Microfinance organizations are a relatively new financial institution, which appeared on the domestic market not so long ago. MFIs issue loans to the population in a very short time without requiring a large package of documents. In addition, any citizen who has reached 18 years of age and who has a residence permit in the company’s service area can take a loan from a microfinance organization. Such organizations do not limit the age of borrowers or the type of employment - both officially and unofficially employed, temporarily unemployed, as well as students and pensioners, can take microcredit.
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However, not only this has become the reason for the popularity of microfinance organizations. They are also very popular with investors. The bulk of the funds that microcredit firms use to lend to the public are funds invested in them by investors at fairly high interest rates.
Investments in microfinance organizations attract investors with interest rates and their short term deposits. So, the deposit rate can reach 25-30% per annum. Investments in MFIs differ from bank investments, first of all, in high profitability - income here is at least 2 times higher. However, the risk of such deposits also increases, since investments in microfinance organizations do not fall under state insurance, like investments in banks. There is also no guarantee of a refund upon liquidation of the company. The law establishes that the investor cannot prematurely terminate the contract with the microfinance organization. In addition, interest income from a deposit is taxed, while this rarely happens in banks.