2. What is Microfinance?
The provision of microloans
to poor entrepreneurs
small businesses lacking access to banking and other
financial services.
3. Evolution of Microfinance
The first organization to receive attention was the
Grameen Bank, which was started in
1976 by Muhammad Yunus in Bangladesh.
In 2006, the Nobel Peace Prize was awarded to both
Yunus and the Grameen Bank for their efforts in
developing the microfinance system.
4. Evolution of Microfinance
Microfinance has now evolved as an industry, with
major activity in Latin American countries, Africa,
Eastern Europe, India and South East Asia.
5. Why is Microfinance so important?
Unemployed or low-income individuals should not be
deprived of the opportunity to start their own business.
Microfinancing is an option for impoverished dreamers
looking to create a brand and get ahead.
6. How does it work?
Microfinance institutions (MFIs) offer range of financial
products (such as microloans, microsavings and micro-
insurance products) to their clients.
7. Provision of financial services to low income
clients and poor people with the goal of
creating social value.
Loans Savings Insurance Remittance
8.
9. Salient features of Microfinance
Beneficiaries are from low income group.
Loans are of small amount.
Short duration loans
Loans are offered without collateral.
High frequency of payment
Loans are generally taken for income generation
purposes.
10. Benefits of Microfinance
It allows people to better provide for their families. ...
It gives people access to credit. ...
It serves those who are often overlooked in society. ...
It offers a better overall loan repayment rate than
traditional banking products. ...
It provides families with an opportunity to provide an
education to their children.
11. History of Microfinance in India
Group-based internal lending has been historically
popular in India (e.g. the bhisi system common in Mumbai,
the sheetu / chits system common in TN and AP, SEWA and
Annapurna Mahila Mandal groups of working women etc.)
In 1982, the state-sponsored NABARD initiated the
Bank-SHG Linkage Programme with the objective of
expanding the reach of existing banks to the rural poor
The SHG-model has had issues in terms of scaling up
and quality of groups and loans in the long-term
In 1990s, private microfinance institutions (MFIs) were
established primarily in AP, following the Grameen
Bank model
Microfinance can be defined as any activity that includes the provision of financial services such as credit, savings and insurance to low-income individuals which fall just above the nationally defined poverty line, and poor individuals which fall below that poverty line, with the goal of creating social values. The creation of social values includes poverty alleviation and the broader impact of improvving livelihood opportunities through the provisions of capital, savings, insurance and remittances.
