History of Microfinance

Topics: Microfinance, Microcredit, Poverty Pages: 2 (628 words) Published: October 30, 2012
Definition of 'Microfinance'
A type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services. Ultimately, the goal of microfinance is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.

Investopedia explains 'Microfinance'
Microfinancing is not a new concept. Small microcredit operations have existed since the mid 1700s. Although most modern microfinance institutions operate in developing countries, the rate of payment default for loans is surprisingly low - more than 90% of loans are repaid. 

Like conventional banking operations, microfinance institutions must charge their lenders interests on loans. While these interest rates are generally lower than those offered by normal banks, some opponents of this concept condemn microfinance operations for making profitsoff of the poor.

The World Bank estimates that there are more than 500 million people who have directly or indirectly benefited from microfinance-related operations. 

Read more: http://www.investopedia.com/terms/m/microfinance.asp#ixzz2AhH8VN6h Microfinance
a means of extending credit, usually in the form of small loanswith no collateral, to nontraditional borrowers such as the poor inrural or undeveloped areas. This approach was institutionalized in1976 by Muhammad Yunus, an American educated Bangladeshieconomist who had observed that a significant percentage of theworld's population has been barred from acquiring the capitalnecessary to rise out of poverty. Yunus set out to solve thisproblem through the creation of the Grameen...
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