The demand for flexible microfinance products: lessons from Bangladesh

摘要

Many microfinance institutions (MFIs) have developed large-scale operations by offering a few highly standardized products. In offering 'one-size fits all' loan terms and conditions, they streamlined loan administration, simplified decision-making for field staff, reduced the information required from clients, and held down operating costs. By limiting the range of interest rates, repayment schedules and the way interest is charged, they also simplified the calculation of repayment obligations and the explanation of those obligations to uneducated borrowers. Simplicity has its drawbacks, however, and these are now becoming clearer. Many METs are reporting high dropout rates and repeat borrowers do not demand the larger loan sizes assumed in many MFI market projections. Also there are potential clients who refuse to join programmes even though the products offered were supposedly designed for them. This has led MFIs to re-evaluate their business plans and pay closer attention to product flexibility. Focus groups and marketing studies are being used to better understand client preferences. MFIs are experimenting with more flexible products designed to retain existing clients and attract new ones, especially in markets where competition among MFIs is becoming most intense.