Microfinance

• 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.
• It allows people to safely take on reasonable small
business loans in a manner that is consistent with
ethical lending practices.
• It is also called microcredit

Dr. Mayank Malviya

 History
• The first occurrence of micro-financing is attributed to
the Irish Loan Fund system, introduced by Jonathan
Swift, which sought to improve conditions for
impoverished Irish citizens.
• The micro-financing 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
Muhammad Yunus and the Grameen Bank for their
efforts in developing the microfinance system.

Dr. Mayank Malviya

 Features of Microfinance
• Lend to the poor
• Do not take collateral security
• Prefer saving over borrowing
• Small short term loan
• Target group - Developing Countries –
Unemployed and Low income group – priority
for women

Dr. Mayank Malviya

 Benefits of Microfinance
• Involvement of the poor into the financial
systems.
• Opportunities of start-up.
• Lower interest rates compared to local money
lenders.
• Self-employment.
• Opportunity for education and development.

Dr. Mayank Malviya

 Services provided by Micro-finance
• Credit facilities
• Saving accounts
• Money transfer
• Insurance

Dr. Mayank Malviya