Micro finance institutions are established with an aim to provide financial assistance to the poor people of the society. The institutions are also working hard to develop the habit of saving among the community. There are several programs to provide flexible financial loans to the common people.
Poverty is a global problem and the whole world is tying hard to get a practical solution. The problem of poverty is more acute in the third world countries. In 1970, the term micro finance emerged as an prospective solution for the problem. Though the practical use of the concept was done much before the emergence of the term itself.
The micro finance institutions can be divided in three types. These are:
- Formal Institutions: cooperatives and rural banks
- Informal Institutions or sources: lenders and shop-owners
- Semi Formal Institutions: non government organizations
The micro finance institutions are established with a view to help the poor people to become self sufficient. At the same time the institutions also aimed at providing the banking facilities to all these people. Several researches have proved that all these people are involved in saving money but they are habituated with saving money at home. Home as a medium of saving is not considered as very safe place. The institutions aimed at bringing this money in the banks and then use it for the development of the poor people.
There are many other types of financial assistance, which are provided by these institutions. The microcredit is one of those services. The microcredit loans are nothing but the microloans extension. There are many people who have nothing to provide as security and so these people are always left out of the lending scenario. It is a common trend that the renowned financial organisations are least interested to take care of the financial requirements of those people who are either unemployed or ocassionally employed. Here comes the important role of the micro finance organizations.
The micro finance institutions are dealing with the underprivileged section of the population and are providing the necessary financial assistance to them so that these people can come forward in the society. At the same time, if these people can avail the basic facilities, the social scenario is bound to change. These institutions are also involved in providing microinsurance to the same community.
Some of the famous microfinance institutions are:
- Grameen Bank
- ACCION International
- Opportunity International
- Comilla Cooperative Pilot Project
- Orangi Pilot Projects
- Women's World Banking
- FINCA International
- TMSS
- SKS India