MICRO-FINANCE



​Microfinance is usually understood to entail the provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

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It can simply be defined as any activity that includes providing financial services such as credit, savings, and insurance to low-income individuals or households with the objective of creating social value.
 

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Professor Mohammad Yunus of Bangladesh is widely known as the father of microfinance. He founded the Grameen Bank in Bangladesh 25 years back, which is seen as the beginning of microfinance, though almost at the same time several other initiatives were taken in microfinance. The domain of microfinance has spread since with the adaptation and evolution of Professor Yunus’ ideas in various countries and contexts. Several other innovative models in microfinance have been developed. Microfinance is now hailed as one of the most powerful instruments of poverty alleviation worldwide.