There is a clear comparative competitive advantage which commercial banks enjoy in extending microfinance. As financial inclusion and basic bank deposit accounts are in place, banks should now move to the next step of crafting products and services for the poor.
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.