Preview

Reserch Papar

Good Essays
Open Document
Open Document
506 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Reserch Papar
Microfinance banks:

DEFINITION:

Microfinance institutions offer important functions to the people, who are not able to meet the eligibility criteria of commercial banks. On elementary basis, it offers an opportunity to get cheap capital. Microfinance institutions exist to alleviate poverty. They do so by making loans with relatively low interest rates to people who are not able to access more traditional forms of financing.

Services:
Since its early days, the microfinance industry has grown to include other financial services other than small-business loans. Microfinance banks often offer savings and other deposit accounts, as well as home mortgage loans and credit cards. Certain microfinance banks also offer their members affordable insurance products, including life, medical, disability and property insurance. Microfinance banks may also give emergency loans for unexpected expenses such as major illnesses or hospitalizations.

FUNCTIONS OF MICROFINANCE BANKS:

* Education:

Apart from the key function of lending money, microfinance institutions also offer basic education to people on how to manage money and run a business efficiently. In some cases, they also keep criteria of education for borrowing group to get eligible for cheap loans.

* Group Lending:

Even though, offering a loan without any collateral may leads to higher delinquencies, most of the microfinance institutions charge lower interest rates as compared to commercial banks. Microfinance institutions need their borrowers to create a group, so as to ensure timely repayments. Formation of group act as a support for each other and every member can guarantee the repayment of other member of group. Through this way, microfinance institutions can collect weekly payments more efficiently and it leads to the formation of support group if borrower faces any problem.

* Women Empowerment:

Research shows that, profits made by woman because of loan are invested for

You May Also Find These Documents Helpful

  • Better Essays

    The first feature of microfinance that comes to one’s mind is its huge growth potential. As stated in the case, only 20% of overall demand for microfinancing is being met. 420 million people don’t have access to microfinance according to Exhibit 5. Microfinance is believed to be rather helpful in improving people’s lives. Using the small credits, clients start their small businesses improve and their living standards which should lead to increase of life conditions in the whole country. The experience can also attract international companies to open plants and fabrics there as lack of skilled working power is one of the main constrain in FDI. However there is no clear evidence on the real impact of microfinancing on macro level. Moreover MFIs are not transparent at all, which is a huge disadvantage from investor’s point of view. Investors want to know the business they are investing in.…

    • 1246 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Working in a very active financial institution in a country where citizens are eager for financial freedom and increased response and sensitivity of the financial sector to the yearnings of the medium, small and micro-scaled industries to stimulate economic growth and reduce hardship in a poverty stricken environment could be very tasking and demanding.…

    • 4720 Words
    • 19 Pages
    Powerful Essays
  • Satisfactory Essays

    Chapter 13 Key Takeaways

    • 981 Words
    • 4 Pages

    * Financial institutions offer a wide range of services, including checking and savings accounts, ATM services, and credit and debit cards. They also sell securities and provide financial advice.…

    • 981 Words
    • 4 Pages
    Satisfactory Essays
  • Best Essays

    Brazil Risk Analysis

    • 2991 Words
    • 12 Pages

    There are many financial service as the private multi-purpose commercial banks, universal banks, play the leading intermediary role in the country’s financial sector. Public financial institutions are also among the leading intermediaries, promoting rural economic activity and agricultural production through the provision of subsidized loans.…

    • 2991 Words
    • 12 Pages
    Best Essays
  • Powerful Essays

    Global poverty is a daunting challenge. By making micro-loans for poor in the world, we can help them come out of poverty. While discussing about this method, I would like to remind about a very successful character, namely, Madurai ChinaPillai ,Hailing from a humble family in Madurai, ChinaPillai has been serving the society through "Kalanjiyam ' ', An organization that spreads awareness among illiterate and poor women on the importance of small savings and the benefits offered by banks, by way of loans.…

    • 3603 Words
    • 15 Pages
    Powerful Essays
  • Satisfactory Essays

    Just as everyone begins to accept that elves, dwarves and other fey creatures aren’t monsters and the world is not about to end, a video emerges implicating a fey queen in the kidnapping a human child.…

    • 103 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Kiva, a nonprofit microfinance company situated under the website “www.kiva.org”, functions as an intermediate body between a large global infrastructered network of microfinance institutions. Ideally, Kiva provides small loans towards entrepreneurs in developing countries worldwide. Kiva works on a sustainable peer-to-peer microcredit model marketplace that provides loans to borrowers who need it most in order to allow them a better chance of creating a better life. These loans given out are paid back under the assumption that the borrower will repay the loan under “goodwill and faith”. This can be seen as the primary agenda and aim for the company Kiva.…

    • 690 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Microlending Essay

    • 1133 Words
    • 5 Pages

    Microloans are very small loans given to borrowers. Typically, these loans are given to the poor with the intention for them to find work and support themselves. Not only were microloans designed to reduce poverty, additionally it has given power to women. Microloans were developed to be set apart from original loans. Microcredit offers small loans with high interest rates that are needed to return the money. Communities are benefitted as well from micro lending. Instead off collecting taxes from everyone and giving a handout to the poor, these loans are required to be paid back and the tax money can be spared for other important issues.…

    • 1133 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    Domestic Division of Labour

    • 4524 Words
    • 19 Pages

    Secondly, we should look beyond microcredit to other financial services including savings. In the interest of the poorest and women in particular, there may be new possibilities when we view microfinance as a tool not only for income promotion, but income protection as well.…

    • 4524 Words
    • 19 Pages
    Powerful Essays
  • Powerful Essays

    ESSAYS ON POVERTY, MICROFINANCE AND LABOR ECONOMICS by SANDARADURA INDUNIL UDAYANGA DE SILVA, B.Sc., M.A. A DISSERTATION IN ECONOMICS Submitted to the Graduate Faculty of Texas Tech University in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY Approved Masha Rahnama…

    • 37934 Words
    • 152 Pages
    Powerful Essays
  • Best Essays

    Having ‘about one billion people globally live in households with per capita incomes of under one dollar per day’, with ‘policymakers and practitioners who have been trying to improve the live of that billion facing an uphill battle.’(Murdoch,1999,p.1569); microfinance, and in particular micro-credit, has been key in the gradual alleviation of world poverty. This has been most apparent in the developing part of the world in countries such as Bangladesh (where Muhammed Yusuf founded the Grameen Bank), Bolivia, Indonesia and Pakistan.…

    • 2625 Words
    • 11 Pages
    Best Essays
  • Powerful Essays

    The principle of microfinance or microcredit is to provide bank and credit services to those otherwise are not eligible to get credit or finance because of their financial condition being way below the poverty level.…

    • 5020 Words
    • 21 Pages
    Powerful Essays
  • Satisfactory Essays

    I humbly seek to get your opinion about the issues in the questionnaire to facilitate my study about microfinance institutions and the growth of the private sector. Your opinion will be kept highly confidential and used specifically for academic purpose. I will be grateful for your assistance.…

    • 1670 Words
    • 7 Pages
    Satisfactory Essays
  • Powerful Essays

    grameen bank

    • 9887 Words
    • 40 Pages

    © 2004 by The Trustees of Columbia University in the City of New York. All rights reserved.…

    • 9887 Words
    • 40 Pages
    Powerful Essays
  • Powerful Essays

    Microfinance in India

    • 2038 Words
    • 9 Pages

    Microfinance typically refers to a range of financial services including credit, savings, insurance, money transfers, and other financial products provided by different services providers, targeted at poor and low income people.…

    • 2038 Words
    • 9 Pages
    Powerful Essays

Related Topics