Why do We Need Microfinance
People who are unable to get financial services from the general banking institutions, approach Microfinance Companies (MFI). The main working area of MFI is to provide Microloans. The loans are specially given to unorganized businesses and underprivileged sections of society.
No just loans, but MFIs also offer savings accounts, deposits, and microinsurance. The world’s first MFI institution is Grameen Bank of Bangladesh which started in 1983. As of today, it has given microloans to more than 9 million poor people. A most interesting fact is that more than 95% of them are women.
How Micro Finance Companies Work?
Microfinance, spearheaded by the Nobel Prize victor Muhammad Yunus, helps the monetarily underestimated by giving them the basic capital to begin a business and work toward monetary independence. These people were awarded loans without any kind of security or collateral.
Microfinance incorporates microloans, miniature reserve funds, and microinsurance. They give a small number of credits and different resources to entrepreneurs and business visionaries to assist them with getting their organizations going. A large number of the beneficiaries are in non-industrial entities, which could somehow not get a conventional loan.
Miniature bank accounts are likewise under the microfinance umbrella. They permit business people to have an investment account with no balance maintenance requirements. And micro insurance furnishes these borrowers with protection, at a lower rate, and with lesser premiums.
MFIs are like banking institutions that aim to provide basic services to the poverty-stricken masses. They also utilize Online Microfinance Software to manage their whole operations.
Monetary Literacy:
Now and then, the individuals who get microloans are needed to take instructional classes. These courses incorporate accounting, manage income the expenditures, and other applicable skills.
And now, people are more resourceful than ever before. They have mobiles and smartphones to access the Digital World.
Why is MFI Crucial?
As of today, there are more than 700 million people living with daily expenses of less than $2, per day. In India, we have 22% of the total population living under the poverty line. There are countries like Afghanistan, Burundi, Congo, Central African Republic, Equatorial Guinea, Eritrea, Guatemala, Haiti, Honduras, Liberia, and many more which have more than 50% of the total population living under poverty.
How those people will get basic financial assistance to fight poverty? Only Microfinance Companies can help them to reach their financial goals. And MFIs are doing their job quite perfectly. A large number of people have given Microloans to meet their daily financial requirements.
By providing loans to unorganized firms and businesses, MFIs are helping them to grow. When those small companies are getting growth and prosperity, it helps them to generate jobs.
Microfinance Companies mainly work in the rural areas for the farmers. They provide assistance to the farmers by providing farming pieces of equipment, crops, seeds, storages, and many more. It helps the farmers to improve their cultivation and produce more crops.
The Future of Microfinance
The significance of Microfinance would be huge in the coming years. It will also need to evolve and change from time to time to adapt to the new trends and developments. To connect with more people MFIs need to connect with people through digital platforms.
This is why numerous MFIs are deploying advanced Microfinance Software to serve people with effectiveness. All the banking corporations have introduced Banking management software on mobiles for the clients. MFIs are also offering applications on mobiles and smartphones. The Microfinance Software Demo is available for free download.
