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Microfinance defined as credit and savings to provide other financial services such as transfers, insurance, consumer loans, marriage loans, technical assistance, credit cards, payment services
Microfinance programs focus on two main components:
- The need to provide a variety of financial services, not only lending services;
- Provide such diverse financial services to poor people who are able to slice the creation of income-generating projects. What can be said from the foregoing is that the concept of microfinance is intended to those programs that focus on providing a variety of financial services, not only lending services to individuals who do not have the ability to get those services from formal financial institutions, who at the same time to start investment projects income-generating, in the sense that it comes to addressing the problem of poverty and unemployment, in addition to addressing the problem of economic and social exclusion experienced by many individuals with low profitability and high risk from the standpoint of formal financial institutions.
2. Microfinance properties
Working in the field of microfinance institutions programs following characteristics and Judith Lawrence characterized (1998):
provide small and short-term loans for working capital purposes;
simple and easy evaluation of the investments of borrowers;
the use of innovative alternatives Kaldmanat collective style mandatory savings instead of using collateral;
potential borrower for new loans will depend on the extent of fulfilling its obligations to repay previous loans;
payment simplified and rapid loan installments as a method of payment weekly or monthly, or daily payment method in some microfinance programs;
high collection rates for the loan installments loan collection rates compared to the level of some of the traditional financial institutions;
use voluntary savings as a way of tools increases the borrower's ability to meet its own needs situational;
impose high interest rates to cover the high costs involved in microfinance transactions prices;
use of alternative approaches to collateral;
appropriate location and timing of the payment;
appropriate financial services in terms of speed, timing and value.
Features-
Related with small amount of finance
Service oriented
focuses on small entrepreneur
