Giving loans and financial services and facilities to people with low income who don’t have access to traditional banking system. Usually traditional banks not providefinancial services to people with little or no cash income. However risks exist because the bank has little recourse against defaulting borrowers.
Help for the development of a country’s financialsystem
It is believed that this system will give a chance to poor people to get out of poverty: providing poor people the capital they need to open their own business or to expand it
However there islow information concerning the benefice of microfinance. In fact, over-borrowing can be a danger for poor people
Lending money to poor people has a long term view because it can develop a healthynational financial system
Success of Grameen Bank inspired the entire world
WHAT IS A MFI (Microfinance Institution)?
Organization providing financial services to people with low income andvulnerable with no access to traditional banking system
Exist many kinds of microfinance institutions : structure or mission
80’s: emergence of non-governmental organizations providing little loansto poor people
90’s: became financial institutions
Since these years these non-governmental financial institutions have proven that poor people are reliable and can have access to financialservices
Registered legal organizations
Offer different financial services
Not follow bank regulation
Can be government-owned
Can be member-owned
Can be formed bysocial-view shareholders
Can be form by profit-maximizing shareholders
The services a MFI offer are limited by the structure of the institution
Way to help people so the name ofcharitable MFI corresponds. However it consists on a MFI which is not aimed at profit
Role of donations: charitable MFIs exist thanks the help of donations
International and private donors,...