Few ideas have been so celebrated or been capable of generating such high and broad worldwide expectations like microfinance. The aim of this essay is to critically sketch the current mainstream microfinance movement and to shed light on its broken promises and emerging contradictions. The paper claims that modern microfinance could increase its internal as well as external sustainability as a development tool by rediscovering some of the key principles underpinning relational credit practices as historically testified by a number of bank cooperatives, popular banks and mutual-loan guarantee societies. In conclusion the paper suggests principles to re-imagine the future of microfinance innovating from the past.
Keywords: Microfinance, Development, Sustainability, Relational credit practices.