons like themselves to start businesses, rebuild after natural disasters and to receive both short and long term loans. These loans are used to meet their financial needs and to improve their overall quality of life contributing to their growth and development in their country’s economy. Microfinance Institutions (MFI) are banks or other NGO’s that provide microfinance services particularly to people who are poorer and more vulnerable than the traditional bank clients. MFI’s are viewed by various analysts as a beacon of hope for the really poor and destitute. Based on various findings, in my opinion the two most basic characteristics of MFI’s that enable them to effectively serve poor clientele are: 1. Simplified savings and loans procedures 2. MFI’s go to clients rather than clients going to MFI’s The term “poor” can be characterized

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