MICRO FINANCE

MICRO FINANCE

Micro finance is a kind of banking service provided to low income groups who do not have easy access to loans. the focus of these groups is to help small business. They do not take colaterals, unlike regular fiance institutions.

     Those who are offered micro-finance need to  go through a training period where they are thought various aspects of managing money.It is only then that a loan can be accessed.

      In order to ensure that people who take a loan return it, part of their income is kept as insurance. Loans are given at reasonable interest rate. The 'credit worthiness" of each member increases each time a loan is paid back on time.This increase the chances of getting a loan second time.

       Micro-finance as a concept has grown in popularity and there are several such initiative in existence today. The first micro-finance group to receive recognition was the Grameen Bank foundation in Bangladesh, which was founded by Muhammad Yunus. While most institution involved in the field of micro finance mainly provide easy access to loans,some also provide another support services to encourage entrepreneurship. An example includes training programmes to acquire professional and technical skills required to succeed in business.

SELF-HELP GROUP

Self help groups or SHGs are a variation of the concept of micro finance. The difference between the two is that these are formed by women who save a part of their income and contribute it to the group's collection. there is no third party involvement in this group. if a member of the groups require money, the group as a whole decides if the member's need is valid and then processes a loan from the collection,

GOVERNMENT SCHEMES

The government also provides schemes to provide easy access to loan at reasonable interest rates for low income groups.

DID YOU KNNOW

Muhummad Yunus won  the Nobel peace prize for his phenomenal work in the field of micro finance in 2006.

The world bank estimates that more than 500 millions people benefit from several micro-finance projects across the world.