Micro finance bank is the basic instrument through which the whole concept of micro finance is executed. According to the basics of micro finance, it is a term, which is related with promoting the habit of savings.
At the same time the concept also aims at providing loans and insurance to the poor people to support their business, which can also be termed as microbusiness. There are three types of sources, which are related to microfinance. These are the formal, semi-formal and informal institutions.
The microfinance banks are related to the formal institutions. There are several micro finance banks working all over the world. The prime aim of these banks is to provide institutional financial services to those people who are denied from all these because of their poverty.
The main-stream banks and financial institutions are not interested to provide any kind of loan to the poor people because primarily they are not able to provide any kind of collateral and the loan costs are also very high in the small loans.
The micro finance banks are founded with an aim to fill up this gap. The microfinance banks are doing an excellent job. These banks are not only providing loans to these people but also playing their role in changing the economic structure of the society as well as the whole country. The Aga Khan Agency for Microfinance, established the first microfinance bank, which is at present operating in Pakistan and Afghanistan.
The Grameen Bank of Bangladesh is working very efficiently in the country. The bank has been found in 1976 by Dr. Muhammad Yunus. Right now the bank is operating through 1000 branches and providing microfinance services to more than 28,000 villages. The number of borrowers are increasing at a rate of 20% every year. The loan repayment rate, because of which the commercial banks denied these people, is almost 98%. The unique feature of this bank is that 90% of the borrowers are women.
Pag IBIG Fund
It is situated in Philippines and is one of the steady financial institutions of the country. The institution is owned by the national government. The borrower strength of this corporation is nearly 1.2 million and the capital is about US $800 million.
The Asian Development Bank is providing microbanking services to the people of the continent. Through the Microfinance Development Strategy the bank aims at providing institutional Financial services to the poor and deprived people.
Last Updated on : 1st August 2013