What is Microfinance

Finance is the blood of any organisation or country to survive and remain firm in the long run. Normally inventions and findings in science come from the technologically advanced and financially strong countries. But surprisingly, the most crucial finding in finance has not come from any superpower or from the world of the rich. The hedge fund or the liquid option note were not important but for a developing and a poor country like India the finding that poor can save, can borrow money with an intention to repay it was more important.This is nothing but the world of microfinance. Professor Mohammad Yunus, founder of the Grameen Bank in Bangladesh gave birth of microfinance. Since its birth, the field has evolved tremendously with the adaptation of professor Yunus’ ideas to various countries and context. The private institutions and banks are keeping an eye in the field of microfinance which was originally assumed to be domains of non-government organisation (NGO). Indian banks have become aware of the potential of microfinance and have started to compete with MFIs, particularly in the case of lending to SHGs, which have experienced significant growth since 1999. Despite of the current enthusiasm in the donor community for microfinance programs, Consultative Group to Assist the Poorest (CGAP) estimates that microfinance probably reaches fewer than 5% of its potential clients. This might help in estimating a rough figure of potential client not reached by microfinance institutions. There have lot of innovation in microfinance done in India as a huge population of world poor resides in India. Hence there is a huge untapped market for microfinance institutions.