A bank is a dedicated microfinance in extending small loans , referred to as micro-credit , to individuals, businesses and organizations in low-income areas , including underdeveloped countries , where small amounts of money can go a long way. Some financial institutions entirely dedicated to microfinance , while others are part of larger companies , such as global investment banks . Ultimately , this type of bank provides credit to those who otherwise would not have access to this form of capital . These loans to foster the development of small businesses and provides tools for entrepreneurs to follow their dreams , all in an effort to alleviate global poverty in vulnerable areas.
![Functioning of Microfinance Bank How you Can Get Loan to Startup]( "Functioning of Microfinance Bank How you Can Get Loan to Startup")
In most cases , a microfinance bank participates in social investment - that is, to promote growth and economic development in a vulnerable area with the extension of loans to families , businesses and entrepreneurs . These financial institutions are still intending to produce profits from microfinance investments , but also take interest in the social development of a country impoverished . During this process , the bank lends financial expertise , business resources , and skills related to deprived areas than financial support.
The history of microfinance starts with a man and a village . Grameen Bank was the first bank microfinance , and was founded by Muhammad Yunus, a native of Bangladesh . It was justified by the fact that Bangladesh business owners had to return much of their profits on loan - Issuers . In 1976 , Yunus extended first microfinance loan from the personal account of a group of women in a village in Bangladesh , and the concept grew from there . His intentions were not to gouge borrowers , but instead to provide reasonable financing on terms that would not cripple the economy, but rather enhancing development.
Microfinance loans are designed to provide funding to the most deprived areas of the world , including sub - Saharan Africa and the Democratic Republic of Georgia , where pockets of the population might have otherwise not have access to any kind of banking institution . Apart from small loans , people can gain support , including education and training for personal development , in addition to saving and insurance products . The aim is to break the cycle of poverty in an area.
Loans for women living in poverty are among the most widely adopted forms of credit in the field of microfinance. This is due to the fact that 70 % of the world population struggling through extreme poverty are women , according to Opportunity International, a US-based non - profit organization that works with microfinance lenders . A woman is less likely to receive formal training , business training , or a prominent role in society in an underdeveloped area , and without adequate financial support , can never overcome these obstacles
The history of microfinance starts with a man and a village . Grameen Bank was the first bank microfinance , and was founded by Muhammad Yunus, a native of Bangladesh . It was justified by the fact that Bangladesh business owners had to return much of their profits on loan - Issuers . In 1976 , Yunus extended first microfinance loan from the personal account of a group of women in a village in Bangladesh , and the concept grew from there . His intentions were not to gouge borrowers , but instead to provide reasonable financing on terms that would not cripple the economy, but rather enhancing development.
Microfinance loans are designed to provide funding to the most deprived areas of the world , including sub - Saharan Africa and the Democratic Republic of Georgia , where pockets of the population might have otherwise not have access to any kind of banking institution . Apart from small loans , people can gain support , including education and training for personal development , in addition to saving and insurance products . The aim is to break the cycle of poverty in an area.
Loans for women living in poverty are among the most widely adopted forms of credit in the field of microfinance. This is due to the fact that 70 % of the world population struggling through extreme poverty are women , according to Opportunity International, a US-based non - profit organization that works with microfinance lenders . A woman is less likely to receive formal training , business training , or a prominent role in society in an underdeveloped area , and without adequate financial support , can never overcome these obstacles