Loosely speaking, the contradictory parties are development practitioners and the civic people of urban areas. Practitioners involved in micro finance are always keen to demonstrate their achievements. Successes of micro enterprises funded by micro finance institutes (MFIs) are abundant and the media widely covers such success stories. The practitioners are also equipped with myriads of scholarly papers produced upholding different aspects of micro finance and their impacts in the livelihoods of the rural people. According to the hundreds of impact assessments, micro finance has positive effect on income of the beneficiaries, their vulnerability to shocks, women empowerment, social awareness, community solidarity, rural economic growth etc.

Despite the long list of pathways through which people can reap benefits from micro finance and the rapid expansion of MFIs all over Bangladesh in the last two decades, poverty is pervasive. More than 40 percent of Bangladeshis are living below poverty line. This fact generates frustration among the people. Here the point of deflection is more of how much is claimed rather than what is claimed. Micro finance is a weapon of poverty reduction but not a weapon, which can destruct poverty at a massive rate.

One general objection most frequently raised against micro finance is the rate of interest charged by the MFIs. Some go on describing the micro finance institutes as the new mahajans pointing to the rate of interest which is three-four times higher than the rate charged by banks. There are number of related issues and discussions on the effective interest rate of micro finance. Some of those issues are quite puzzling as well. For example, if anyone has been a member of an MFI for 5 or 6 years, there is a good chance that her outstanding loan amount would be lower than the amount of savings she has with that organisation. The incentives of meeting financial requirements by borrowing at higher interest rate while earning at a lower rate from savings, is not apparent. Nonetheless, cost of borrowing rather than interest rate is a more appropriate measure in evaluating the alternative sources of credit as far as the economic incentives of the borrowers are concerned. In terms of the cost of borrowing, credit from MFIs is the cheapest alternative. However, this cannot be used as a justification of high rate of interest.

Generating enough revenue for meeting operational cost is essential to attain sustainability. In fact, sustainability has been the hallmark of micro finance in Bangladesh. Thrust for sustainability and growing involvement of banks as wholesalers of fund for micro finance show that micro finance is not a charity rather it is a service. The uniqueness of this service sector is that MFIs serve a particular segment of the financial market, which is beyond the reach of the commercial banks. Appreciation of this market-oriented service is crucial to move further with micro finance. For me, the knot of mismatch between the haters and hailers of micro finance exists in the extent of appreciation of this market orientation.

We have to take micro finance forward from sustainable development intervention to a service sector, which can yield profit. This alternation of attitude is necessary for building a framework, which would regulate this sector. Moreover, considering micro finance only as an instrument to poverty reduction undermines the fact that poor people are good clients of financial services. They are willing and able to avail the services and paying for it. In a sense, we have to demystify micro finance as a development intervention.