Benefits of Microfinance – Microfinance | Management Notes

Benefits of Microfinance | Microfinance / Microcredit | Loan/Credit to Poor | What are the benefits of microfinance? | How does microfinance reduce poverty? | Why is microfinance so important?

What is meant by microfinance?

Microfinance is a type of banking service that is provided to unemployed or low-income individuals, or groups who otherwise have no other access to financial services. It is a financial service that offers loans, savings, and insurance to entrepreneurs and small business owners who don’t have access to traditional sources of capital, like banks or investors.

What are the benefits of microfinance?

Some of the benefits of Microfinance are as follows:

  • Improving the quality of life through the provision of inclusive and sustainable microfinance services to economically disadvantaged people.
  • Empowering rural people for attaining self-sustaining socio-economic upliftment.
  • Reaching to unreached for inclusive banking for sustainable development economic promotion, livelihood improvement & Social development through microfinance plus programs.
  • To sensitize and capacitate communities through community organizations development resource management and equal distribution of resources.
  • Participation for women and underprivileged sections of the societies.
    Provide micro-finance services in rural areas.
  • Social mobilization to sensitize and capacitate communities through community organizations
  • Act as an intermediary between development programs of the government, NGOs, bi-lateral and multi-lateral projects, and local.
  • Enhance the capabilities of Community based organizations by organizing appropriate training and involving them as partners in the development intervention process.
  • Organizing different skills training programs for disseminating improved technology in tourism, agriculture, livestock, and off-farm activities.
  • Provide support services to local institutions for the development of agriculture, irrigation, drinking water, cottage and rural industries, forestry, and alternative energy and encourage them to undertake feasible and appropriate enterprises.
  • Promote equal access to opportunities, resources, ownership
    Focus on low-income households, assets-less self-employed in the informal sector to uplift their livelihood increasing involvement in economic activities and income-generating activities, Besides all these financial services, it also focuses on their social development, cultural promotion, educational development, skill development & many more

Why is microfinance so important?

Because it acts as an intermediary between development programs of the government, NGOs, bi-lateral and multi-lateral projects, and local. This enhances the capabilities of Community based organizations by organizing appropriate training and involving them as partners in the development intervention process.

How does microfinance reduce poverty?

By improving the quality of life through the provision of inclusive and sustainable microfinance services to economically disadvantaged people.

What are the types of microfinance?

Credit unions, Commercial banks, NGOs , Cooperatives, and sectors of government banks.

What is an example of microfinance?

Financing on micro-enterprises like basket-making, sewing, street vending poultry farming.

Also Read:

Micro-credit Vs. Microfinance

Difference between traditional financing and micro-financing

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