Finance is considered life
blood of all business en-
terprises. In a money-oriented economy, its importance
is multiplied. It is regarded as the master key that providing
access to all business endeavors – manufacturing, merchandising and
resources. It has also been rightly observed that business
needs money to make more money and this is possible only when it
is managed properly. Hence, efficient management of every business
enterprise is closely linked with the management of its finances.
The macro environment of the Indian economy has
undergone radical changes with the policies of Liberalization,
Privatization and Globalization (LPG). These policies have also taken
multi-directional shifts towards treating the world economy as a global
village. The opening up of the economy has led to a series
of structural adjustments. Competition and the survival of the
fittest have become the rules of the game. In this scenario, microfinance
is playing a key role in the economic development of every country.
Microfinance was started approximately 27 years ago with
the origination of the Grameen Bank in Bangladesh by the
renowned Prof. Mohammed Yunus, an economist, who later won
the Nobel Prize for Peace in 2006. The UN Year of Microcredit, in
2005, was a turning point for microfinance as the private
sector banks began to take a more interest in microfinance.
Mohammed Yunus, a pioneer in microfinance, has worked extensively to
spread this concept around the world. Today, microfinance is widely
accepted as a `miracle cure' for eradication of poverty. Studies
reveal that microfinance now reaches about 80 million families and
approximately 20,000 Microfinance Institutions (MFIs) are now
operating in developing countries of Asia, Africa, Europe and
Latin America with an aim to eradicate poverty. However, less than
10% of the potential clients have access to loans from MFIs. It is
estimated that the number of borrowers of microfinance in the world,
at present, is approximately 500 million. China and India are now
entering the microfinance field, and it is expected that this would
affect them in ways that are currently unimaginable. |
