Micro-credit by itself is helpful for the poor members in economically dynamic areas. Less enterprising poor households need to start with savings before they can benefit from micro-credit, because they need to cope with risk. To offer these services in a cost-effective manner, it is not possible to work with poor households individually and they need to be organized into groups, informal associations and sometimes cooperatives or producer companies. The formation of such groups and making them function effectively, requires society development services.
Microfinance is started with the recognition that poor people have the capability to lift themselves out of poverty if they had access to affordable savings & loans. With the right opportunity, the poor have proved themselves to be productive and capable of borrowing, saving and repaying, even without collateral.