The concept of microfinance: In the earlier days the service of the banks and the financial intuitions are exclusively for those people who are financially strong and have enough money. However a person from the weaker section of economy was unable to avail these services. There comes the concept of the microfinance. Where person with low income, if want to come to the main stream of economy and wants to set some scale industry or any manufacturing industry can relies their dream.Sponsored Links
The microfinance is exclusively designed for this purpose. In addition to that the microfinance also provides other basic financial services such savings, money transfer and insurance for poor people and weaker section of economy.
The reason behind its popularity: Within a very short span of time the microfinance has gained immense popularity. In fact it has come to a level of popularity which was not expected at all. Most of the industry renowned economist has given a surprise sign that how the microfinance has got so popular within a shorter duration of time. The first and the foremost reason of the success of the microfinance are due to the access of poor towards the main stream of economy. Weaker section of the economy can also access the service and can make the necessary financial transaction. Loans for small scale industries and small manufacturing plants are easily being sanctioned by the microfinance.Sponsored Links
As a result of which lower and middle class people are more attracted towards the microfinance. At the same time the microfinance has also made necessary and user friendly repayment options to repay the loan well in time and to take a fresh loan after the closure of the first one. Documentation and the access to microfinance is the another reason why it has become so successful. While availing any loan from the microfinance the documentation process is least and people can take a loan with the minimum required document. At the same time people can have an easy access to avail the benefits of the organization, hence more and more people are attracted towards it and the microfinance become so successful.
How does it work: You are aware that the microfinance is exclusively designed for the weaker sections of economy people hence all the policy and the product available with the microfinance is well suited to those sections of people.Sponsored Links
Keeping in mind the requirement of MSME, small industry and small manufacturing industry the micro finance design their product so that people can take the advantage of it. In short it can also be described as the microfinance works for the interest of the poor and to financially protect the poor. Now you might be aware that from where you can avail the microfinance service. There is various government sponsored microfinance and various NGOs are also running the microfinance form where you can take the service. Similarly various banks and MFs are also providing the service of the microfinance for the welfare of the poor.