accomplishment level of Friedrich Wilhelm Raiffeisen’s rural bank undertaking, which serviced more than two million farmers, was because it adhered to the precepts of the test 2mentioned above; Reiffeisen’s versatility of being more than a banker, as he stepped outside of the traditional mold to provide the beneficiaries with a mixture of special personal (social) services which addressed their needs outside of their specific enterprises and contributed to the total operation of their enterprises. Obviously, the primary objective of Raiffeisen was to assist the low-income individuals to improve the financial standing.
He recognized there were a number of social obstacles, which when viewed by the average (low-income) individual who qualified to receive financial assistance, would be very difficult or impossible to overcome. There were however, three common problems which all of the prospective beneficiaries shared in common; first on the list was proximity; the nest was, most of them were too poor to access a loan from a conventional bank, and to further compound the problems faced by this group, the only feasible means at the time which was available to this group, were local lenders who customarily charged usury rates on their loans.
Of course when we speak of microfinance, one automatically accepts the reality that this encounter will possess very few similarities to a traditional banker, borrower relationship. This is a given, because the needs of the poor are much more varied than an individual in the traditional/conventional context. The group who has committed itself to lending money to low-income persons, must be prepared to come to the table, to offer a variety of services, which would be considered, non-conventional in the traditional banking arena.
It is safe to say that the financial needs of the poor are decidedly more challenging than those of the conventional borrower. Any microfinancial institution seeking the business of low-income persons must be cognizant of the reality, that while the transaction is on the line of business, it also 3possesses a very strong social premise. Consequently, if they are desirous of having more successful outcomes they must be prepared to offer a broader range of services, both financial and social. .
The scope and specific types of social services would vary accordingly, with the dynamics of the groups or persons encountered. Also, these low-income persons are prone to be members of a distinct financial standing; they either have no previous formal track record with any financial institution, or their track records have been scarred, due to their precarious financial standing, therefore, under both scenarios, they will be in need of a range of financial services as well, i.e. , cash transactions, savings, and possibly, they will be in need of checking accounts and insurance.
A microfinancial institution which has prepared itself to be a full-service financial bridge, as well as a social buffer, will be viewed by the low-income person as the appropriate organization, to provide them with the resources and know how, which is needed to assist them in moving onto a better financial plane. They seek a financial plane