“Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on accountability, mutual trust, creativity and participation. At Grameen Bank, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable.” – Muhammed Yunus, the Grameen Bank
The number of directly and indirectly involved actors in Microfinance is as vast as it is diverse. The Grameen Bank for instance is only one node of a network that channels money from a economically developed nations to people require tiny loans or deposits. The Grameen Bank can be seen as successful microfinance institution (MFI). Commonly these are organizations which do not have a banking license but provide small financial services to the end-customer. One example is the Georgian company Crystal.
Very important are governments and state-owned institutions in both donor and receiver nations. For example the Swiss Department for Development and Cooperation contributes resources, their network and support for specifc projects. On the other side, the local government offices have the responsibility to set a working environment that allows for a basic functioning of these flows.
There are swarms of consulting and supporting services providing expertise and specific knowledge. One such example is BFC – a small development banking consultancy tha has been working on projects especially in Eastern Europe.
NGOs like Swiss Caritas and other not-for-profit companies help implementing different programs and play a vital role in supporting services. These include network enhancing activities, fundraising, educational services and so on. These programs often do not have a financial gain as end goal but are focused on the development of the society they work in.
Network platforms such as the e-MFP play important roles in creating knowledge and bridging gaps between the different players. They support research and try to improve the general quality of Microfinance.
There is a broad range of financial institutions, private and public-private mostly operating under some form of market or financial return considerations. Asset and fund management companies as well as banks are very important. Switzerland has a number of very large players like BlueOrchard, symbiotics or responsAbility and also banks like Credit Suisse have been investing in Microfinance for over a decade.
Is profit more important than impact and development? Why do microfinance institutions focus on women? How long does a loan disbursement take?