Essay On Microfinance

Role of Microfinance:-

The micro credit of microfinance program was first initiated in the year 1976 in Bangladesh with promise of providing credit to the poor without collateral , alleviating poverty and unleashing human creativity and endeavor of the poor people. Microfinance impact studies have demonstrated that :

• Microfinance helps poor households meet basic needs and protects them against risks.

• The use of financial services by low-income households leads to improvements in household economic welfare and enterprise stability and growth.

• By supporting women’s economic participation, microfinance empowers women, thereby promoting gender-equity and improving household well-being.

• The level of impact relates to the length of time clients have had access to financial services.

Strategic Policy Initiatives

Some of the most recent strategic policy initiatives in the area of Microfinance taken by the government and regulatory bodies in India are:

• Working group on credit to the poor through SHGs, NGOs, NABARD, 1995

• The National Microfinance Taskforce, 1999

• Working Group on Financial Flows to the Informal Sector (set up by PMO), 2002

• Microfinance Development and Equity Fund, NABARD, 2005

• Working group on Financing NBFCs by Banks- RBI

Activities in Microfinance

Microcredit: It is a small amount of money loaned to a client by a bank or other institution. Microcredit can be offered, often without collateral, to an individual or through group lending.

Micro savings: These are deposit services that allow one to save small amounts of money for future use. Often without minimum balance requirements, these savings accounts allow households to save in order to meet unexpected expenses and plan for future expenses.

Micro i...

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