India Focus Note 89: Governance in Member Owned Institutions - Community Microfinance

Strong governance in member owned institutions (MOIs) is important for their sustainability. If the governance is weak, there are high chances of fraud by staff, members with vested interests, and by the social and political elite. Such a situation could lead members to lose faith and withdraw their shares/ and leave the institution. An MOI with strong governance is able to establish a conducive environment for members through the right mix of ownership incentives, member decision-making and other control mechanisms. Good governance structures give members and investors confidence and are necessary foundation for successful community-based organisations.

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