Abstract: In the evolution of global business, a number micro-financing players have faced many defies in due course of their lending-borrowing interrelations. The group lending by MFIs has been one of the model perceived to guarantee the security of loans provided by the said funding institutions. This study aimed “to determine the challenges of group lending on MFIs loans security in Tanzania”. The specific objectives of the study were: to examine the challenges of diluted group norms on MFIs loans defaulting; and, to examine the contribution of deferred group interests on MFIs loans defaulting. A research was a multiple case study in nature undertaken in four selected MFIs (FINCA, BRAC, NMB & CRDB) based in Arusha– Tanzania.