What is Microfinance?

jupitadas625 

Every person in the society has some imported needs. That needs also becomes a dream for many people which they also want to fulfill like being financially independent, saving money for the future, set up own business, getting proper education, making life better. But not every person in the society is successful in achieving all this. Many people have to face problems due to financial problems. Microfinance provide their service to the low income individuals of the society to help them financially. In this post, we will discuss in depth about this microfinance. What is microfinance, how does it works, what are its benifits, these kind of questions will be discussed in this post.

As I have already mentioned that microfinance is a banking service provided for the low income individuals or groups who otherwise would have no other access to financial services. Microfinance service is not a new concept. In 18th century these kind of operations were also exist. But from 1970 it became popular among the people. Acoording to some people, in 1970, Muhammad Yunus has first introduced microfinance in Gramin Bank of Bangladesh, Bangladesh. Later on many countries liked the concept and also adopted it.

People who are struggling with poverty or who do not have enough money to start their own buisness or generate any other income source, microfinance help those people to get easy loans. Instead of keeping this section of the society away from the benifits of banking services, microfinance helps them to move forward with good banking service. By doing this, they are not only helping in getting loans, but they are also helping people who can afford to save a small part of their earning so that they can use it on other expenses. Like conventional lenders, microfinanciers also charge interest on loans and institute specific repayment plans to continue with their services.

Again, many time, microfinance organizations allot classes for the people seeking help from them. They are taught about interest rates, the concept of cash flow, how savings account work, how to budget and how to manage debt. Once educated, they can apply for loans and just as one would find at a traditional bank, a loan officer helps them with applications, lending process and approves loans. Many small start ups as well as entrepreneurs have grown with the help of microfinance. Many microfinance institutions, sometimes referred to as MFIs, focus on helping women in particular.

Perhaps, understanding the importance of microfinance, many developing countries like India, Cambodia, China, Indonesia, Pakistan, Myanmar etc have started adopting it to help citizens.

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4 thoughts on “What is Microfinance?

  1. sekret-natury.pl

    Insightful piece

  2. Cruz Gey

    Insightful piece

  3. Tutaj

    great article

  4. Tutaj

    great article

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