One of the most commonly heard criticism for the microfinance industry is that the companies charge consumers of a very high interest rate and the perception of the reference come from the percentage of the loan amount.

However one cannot show back to the fact that the micro and macro loans are slowly making a comeback into the market.

For the ones who are interested to take a further look into the calculations of the same: assuming that the loan amount is Rs. 5000 and the average declining balance comes out to Rs. 2500, the operating ratio at the end stands at 10-20%.

But if the loan amount is at Rs 10000, the percentage already stands at 5-10% but a loan of Rs 25000 attracts an operating expense of close to 2-4%.

It is very advisable that one should secure a loan before buying a house for self. Reserve Bank of India (RBI) has recently said that the government is planning to come up with ordinance with an aim to tackle the predatory practices of micro finance institutions (MFIs).

In fact, it also said that it will be coming out with a constitution of a sub-committee to look into the functioning of MFIs.