The term micro finance became popular from the late 1970 but it was in practice in the nineteenth century too. Evidences state that the practical use of the term was made in Germany in 1864 but at that time the term itself was unknown.
In todays context, the question, what is micro finance, can be answered in many ways. The term micro finance is generally used for financial services. These services are provided to the below poverty line people in form of microcredit, microinsurance and microsavings.
The aim of micro finance is to provide the poor people with the opportunity to save some good amount of money. The poor cannot save such huge amounts at once. So, these people are provided the chance to save very little but in a regular manner to get a big amount in the future.
This huge sum can provide some good options to the poor people and can also inspire them to try and save much more in the future. Micro finance is at present used as a tool to fight out poverty from the world.
The concept of micro finance is basically emerged for those people who are too poor to get any kind of banking facility. But these people also saves some amount from their daily income, which is very low. The real problem is with the mode of saving. If someone saves in his own home, then the accumulated money is in risk because their are certain factors, which can make the home, a risky option for savings. Among these factors there are the natural disasters, hunger, disease and many more.
Another aim of micro finance is to provide the poor people with loans which are provided with very flexible terms and low interest rates. It has been found through several researches that many people from the poor community has the talent to organize business of different nature. They only need the financial back-up to prove themselves. At the same time, if these people are provided with the financial assistance the economic condition of the society is also bound to change. With these, the question what is micro finance has assumed a new aspect altogether.
Last Updated on : 1st August 2013