Micro financing is a very emerging financial services to deal with poverty in most of the developing countries. This is most useful services for development of small scale entrepreneur development.
Micro financing as the name suggest are financial services for poor and low income group people. This could be the most useful services to improve economical condition of a developing country. It can also be helpful for growth the growth of overall population across the globe.
Poor people who are not capable of using banking facilities because of its high operational cost and other charges are provided various services by micro financing. People who are struggling to start small business become capable of using banking services by using loans and other banking services at lower cost by micro financing. They would become eligible to take risk by using insurance services which can help them to improve their lifestyle by a regular source of income.
Eligible clients for Micro Financing:
People with low income group who are unable to use other financial services.
Micro entrepreneur in rural area.
Self employed person works from home.
Women trying to set up their small scale business.
Small retail shops or manufacturing units.
Working models of Micro Financing:
Various communities for association to provide Micro financing services.
Community banking is another aspect can be considers to provide micro finance through semi formal institutes.
Various NGOs are working to bring growth in rural areas by offering micro financing services either individually or by associating with any institute.
SME (small and medium enterprise) Section of banks Working to serve poor and low income group with micro financing concept and also generation employments in the country.
Benefits of Micro Financing:
It is proven by various studies that micro financing is helping poor to grow and reducing the need to sell assets by poor to fulfill their basic needs. This will provide people to cope up with emergency and difficult situations of life.
Make poor able to take loan: Micro financing allow people to get low amount of loan at very low interest rates. This will help them to grow and come out of the cycle of poverty.
Women empowerment: Women which wants to start their small business and become self employed can easily get credit with the help of micro financing concept. This will improve their living standards and promote gender equality in country.
Financial independence: Micro financing is not only providing loans but it includes saving transfer and insurance as well. Small savings help people to become financially independent. Insurance schemes for business make them able to take risk.