LLANTOet al.:MICROFINANCEINSTITUTIONS
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and management of risks, product packaging and pricing, management of loan arrears and strategic business planning. Related to these will be the need to upgrade and institutionalize performance standards, particularly in loan repayment, appreciation of loan default and aging of delinquent accounts, and the installation of appropriate accounting and internal audit systems. 2. Resource mobilization. Viability and sustainability are conditional on the ability of the MFI to mobilize substantial resources which can be leveraged. Despite sound credit practices and management, the lack of resources, be it in the form of equity capital, borrowings and deposits, spells the difference between a self-sustaining MFI and one which is subsidy dependent. _ Earlier, we adverted to several creative and innovative ways by which MFIs could mobilize resources but the lack of legal personality and authority hampered the effort. The absence of prudential regulations to safeguard the interest of the depositors and shareholders also makes it untenable for creative ways to mobilize resources. The inability to mobilize deposits is offset by the access to cheap funds from external donors and government concessional loans. Grants and concessional loans are disappearing phenomena in an era of budgetary crunches. The emerging policy and institutional framework in the country now leans toward reliance on private resources to deliver goods and services to the public as much as possible, and to the use of scarce grants/ government funds to create an enabling framework for private institutions to operate more efficiently. It is in this context that the mobilization of private deposits assumes an important role in the viability and sustainability of MFIs. The immediate results of the dependence on grants and concessional loans are the unwarranted bias for lending and the failure to develop deposit instruments suitable to poor clients. It has been argued by some researchers that demand for savings
25.Thesubsidy comeseither asgrants orconcessional loans fromgovernment/ donors.