Microfinance is the provision of a broad range of financial services such as uncollateralized loans, deposits, money transfers, and insurance to poor  and low-income individuals and households who  would otherwise not have access to these services from conventional banks. Microfinance has garnered significant attention within the international development community for its potential to reduce poverty and increase the quality of living in developing countries.

Poor and low income individuals often lack stable employment or a verifiable credit history making traditional borrowing from conventional banks virtually impossible

Microfinance is a ground-breaking mechanism that empowers people suffering from extreme poverty (largely women) to start their own businesses, become financially independent and successfully escape the cycle of poverty. This mechanism originated in developing countries and is now being used to reduce poverty around the world.

Microfinance primarily uses a peer group framework in which loans are undertaken by a group of individuals who are jointly responsible for ensuring repayment of each of the loans and preventing default. BRAC and Grameen Bank in Bangladesh are two of the major institutions that have pioneered the field of microfinance.


DATA

The Current State of Microfinance The top five nations ranked by the number of microfinance users Rank Country name Total Borrowers Number of MFI's Average Amount Borrowed Penetration Ratio １ Bangladesh 2,4000,000 70 350,000 35% ２ India 10,700,000 106 100,000 3% ３ Vietnam  5,800,000 12 500,000 11% ４ Indonesia 38,00,000 42 900,000 25% ５ Mexico 3300,000 40 850,000 14% Source: CGAP Report Growth of BRAC Microfinance Program Source: CGAP Report