Does microfinancing really benifit the poor?

Major problem is not in how many people, microfinance schemes reaches or the amounts involved, but in peoples attitudes and beleifs. Most of the development schemes and financing schemes are either failures or inadequate for the purpose for which it is taken. Beneficiaries misuse the funds in most cases. It is the relegious customs coulpled with peoples attitude that is mainly responsible for the failures. People spend their savings, profits and even money obtained as loans for offering to Temple/God/Mut or for conducting festivals//functions etc instead of savings/repayment of debts or for expanding business. Our faiths/beleifs/customs are killing us and poor people remain poor for ever. The rich, politicians and relegious heads want that the gap between the rich and poor should remain otherwise politicians will not have subjects to rule and give promises and retain power, the rich will not have slaves to do their personal work, relegious heads will not have Bhakta's to preach and collect donations for enjoyment in private. Micro finance schemes will be successfull when peoples attitude and beleifs are changed and is changing even though slowly. Strict monitoring to prevent misuse along wiht proper education and modification of the schemes according to need will make micro finance attractive and help the micro/small enterprises

Microfinancing is developed/designed to help the small and medium scale entrepreneurs succeed in their business proposals.  To attain this goal of helping the small and medium scale entrepreneurs, those personalities tasked to evaluate the business proposals submitted by the proponents should thoroughly review the feasibility of the project; in terms of market size and expansion opportunity and ability to read, see through the character of the proponent of the project.

For microfinancing  "implementors"  failure to gauge the market size and see through the character of the proponent adequately the submitted project at hand is most likely to fail.  With initial funds  "gone"  the burden shifts to recovery of the initial funds, as well as, how to help the small and medium scale entrepreneurs be back at their feet.

Without micro finance the poor will have no chance of breaking out of the poverty trap... it is easy to have a philosophical debate on the pros and cons of micro finance and the micro finance argument is seldom heard from the lips of the poor but almost exclusively from the lips of privileged people who do not have a clue of what it is like to be poor.  Quite frankly, it is the responsibility of each of us to make a difference!  Some people reading this will think they have no personal responsibility and others will think they cannot  make a difference... it is the resolve that is lacking, not the opportunity to make life better for many.  Gordon Gekko stated "Greed is good" in the 1980's movie "Wall Street", well, he echoed the real state of humanities values.  None of us can start a business with a micro finance loan, however, the poor will get a significant boost in their fortunes, even if it is just to get the tools they need to start a new business for example: a bucket, broom, squeegee, cloths and some solvents to start a cleaning business. I can show you whole communities in Africa who have broken the poverty trap by a good Micro Finance approach. 

More than subsidies poor need access to credit. Absence of formal employment make them non `bankable'. This forces them to borrow from local moneylenders at exhorbitant interest rates. Many innovative institutional mechanisms have been developed across the world to enhance credit to poor even in the absence of formal mortgage. 

Most poor people manage to mobilize resources to develop their enterprises and their dwellings slowly over time. Financial services could enable the poor to leverage their initiative, accelarating the process of building incomes, assets and economic security. However, conventional finance institutions seldom lend down-market to serve the needs of low-income families and women-headed households. They are very often denied access to credit for any purpose, making the discussion of the level of interest rate and other terms of finance irrelevant. Therefore the fundamental problem is not so much of unaffordable terms of loan as the lack of access to credit itself.

The lack of access to credit for the poor is attributable to practical difficulties arising from the discrepancy between the mode of operation followed by financial institutions and the economic characteristics and financing needs of low-income households. For example, commercial lending institutions require that borrowers have a stable source of income out of which principal and interest can be paid back according to the agreed terms. However, the income of many self employed households is not stable, regardless of its size. A large number of small loans are needed to serve the poor, but lenders prefer dealing with large loans in small numbers to minimize administration costs. They also look for collateral with a clear title - which many low-income households do not have. In addition bankers tend to consider low income households a bad risk imposing exceedingly high information monitoring costs on operation.

Micro finance will definitely support the poor but skilled artisans and poor people with acqured skills to make a living and possibly improve their standards of life.

But this will be totally negated if they are charged exhorbitant interest as what the money lenders are already extracting from these skilled people.

Yes, it benefits the poor people, since they are able to reach where banks are still reluctant to provide any services even if they have the branches, although rate of interest charged by the MFC's  are relativily on much highter side.

for poor family it is way to solve any finance problem.