Microfinance institutions should, therefore, strive to keep the transaction costs at a minimum and eliminate the possibility of incurring deadweight losses. The on-time delivery of microfinance loans is also a very important requirement. Most of the microfinance projects are agriculture based businesses. Hence, there is a necessity for meeting crucial expenses on-time. For instance, if a farmer has to apply fertilizer to his field, he has to do it on the due date. For him to buy fertilizer, he needs money also on the due date. This requires the microfinance institutions to release their loans on the due dates. Any undue delay would be immensely costly. A final word should also be said about the subsidization of the interest rates under microfinance credit schemes. Such subsidized credit is demanded, not by the microfinance borrowers, but by urban based social workers and politicians. The problem with subsidized credit is that it flows not into the microfinance projects but elsewhere. What microfinance borrowers need is not cheap credit. They need credit on simple terms in time at zero transaction costs. When the credit is subsidized, it not only leads to wastage, but also goes into the hands of undeserving individuals. Most probably, middle class and lower middle class people would flock to appropriate such credit which they plan to use for other types of non-productive purposes. In this context, informal money lenders would definitely provide a role model for microfinance institutions.
Instead of trying to fight the money lenders, microfinance institutions should learn good management practices adopted by them. All in all, microfinance delivery is a very subtle subject which should be handled very carefully. The best practices of microfinance lending are common to all countries. But, there may be a necessity for such countries to vary the actual implementation based on the specific country requirements. This arises from the famous dictum that one shoe will not fit all the feet. For the size and the variance of each and every foot, a different variety of a shoe has to be made. I hope that the participants of this training program have acquired this wisdom and would return to Sri Lanka armed with that wisdom. Thank you. BIS Review 48/2007  3