New Delhi, Oct. 29 -- e cycle, or when the lender's incentives favour disbursement over suitability.

The fourth group, households genuinely ready for investment may need not only capital but training, market linkages and business support. The IPS survey found that only 19% of MFI participants had received any skills training. Credit without the capacity to deploy it productively rarely generates the income growth needed to repay comfortably and accumulate assets.

"High repayment rates do not establish borrower wellbeing. A household may repay on time while consuming less food or borrowing elsewhere."

Grameen Bank in Bangladesh pioneered group-lending methodology and demonstrated that poor households, including women, can and do repay l...