Microfinance

                                     Microfinance


Over the past several decades, microfinance, broadly defined as financial services to poor and low-income clients, has become an increasingly important tool for governments, multilateral agencies, and nongovernmental organizations (NGOs) to address poverty. Initially, for example, with Banco Sol in Bolivia, the Grameen Bank of Bangladesh, and Bank Rakyat of Indonesia, microfinance was focused primarily on microcredit, small loans to poor people. The basic idea was to extend credit to poor people who do not have access to finance, enabling them to help themselves. In designing products for the poor, the industry has made substantial innovations in the practices used in lending. In addition, some microfinance institutions (MFIs) now offer a range of financial services, including savings vehicles, money transfers, and insurance specifically designed to meet both the needs and specific situations of poor people. Broad recognition of microfinance as a development strategy came with the United Nations (UN) declaring 2005 The International Year of Microcredit and with the awarding of the 2006 Nobel Peace Prize jointly to Mohamed Yunus and to the Grameen Bank, which he founded.



                                                                     Urooj Qureshi