The advantages of banks over MFIs stem from their being regulated institutions fulfilling the necessary preconditions of ownership, financial disclosure and capital adequacy that help ensure prudent management. They have the physical infrastructure, large networked branches on CBS from which to expand access and reach out to a substantial number of poorer clients.
They have well established internal controls and administrative and accounting systems to keep track of a large number of high volume, small value transactions. As they are well capitalized, they are not dependent on scarce and volatile donor resources unlike NGOs and MFIs. Banks offer savings, remittance, loans and other financial products that are prima facie attractive to the hitherto unserved micro finance clients.