The Microfinance started with the idea of helping the poor and the low-income individuals financially so that they can find a positive solution to come up in their life. But, today the microfinancing concept is also extended to certain small businesses that are unfortunate to avail the help of the financial mainstream either due to poor credit or due to the institution’s stringent policies and therefore, a widely growing financial concept of the era. But, Microfinance is not limited to the microloans, there are other options or products involved in the concept, which we are here to discuss in detail.
Microloans or microcredit is the financial assistance offered to the growing business, whose value is smaller in number than the one that can be availed from the conventional bank. Initially, microloans were limited to a maximum of $100 offered to the micro-entrepreneurs running micro-enterprises in the developing countries. But, today the microloans are offered to even the small business entrepreneurs in the developed nations like the USA, typically in the range of $35000 – $50000, appreciably. On an average, the interest rates are higher than the conventional bank’s interest rate but, since it is predominantly a group lending process, the repayment rate is also higher, admirably!
Everybody has the right to save for their future and so the people with the low-income, who can be best benefitted by this Microsavings scheme. Unlike the savings scheme of the conventional banks that expect minimum balance for the participation, a person with a Microsavings account can save as much little as possible without worrying about the minimum balance factor at all. By this way, they can grow their little money uncomplicatedly to meet their future needs, satisfactorily!
While financial emergency seems unbearable for the affluent, understand the pathetic state of the financially deprived, for whose rescue this concept of Micro-insurance arose. Just like the traditional insurance process, this micro-insurance process too pools the risks together to offer the suitable risk management benefits but, by only accepting lower premiums and policy amounts, favoring the current financial state of the pursuers, appreciably. Thus, low-income individuals can now safeguard them against any threatening conditions like the death, illness, natural calamities and so on that would greatly alleviate their fear about the future, certainly!
Thus, within the significant concept of the Microfinance there lies, at least, 3 more significant variations or the product, each designed to cater to the practical financial needs of the respective individuals, appropriately.