Under What Circumstances Is Micro-Financing Successful?

Background: Providing small loans to poor people to help fight poverty and fight against poverty is very popular in modern society. As a project, microfinance has become the world's largest fighting tool against poverty, explained as a basis for financial support for poor individuals and groups, lacking access to formal banks. The beginning of modern microfinance was assigned to Dr. Mohammad Yunus who started lending to a poor woman in Jobra village of Bangladesh in the 1970 's.

Founded by Bijay Mahajan in 1996, BASIX is the first microfinance project that provided loans to poor people at the time. It aims to promote the livelihood of the new generation in the country by providing advisory services in microfinance and livelihood promotion, as well as information technology (IT) applications for microfinance and livelihoods. As of May 31, 2014, BASIX distributes approximately 3,512,480 loans to 122 locations in 16 states. BASIX is also a member of the well-known microfinance institution network (MFIN).

The term microfinance institution is widely used, it includes all types of businesses normally involved in microfinance, microfinance does not belong to African society. Traditionally, there are many forms of informal and formal saving and lending associations working in the village. And group level. Modern microfinance schemes, solidarity groups, village banking transactions, etc. have been managed for 20 years. The microfinance institution functions as an effective tool for providing sustainable basic financial services to the SME sector, but its impact is small. Only a small portion of the productive poor can even access the available microfinance services.

Micro finance is a new paradigm in the development of discourse and financial intermediation. Broadly speaking, microfinance funds a small number of goods that have long been excluded from poor people, credit and other financial services, and rural, sub-urban and urban mainstream banks and financial markets It means that. Their income levels and their living standards. In particular, after the Nobel laureate Mohammed Yunus of Bangladesh established Grameen Bank, microfinance emerged as a major financial service in the 1970s. Providing credit in front of people who are not covered by formal banks, coupled with capacity building, is one way to achieve financial subsidies. The most important economic reason for integrating the poor into the economy is transaction costs. For formal banks it will be costly to mobilize small deposits of widely dispersed poor families.