Importance Of Microfinance

INTRODUCTION TO MICROFINANCE

What is microfinance?

Microfinance which is also known as microcredit is a financial service that offers banking services to small entrepreneurs and small business owners who don’t have access to traditional sources of raising capital like banks or other investors. The concept of microfinance and microcredit was pioneered by a Bangladeshi social entrepreneur named Muhammad Yunus who later won a noble prize for peace for founding the Grameen Bank. These loans proved to be very helpful to small businessman mainly sole proprietors to raise capital and run their business efficiently and to grow and prosper.

What is its importance?

Right from its inception microfinance has played an important role in driving growth for the citizens mainly in developing nations such as India, Bangladesh etc. Microfinance is available through various microfinance institutions ranging from small non-profit organizations to larger banks. They offer small loans and help set up and maintain a savings account. They also assist borrowers in obtaining insurance for a variety of needs, such as death, illness or loss of property. Micro-finance slowly has emerged as a great movement with an objective to provide affordable financial services to all mainly the poor and socially marginalized section of the society. This not only helps them to financially grow and expand their business but also serves the society as a whole as it leads to greater productivity, increased