This is a simple presentation about microfinance and important of it in developing country. I briefly described about service and impact of it. I prepared it to present in university. University of Economics in Katowice, Poland. Suman Bhattarai (Nepal)

1. Microfinance
Suman BHATTARAI

2. Introduction
❖ Microfinance, also called microcredit​.
❖ It is a type of banking service that is provided to unemployed or
low-income individuals or groups who otherwise have no other access to
financial services.
❖ It is also the provision of savings accounts, loans, insurance, money
transfers and other banking services to customers that lack access to
traditional financial services, usually because of poverty.

3. Background
❖ Targeting unemployed and low-income
individuals and group.
❖ Providing banking services.
❖ Microfinance allows people to safely take on
reasonable small business loans in a manner
that is consistent with ethical lending practices.

4. History of micro-finance
❖ The first occurrence of microlending is attributed to the Irish Loan Fund
system, introduced by Jonathan Swift, which sought to improve
conditions for impoverished Irish citizens.
❖ Modern form, microfinancing became popular on a large scale in the
1970s.
❖ 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.

5. What is the benefits ?
❖ Inclusion of the poor into the financial systems,
❖ Opportunities to start-up,
❖ Lower interest rates compared to local money
lenders.
❖ Self-employment
❖ Opportunity for education and community
development.

6. Benefits of Microfinance
❖ Entrepreneurs who create a successful business
create jobs, trade and overall economic
improvement within the community.
❖ Empowering women in particular, as many
MFIs do, leads to more stability and prosperity
for families.

7. Benefits of Microfinance
❖ The World Bank estimates that more than 500 million people
have directly or indirectly benefited from microfinance-related
operations.
❖ The International Finance Corporation (IFC), part of the larger
World Bank Group, estimates that more than 130 million people
have directly benefited from microfinance-related operations as
of 2014.
❖ These operations are only available to approximately 20% of the 3
billion people who qualify as part of the world’s poor.

8. Key Features of Micro-finance
❖ Lend to the poor
❖ Do not take security (Collateral)
❖ Prefer saving over borrowing
❖ Small short term loan
❖ Cost covering interest rate
❖ Group appraisal and guarantee
❖ Target group- women

9. Target Groups
Developing Countries
Unemployed/Low-income Individuals
Women

10. Services provided by Micro-finance
❖ Credit facilities,
❖ Saving accounts,
❖ Loan for small Investments,
❖ Money transfer,
❖ Remittance,
❖ Insurance. Microfinance

11. Where it is more famous ?
❖ Exist all around the world, the majority of
microfinancing operations occur in developing
nations, such as Uganda, Indonesia,
Phillippince, Serbia, Bangladesh, India, Nepal
and Honduras.
❖ Many microfinance institutions (MFIs) focus on
helping women in particular.

12. Microfinance in Uganda
Economic Condition of Uganda
❖ Uganda is a country with a remarkable development.
❖ Over the past decade, the size of Uganda’s economy has more than doubled
with average growth rates of about 6% per annum.
❖ Uganda ranked second in 11 Sub-Saharan Africa in terms of GDP growth
since 1990.
❖ Inflation was brought down from the dizzy heights of 240% pa in 1986/87 and
has been less than 10 percent in the last five years.

13. Micro-finance in India
❖ India's SKS Microfinance serves a large number
of poor clients.
❖ Formed in 1998, it has grown to become one of
the biggest microfinance operations in the world.
❖ SKS works in a similar fashion to the Grameen
Bank, pooling all borrowers into groups of five
members who work together to ensure loan
repayment.

14. Microfinance in Bangladesh
❖ Bangladesh’s microfinance sector was first established in the 1970s, its
main goal was reducing rural poverty.
❖ Microcredit accounted for a 10 percent reduction in rural poverty in
Bangladesh over that time—meaning MFIs lifted some 2.5 million
Bangladeshis from the ranks of the poor.
❖ Today, Bangladesh’s MFIs cover some 32 million members and give
out more than $7.2 billion annually.
❖ Modern microfinance in Bangladesh has expanded its scope from
home-based activities and self-employment to include savings and
insurance, microenterprises, and productive employment

15. ❖ Microcredit also helped to diversify borrowers’ economic activities,
boosting incomes in the process.
❖ Household income grew over the study period, driven by rising
non-farm income.
❖ Two of Bangladesh’s top MFIs (Grameen Bank and BRAC) are among
the world’s most efficient microfinance institutions.
❖ Microfinance also encourage individuals to invest in small business,
provide self-employed training and also provide resources to establish
business.

16. Summary
❖ Microfinance works as banks for low-income/unemployed individuals.
❖ Especially in those areas where banks are not available.
❖ Major objectives is minimize poverty and unemployment rate.
❖ Play vital role to develop nation’s economy.

17. Sources
https://www.investopedia.com/terms/m/microfinance.asp
http://www.oecd.org/countries/uganda/35481055.pdf
https://www.kiva.org/microfinance
https://www.ifc.org/wps/wcm/connect/Industry_EXT_Content/IFC_External_C
orporate_Site/Industries/Financial+Markets/MSME+Finance/Microfinance/
https://opportunity.org/what-we-do/microfinance/