| Pub. Date | : September, 2021 |
|---|---|
| Product Name | : The IUP Journal of Entrepreneurship Development |
| Product Type | : Article |
| Product Code | : IJED20921 |
| Author Name | : Khugang Moses Wangsa and Amrendra Kumar |
| Availability | : YES |
| Subject/Domain | : Management Journals |
| Download Format | : PDF Format |
| No. of Pages | : 9 |
Microfinance is an effective mechanism through which the underprivileged households have access to diverse credit services so as to guard themselves against financial insecurity in the future. These financial services are not restricted to lending credits, rather it comprises other services such as micro insurance, micro leasing, provision for thrift savings, etc. In other words, microfinance is a matching set of formal financial instruments that are specifically designed to fulfil the needs of the poor individuals by taking into consideration their low level of education and knowledge related to financial activities. The introduction of microfinance program has led to the improvement of the credit lending options for the rural poor households, and it is believed to work as an effective weapon to lessen poverty and improve the living standards of the poor. Hence, it is considered as the most distinct instrument for uplifting the poor individuals and mitigating poverty.
Like several contemporary facets, microfinance can also be traced back to history. The means for granting loans to the needy population has existed in various forms across the world for thousands of years, yet the modern microfinance has surfaced in one of the poorest countries, Bangladesh, wherein professor Muhammad Yunus came up with the finding that the open market of demand and supply has failed to keep his country protected from the devastating famine. It was observed that the technique of combating poverty through subsidies and aids was not adequate and the formal banking sector was unable to provide satisfactorily for the deprived poor population. In a village named Jobra, professor Yunus decided to grant a special loan to 42 women with the vision of supporting them to start their own businesses. This method of granting small loans to the poor individuals worked as an effective instrument and thus the act established the fundamental ethics of the modern microfinance. Further, professor Muhammad Yunus was determined to reproduce the first microcredit experience in different places, and later he decided to create his own organization known as the Grameen