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There are four models for microfinance. One is Institution Building Method which NGOs create a microfinance institution (MFI) to loan the funds to solidarity groups which consist of several ROSCASs. ROSCAS pays the interest to MFI, which covers its operation cost. The final aim for the NGOs is to convert MFI into a real bank. In the Grafting Model, banks and credit unions hire or train and create animators who professionally train and monitor the village banks. The financial system will be the same as Institution Building Method. Saving-led Model is organized by NGOs which only concentrate on training the local NGO partners. These trained partners will supervise the locals to organize self-help group (SHG). Within the group the members loan their savings to one of the members who needs the money. The one who borrowed will return the money with interests which will be divided by the members. In the SHG/Bank linkage model, the SHG will obtain linkage with the real banks. Whenever there are excess demands for funds, the groups can borrow from the bank.
Approximate Word count = 704
Approximate Pages = 2.8
(250 words per page double spaced)
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