Introduction to Micro Finance

Microfinance is a type of banking that provides services to unemployed and low-income individuals. Microfinance banking helps low-income individuals become more self-sufficient by offering microsavings and insurance products.

History

Microfinance first became mainstream in the 1970s when entrepreneurs began lending capital to the working poor. Muhammad Yunus and Grameen Bank gained worldwide recognition for microfinance work; both won the Nobel Peace Prize in 2006.

Significance

In 2007, the microfinance system served more than 33 million borrowers and 48 million savers. According to Unitus statistics, an organization leading the fight of global poverty, 80 percent of the potential of microfinance property has yet to be reached.

Products

Microsavings is a product that allows low-income individuals to save small amounts of money. Microinsurance involves insurance policies, which are usually issued to people in developing countries. Finally, microloans are loans of around $100. These loans have interest rates around 35 percent, which is lower than available alternatives.

References

• "Forbes Investopedia": Microfinance Has Major Impact
• Forbes Investopedia: Microfinance