Top 10 Things to Know about Microfinance
Microfinance in today’s time is an emerging word that has gained huge popularity for a plethora of reasons. If you need to understand the importance of microfinance, you need to go through a thorough analysis from the beginning. Besides, one also needs to consider the right perspective for microfinance, which focuses on its precedence in various informal and traditional credit systems that already exist in today’s time, even before microfinance came into popularity.
A lot has been written and said about microfinance. It is a crucial provision for various small loans to those people who are poor or don’t have good economic conditions. Meanwhile, microfinance is not only limited to these perspectives. You can understand its dimension far more broadly.
So, if you are seeking to get more information regarding microfinance and various microfinance companies in Bangalore, you are in the right place. Here, we will discuss several important things about microfinance that you need to know about. Take a look.
1. Microfinance is not a New Concept
Most people think that microfinance is a new concept. But, they are wrong! It’s not a new concept. The history of microfinance can be traced even to the middle of the 1800s. You can get details of the entire concept of microfinance from F.A.J Bouman’s 1990 book named ‘Small Short and Unsecured.
2. Popular for Small Loans
Well, microfinance is popular for small finance that a reputed microfinance company in Bangalore offers. It brings provision for small loans for the needy to make them self-reliant. And this is the reason why microfinance has become popular in today’s time. These are small loans that are meant to be repaid within the specified and the short-period of time.
3. Right Option for People having Low Income
The next thing that you need to know about microfinance is it’s a great option for people who earn low income and seek finance for their purpose. If you are one of those who earn low income and also have households with a limited asset, you can use it as collateral.
4. Credit Plus Approach
Another important reason why microfinance has become popular is its credit-plus approach. The approach focuses on offering the most appropriate and timely credit for lower-income groups. But, this is also for integrating it with several developmental activities.
These activities include leadership training skills, development, community organizing, financial management, entrepreneurship management, and many more. Meanwhile, the sustainability and success of microfinance programs are something that depends upon and also fostered these types of important aspects. You can get in touch with microfinance companies in India to get more details about these programs.
5. Microfinance is much more than Money
Of course, microfinance serves its actual purpose of money distribution. But, it’s also the fact that microfinance is much more than money. The concept also focuses on in-depth problems related to the way money is invested and also its utilization by those individuals having lower level incomes. It helps increase and also develop a community-based microenvironment where those of interlinks and existing networks are indeed strengthened.
It’s something that is of good importance and you need to understand that microfinance doesn’t stand alone. It’s something that also overlaps with those of various existing developmental activities, which are helpful in its implementation. Some of these issues in microfinance include trust building, small enterprise management, leadership development, networking, information gathering, operational aspect, community, kinship development, skills development, vocational development, and more.
6. Good Option for Poverty Alleviation
As mentioned above, microfinance offers small loans to those people who have low income and are seeking financial income. It reflects how microfinance contributed to poverty alleviation. Microfinance has emerged as a crucial tool for combating poverty alleviation and also for combining a for-profit approach, which is good for self-sustaining.
Apart from this, microfinance has also become an important tool for exercising developmental priorities for the government, especially in those of various developing countries.
7. It’s not an Option for a Job
Well, many people often get confused about microfinance and often relate it to the job. They should understand the fact that it’s not a replacement for a job. The actual purpose of it is to serve financially weak people and make them self-sustainable. The major objective of microfinance is to alleviate property and promote economic growth and development process.
8. Charges are Applicable for Microfinance Institutions
Many microfinance companies in Bangalore charge even interest rates for loans and they also provide to many people. When it comes to interest rates, it’s something that becomes even more compared to those of many formal sector standards. But, this tends to be low to various informal market supplier credits.
9. Improved Required for Various Systematic Issues
You should also always keep in mind that microfinance emerged as the most vital strategy for different economic opportunities and also opening indeed a complete access. Most people from developed and also developing nations also face numerous circumstances, which can indeed reinforce systematic poverty mainly due to various reasons be it poor public infrastructure, lack of education, or social-gender inequality.
10. It Improves Livelihood
Another crucial thing about microfinance, it works better in improving the economic condition of people and also enhances their livelihood. A large number of farmers worldwide have the capability of improving their income. It also becomes self-reliant and thus boosts their livelihood.
So, after going through the above discussion, you may now have a better understanding of microfinance. Above are some of the crucial facts that you should always remember about microfinance. You can get in touch with microfinance companies in Karnataka to get more details.