The purpose of this study is to find out the factors which affect demand of micro credit in Pakistan. Microfinance institutions (especially NGO’s) are providing the services of microcredit, savings and insurance to poor people in Pakistan. The main purpose of microcredit loan is to reduce the poverty and for empowering the women mostly in developing countries. Data has been collected through questionnaire, descriptive research and interviews from Microfinance Banks and some of their clients. Credits are not available to the farmer on time in rural areas and very high interest rate is charged on loans. So there is great potential of Micro Financing. According to the research data, it is concluded that there are many factors which may affect the demand of microcredit. These includes the interest rate, relationship between lenders and borrower, government policies, gender differences, credit worthiness of borrower, transaction cost, limited access to credit, economic condition and the availability of information. This helps in analyzing the barriers which creates hurdle for borrower and lender for operating microcredit in country. So microfinance institutions have to take under consideration about the factors which may effect in the demand of microcredit.
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