SUSTAINABILITY OF COMMERCIAL MICROFINANCE

Microfinance had been more a social nature of its services, which had been operated alike the form of humanitarian agencies. However, the current focus is turning to sustain the institution by self-generating the incomes and providing the services. This was due to the shrinking funding resources supported by the donors and the ever increasing demands of the working poor. The findings indicated that the licensed microfinance institutions were profit oriented organizations, which operated mostly on individual loan to the viable clients. The vulnerable and short term vision of sustainability and growth was due to dependence on the international funding sources and limited local saving. In the view of operational sustainability, these MFIs were showing the continuous increase of the repayment rate, number of clients and amount of loan outstanding. These were due to the strict eligible criteria and the growing demand of loan. However, they tended not to have financial sustainability due to the high operational costs. Also, their limited outreach to the central areas was the constraint to optimum use of available resources.