On 18 November 2004 the United Nations launched the International Year of Microcredit, as part of an effort to build support for making financial services more accessible to poor and low-income people. The aim of this essay is to outline what a Micro Finance Institute is and who its customers are. It will then go on to explore how they serve the customer and how the Micro Finance Institute benefits its customers. Theses are benefits such as aiding the movement of many out of poverty and empowering women.
Micro Finance Institutes (MFIs) are organizations that offer financial services to the poor and financially vulnerable that come from lesser-developed economies. The term micro finance institution has come to refer to a wide range of organizations dedicated to providing these services. These are institutions or organisations such as NGOs, credit unions, cooperatives, private commercial banks and non-bank financial institutions (some that have transformed from NGOs into regulated institutions) and parts of state-owned banks, for example.
The most common image of an MFI is that of a Financial Non Governmental Organisation (NGO)'. That is an NGO fully and virtually exclusively dedicated to offering financial services. As in most cases micro credit NGOs are unable to capture savings deposits from the general public this has led to a group of a few hundred NGOs that offer micro credit and therefore this has subsequently become micro finance. Many of these NGOs make up a group that is commonly referred to as "best practice" organizations. These are organisations, which employ the newest lending techniques so to generate efficient outreach that allows them to on a sustainable basis reach, and aide the development of the poorest sectors of the economy. Examples of this can be seen all over Bangladesh. Micro finance programs are essentially run by NGOs, most of which are community-based... [continues]
Cite This Essay
(2005, 11). What Are Micro Finance Institutes and What Are Their Benefits?. StudyMode.com. Retrieved 11, 2005, from http://www.studymode.com/essays/Micro-Finance-Institutes-Their-Benefits-71143.html
"What Are Micro Finance Institutes and What Are Their Benefits?" StudyMode.com. 11 2005. 11 2005 <http://www.studymode.com/essays/Micro-Finance-Institutes-Their-Benefits-71143.html>.
"What Are Micro Finance Institutes and What Are Their Benefits?." StudyMode.com. 11, 2005. Accessed 11, 2005. http://www.studymode.com/essays/Micro-Finance-Institutes-Their-Benefits-71143.html.