Microfinance is the term used in financial circles. Microfinance has many different definitions that evolved in the years. Recently microfinance is a key cog in the wheel which means it provides financial inclusion in the terms of affordable financial products, these are not only limited to credit like personal loans and credit cards but in another way such as savings, fixed deposits, and many banking services. Microfinance is how all-around economic development can be achieved. The st accurate definition is that it defines as a micro-credit offered to the unemployed and those who get minimum wages. The organizations that participate in this system of microcredit are called microfinance companies.
The Microfinance Services Bill of India defines microfinance as the service which provides financial assistance to the person or anyone eligible to receive credit.
Objectives of Microfinance organizations
Following are the main objective of the microfinance organizations:
- To promote social and economic development.
- Strengthen self-help groups and use them as a tool towards economic development.
- To promote women empowerment and support women entrepreneurs.
Different type of loans that are offered by Microfinance
The loans accomplish the needs of individuals who need immediate cash, many other loans listed below:
- Women to increase their income generation
- Loans for homegrown entrepreneurs
- Emergency medical loans
- Home improvement loans
- Home extensions/ business improvement loans
The loans which are of a higher amount have been given to the groups that depend on microfinance companies.