Angela Viah A.

Asistido – BSTM Block 1

Microfinance and Development
WEEK IV

Activity 1:

What is Commercial bank?

A commercial Bank is a financial institution that provides deposit, checking, and
saving accounts. A commercial bank serves individuals, businesses and
organization. It accepts deposits and issues loan.

Microfinance
Microfinance is a banking service provided to unemployed or low-income
individuals or groups who otherwise would have no other access to financial
services.
Microfinance allows people to take on reasonable small business loans safely, and
in a manner that is consistent with ethical lending practices.
Application:

1. What are the different categories of MFIs?

 NGOs
 Mass Based Organizations/Grassroots Organizations
 Cooperatives/Credit Unions
 Microfinance-Oriented Banks. Others: Civic Organizations, Clubs and
other socio-economic organizations
Assessment:

Quick essay

What is your understanding on the difference of a Commercial Bank and

an MFI?

Microfinance renders financial assistance and or gives loans to low income

earners of local families. While commercial banks, on the other hand, give
loans to people and big organizations that open accounts with them.
Commercial banks usually takes place through public offers in the form of
equity while microfinance institutions usually receive their funding from
individuals or private equity holders in the form of debt.

Most of the service provided by commercial banks are bank door services,
which means the clients have to go to the banks to avail financial services.
Most of the services provided by microfinance institutions are door step
services, which means the staffs of the MFIs deliver their financial services
at client’s door step.