Microfinance is a pivot of generating economic and financial services for entrepreneurs and small and medium business units

lacking access to banking and investment related services. The two main active mechanisms that catalyze for the delivery and sustainability of financial services to micro credit clients are relationship based banking for individual entrepreneurs and small businesses; and group-based models, where potential entrepreneurs synergize to apply for loans and other joint services as a group. The important principle of microfinance bank involves reserving monetary micro-credit loans for the untapped segments of society. In retrospect they are better than charity to bring an end to the cyclic poverty. The micro credit and micro financing initiatives offer people to take initiative in the field of business, agriculture, farming, livestock etc. In economic interventions like these the low lying economic sectors enhance their own potential effectiveness and economic attainability, creativity to innovate unique things. Increasing income and employement In addition to this spotlighting Bangladesh’s economic system the empowerment of women, improved nutrition and improved education of the borrower’s children are frequently aims of microfinance institutions such as Grameen bank chaired by Mr. Muhammad Yunus. Commercial banks were not designed to help those who don’t have assets previously. After that the question arisen in the mind of people that if commercial banks won’t provide services to poor then what do poor people do to increase their living standards? Loans in commercial banks are available but at a very high rate of interest. Savings services are also provide but with different objections and rules. For the upgrading and development of poor people, Grameen Bank, a microfinance institution, in Bangladesh was founded by Professor Muhammad Yunas in 1976. The aim of this bank was to provide financial and banking services to rural poor who weren’t able to achieve their target through normal banking system i.e. commercial banks. In 1983, Grameen bank was given status independent microfinance bank. At the moment the Grameen bank is owned 94% by his borrowers and 6% by the government. Microfinance institution in Bangladesh provides services which include microcredit loans, saving accounts, pension plans and loan insurance. Lack Collateral: Microfinance institution provides loans only to poor people. The rarer assets you hold the more you will get. Collateral means any deposit kept by a bank as security for the repayment of loans. Microfinance institutions do not require any security for the repayment of loans. There is no legal instrument required between the borrower and the lender that occurs in case of non-repayment. Borrower is not brought before the court in

helps them to cope with the hardships of life. such as Bangladesh's Food-for-Work program. Grameen bank has encouraged people to include in social activities. Empowering Tool for Women: Microfinance institutions in Bangladesh provide microcredit to poor but their special initiative is to provide as many loans to women. Muhammad Yunas. The current aim of MFIs in Bangladesh is to end up the cycle of poverty in every area where there banks are located. other targeted programs. illness. illiterate. and unemployed. promoting gender and improving household well-being. With access of micro insurance. Also when there's increased income within the people they can attain better health and educational facilities from the financial resources they are earning. studies have shown that women’s promote more overall output development of country as compared to men. A microfinance institution in Bangladesh ensures that the borrowers of MFIs have their children enrolled in regular classes. It has also taught people to live together and help their follow men to cope up with difficulties of life.3 million borrowers and 65% have managed to improve their socio-economic condition. It increases consumption level and decreases the sale of assets in time of difficulties. loss of assets etc. Factor of Improving Education and Health facilities: As microfinance in Bangladesh provides credit services.case of failure instead the person is fully supported by bank if it proves that they are unable to payback. and broad-based economic growth are required for those who cannot make productive use of microcredit to escape poverty. It targets the poorest of a poor with a particular emphasis on women who receives 95% of banks loan. Recent . with access to credit. founder of Grameen bank. Women in Bangladesh were neglected by a society were focused more by MFIs. All in all microfinance institutions are a great empowering tool of women. the person can cope with the situation of risks associated in future with death. Access to Microcredit. suggested that giving loans to women will give them access to money to but also they will be counted as a decision maker in the society which will help them to improve their living standards and to educate their children. Micro insurance: Poor people. It provides technical and vocational training to poor people to ensure appropriate use of credit loans. In addition. Grameen bank is best known for his “solidarity lending”. insurances etc. creation of small hospitals have increased health facilities. Clients of microfinance institution have today over 7. savings. Thus. Repayment of loans provided by MFIs is with weekly installments. In addition.

besides increasing the aggregate output of the . to get help from microfinance institutions and start utilizing there unique and innovative ideas. This has been so since the poor are scattered throughout the remote geographical areas where the outreach is so difficult and due to the rapidly increasing number of borrowers.000 credit officers type positions were created in Bangladesh whose households derive their livelihood from the provision of microfinance. If transactions cost are high than people will use informal forms of saving. Microfinance in Bangladesh has been established to provide credit and savings facilities. Saving are highly encouraged by MFIs to poor.e. Economy: Due to micro-financing institutions. people will get employed in their particular fields. Mobilization of Savings: Poor people save their assets in different form and in different purposes. If the confidence and trust is building properly than people will save in financial institutions. Real interest rate Community: The experience of micro-financing has been tremendously successful from the viewpoint of alleviating poverty from poorer sections of society in Bangladesh. most success has been achieved from the commercialization of micro-credit institutions.e. and set up their own businesses.g. Almost above 75. Micro-financing has allowed numerous communities to escape from the vicious cycle of misery. poverty and debt. access to account will prefer formal means of savings in MFIs.evidence from a re-survey of the same households suggests that microcredit has significantly contributed to reducing poverty (Khandker 2003). Poor save to use the savings in nearby future for e. which have. Poor would deposit only if it is provided by financial institutions with proper saving facilities. This enables diversified people. hospitalization. Liquidity of savings i. many small and medium enterprises have emerged in Bangladesh. Microfinance institutions in Bangladesh will use these deposits to lend others so that everyone can avail a opportunity credit lending They will save if appropriate facilities are available and they are as follows:     Security of savings is highly encourage factor. bad health. But. Rising Employment Level: When people will start up their own business the rate of unemployment will also fall greatly i. to cope up with marriage expenditures of son/daughter etc. who didn’t had any opportunity to contribute in the economy.

In an economy of only 6% rendering their services to the Healthcare an increasing brain drain of medical services could be potentially over attempted by locally set up nursing schools with the assistance of micro credit loans. Not only this will increase the healthcare facilities but will encourage students towards the contribution of educational arrays and will also improve employability and income aspects. the micro crediting can be termed as the most effective conceptual innovation in the Bangladesh’s economic history. helped in reducing the unemployment level. Moreover with increases in asset development and rise capital funds a momentum development approach has fractioned securing employment.3% growth. also known as career and technical education (CTE) or technical and vocational education and training (TVET) can be a vital source of learning to aid educational facilitation along with healthcare in Bangladesh. But due to small size of loans such institutions lend to borrowers. imitate low credit startups and generating self-employments making it the chief reason of it’s kind to bring development to the once known dry Bangla economy. Vocational Training: Vocational education (education based on occupation or employment).country and increasing economic self-sustainability. With unemployed citizens getting attracted to prospects of economic investment and expected returns the GDP has spiked to a record 2. when no such thing has been proved from extensive research. Thus in a nutshell. drastic changes have not yet been observed and critics have often complained of proponents of giving unwarranted attention to the “huge benefits accruing to economy”. This initiative would bring about a snow ball effect for the micro crediting history to come. .

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