| dc.description.abstract | Microfinance is a kind of lending that aims at businesses that are deprived of conventional access to lending resources. Availing of the traditional bank loan comprises substantial documentation proof which reinforces the ability of repayment. Sometimes, an established credit history with high credit scores stands testimonial for exhibiting someone’s creditworthiness. However, microfinance offers a loan to issue capital to low-income business owners. The offerings consist of microloans, micro-saving, and micro-insurance. The brainchild of Mohammad Yunus of Bangladesh, microfinance offers women throughout the globe, financial and non-financial services, predominantly in rural areas. Based on the research, it was concluded that women are much less likely to default on their borrowings than men. Microfinancing gives them opportunities to build their own business by employing their skillset. This helps them create a stable income. Additionally, it aids in job creation and supports their children in education.
In India, poor people often engage themselves in borrowing from informal moneylenders who often used to charge astronomical interest rates. But rising awareness has opened the door for microfinance. With the objective of upliftment of the underprivileged, NBFCs have been established. Some of the banks that deal in micro-financing and small financing are Bandhan Bank, Muthoot Microfinance, AU Bank, Equitas Small Finance Bank and Fincare Small Finance Bank. Although the sector has been prevalent for a few decades, the aim of alleviating poverty and upliftment has not been properly addressed. Microfinance Institutions have been dealing with problems related to operational costs, changing RBI regulations, and over-indebtedness. The probable solution that could bring down their operational cost and eventually the rate of interest would be digitalization. | en_US |
