Commercial Banks in Microfinance: Best Practices and Guidelines for Project Design, Monitoring, and Evaluation

Banks are increasingly entering into microfinance, and donors such as the IDB are increasingly helping them to do so. Despite this trend, banks continue to make a number of common mistakes in attempting to serve the microenterprise sector. A key to successfully serving this sector is to follow best practices; these are discussed in some detail in this note. This note also provides additional operational guidance to IDB staff on how to structure projects in this area, including choice of partner bank, mechanisms to help ensure bank commitment, and project monitoring and evaluation.