Mohammad Yunus

Microfinance:Mohammad Yunus

What is Microfinance?

Microfinance

According to The Economist, microfinance has a broad range of definitions. It could mean anything from the alms provided by a priest to the services provided by the state banks and the credit unions to their poor clients. One of the definitions appropriate for our project is the different kinds of financial services like insurance, deposit accounts and loans provided to individuals and households with low income and poor. The aspect of microfinance which differentiates it from other kinds of financial services is that no collateral is required as a security for a loan. Reputation is the basis on which money is provided. Many countries in the developing world do not have a formal system of property rights and this prevents them from providing proper collateral. Therefore, traditional financial services cannot be provided to the poor in these countries making microfinance incredibly invaluable. Without microfinance, the only way for the poor to procure loans would be to seek the services of the money lenders who many end up charging them an exorbitant fee and exploit the clients who may not be able to repay the loan on time.

Mohammad Yunus

=Banker to the poor: Mohammad Yunus in an Interview:= http://www.youtube.com/watch?v=YxpTFwQx-A8

Conclusion

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