Micro Credit refers to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs).Read More →
A Micro Venture can be defined as a small business, requiring initial capital of no more than $20,000 and employing fewer than 10 individuals.Read More →
Mrs. Lalita S. Naik, age 35 years, is a member of the self help group “Navashakti”, founded on 29th November 2009 in Alvekodi village in Karnataka. Lalita has studied upto 7th standard and is married with college going children.
Mrs. Mukta Manjunath Naik is 30 years of age and has completed her 12th Grade. Mukta is a member of the self help group “Navashakti”, founded on 29th November 2009 in Alvekodi village in Karnataka. Mukta is married and has 2 children, one boy and one girl.
Top 5 reasons Microfinance is essential and continues to grow
Microfinance institutions provide their services at the doorstep of the rural and urban poor. This ensures the borrowers can meet and get access to these services without loss of time or revenue.
Microfinance institutions work with borrowers who are from a low income group. The products are therefore designed keeping this in mind and most loans are of small amounts or micro-loans, of short duration, are unsecured i.e. offered without collaterals and have a high frequency of repayment or repayment schedule at the borrowerâ€™s convenience.
3Peer group support
Microfinance loans are typically given to groups of borrowers who are part of an SHG (Self Help Group) or a JLG (Joint Liability Group) and all members are jointly liable for repayment. With access to finance as well as the support of the group, members can identify opportunities and grow existing income generating activities. The group will typically make the payment on behalf of a defaulting member or, in the case of willful default, will use peer pressure to encourage the delinquent member to make timely payments.
4Value added services
Most Microfinance institutions use their distribution network to also provide various value added services like training and education programs, social and skills development, healthcare and hygiene programs and job fairs etc.
5A win-win modelClients benefit by gaining access to financial services otherwise not accessible and microfinance institutions benefit by tapping into a huge market which in India itself extents to about 380 Million people.