Professional Documents
Culture Documents
Challenges to Microfinance:
Improper Regulations:
In the microfinance sector as such no work has been done in Pakistan for the
regulations and restrictions. Some rules were made in the initial stages which
also require changes so government should take steps in making the
regulations and reforms.
Increasing Competition:
As many microfinance institutions are working in Pakistan there is a lot of
competition. Plus now the customers have a lot of awareness so they are
demanding more and more services.
MFIs Profitability:
Due to the special circumstances of the clients, microfinance institutions
cannot charge a high rate of interest and this minimizes their margin of profit
to a large extent. So, they face problems in covering the cost of their
operations.
Stability of MFIs:
Stability of MFIs depends largely on the stability of banking sector and now it
is high time MFIs should stand independently.
Political Interference:
The role of landlords in the rural areas negatively affect the microfinance
operations.
Policy Environment:
In microfinance sector there is no coordination between the government and
private sector in terms of policy development and improvement.
Women Empowerment:
Microfinance provides women with an opportunity to empower themselves
and helping in improving the conditions of their household. On a positive
note the repayment rate of women is very high which is a very big
opportunity for the investors.