Understanding the value of Microfinance

  • 8 months ago
  • 0 0

Microfinance is a very vast concept.It involves a lot of things.Sometimes itis like a movement to help out the poor people from poverty and for othersit is a method of promoting economic development through support of small businesses and micro- entrepreneurs.

Microfinance deals with a very broad service category that includes microcredit. Microcredit refers to those credit services which are given to the poor clients.

Usual financial requirements of the poor section

There are various needs of people who are poor such as:

  • Personal emergencies like injury, sickness
  • The want of expanding business like buying land, building a house, improving housing, etc
  • Life needs like childbirth, weddings, home building
  • In case of disasters, for example, floods, fires

Using loans for the poor

The donors very frequently argue to restrict microcredit for loans in productive purposes like for starting or expanding microenterprises. The ones from private sector respond because restriction is not possible to enforce. In such case it is not on the rich people for determining in what way the poor should utilize their money. Jeff Rutt who was a farmer, later decided to come up with his house building company. He runs it successfully with a Non-profit venture named HOPE providing solutions for poor.

Few wrong people spoil the idea of microfinance

Microfinance is by far an effective way for helping the very poorest of people from poverty. Small loans can help out people who are struggling for starting a business. For instance, for a farmer, taxi driver and few other such people, institutes of microcredit is the place for them for services like banking, insurance and credit.

According to recent survey, the client number in such institutes has reduced to huge number. This is because in the beginning, most micro loans were non profit to help the poor ones but with the growing sector, the others came into business. Few tried to lend money knowing the clients won’t be able to repay and started using harsh practices for collection. Due to some of these people there was lots of negativity spread.

The good ones in the industry like Jeff Rutt, who are interested in taking an initiative of providing saving programs and loans for less fortunate. Such people should just give their best and avoid such practices and make microcredit a strong tool against poverty.


Welcome! I'm Gagan. This is my news blog devoted to lifestyle, health & fitness, travelling, technology, business and all the in-betweens. I hope you will enjoy my daily style and never boring life!

Comments are closed.