Constructing an access system for unbanked in Myanmar to a microfinance institution

Abstract

In Myanmar, the formal financial institution does not provide uncollateralized credits. The rural unbanked under the poverty line is depending on the informal money-lenders with high interest rate. Private Agency Collaboration Together is only one microfinance institution providing the credits without collateral and with low interest rate to the unbanked in Myanmar. Half of the unbanked are unable to borrow the loans from the microfinance institution because of the weakness of the information contribution and the strict legal policies of the microfinance institution. Therefore, the objective of this study is to construct a system to improve the relationship between the microfinance institution and the unbanked by reducing the obstacles in the current system of microfinance institution. The legal policy is studied from the vision of the local unbanked as the originality of this research and the i-System methodology is applied to accomplish the research. The current system comprises the information contribution, loans and legal policies. The current system is only one relationship between the microfinance institution and unbanked. When the ten obstacles occurred in the current system, the unbanked cannot approach to the microfinance institution. An access system including four sub-systems is developed depending on the collected ideas to solve these obstacles and intend to improve the relationship between microfinance institution and the unbanked.

Keywords

Legal policy / microfinance institution / unbanked / access system / obstacles

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