The origin of Microfinance:
Since it started in 1983 by Mr. Muhammed Yunus, a Bangladeshi economist, and banker, the growth is still on and it’s accelerating. I am talking about the Micro Credit or Micro Loans which we also know it as Microfinance system.
Microfinance organizations are contributing to the cause of helping the poor and underdeveloped sections of society. The demands for Microfinance services are ever-increasing in developing countries like India. Here more than 62% of the total population is poverty-stricken.
The Growth Expectation:
The Microfinance sector is expected to see huge growth in the upcoming years. By 2025, the Indian Microfinance Market is expected to see 40% total growth. The world can see huge growth in the MFI industry and expected growth could reach $14 billion.
Why Microfinance Sector is growing?
MFIs (Micro Finance Institutions) are not only popular in Developing and poor countries, but also in developed nations. This industry is actively contributing to the growth prospects of the nation’s economy. There are several reasons that we can identify for the growth of the Microfinance sector, worldwide.
- Huge demand in Rural and Unreachable areas
Microfinance Companies bring financial facilities to the impoverished section of society. In India, we have more than 62% of the total population is grounded under poverty. They can’t access general banking services to open a savings account or apply for loans as there are large numbers of rules and regulations to follow.
Microfinance Companies are doing an excellent job to provide financial support to needy people. They are reaching rural and remote areas to serve them. As the demand and business prospects are growing, they are spreading in other areas too.
- Helping Small Businesses, MSMEs to grow
The working prospects of the MFIs are not only for the poor individuals but for the unorganized business sectors too. If we can check the types of Microfinance companies in India, we will get a clear picture.
There are primarily 4 types of Microfinance Organizations we can find in India.
- Self Help Group
- Joint Liability Group
- Cooperatives
- Grameen Bank type of Institutions
A larger amount of Microfinance Institutions in India is working as NGOs. They don’t concentrate on profit. Their sole purpose is to develop the overall life of indigent segments of the populace. Also, bank-like profitable organizations are also getting popularity for their services.
Bandhan Bank, Arohan Finance, BSS Microfinance are some of the post popular Microfinance Institutions in India.
- Microfinance Services by Leading Banks:
Some of the leading banking institutions have already started to provide Microloans to the masses. There are SBI (State Bank of India), ICICI, Axis Bank that provides microfinance services to low-income individuals and eligible businesses.
Integration of Modern Technologies:
The integration of modern technologies into Microfinance services has made it possible for the industry to grow. Most of the MFIs are not utilizing top software for Microfinance Loan Management in India. This tool works like general banking software. It helps the MFIs to manage their microloan operations very easily.
In this era of Digital Transformation, Tech-based companies are incorporating web technologies like PHP, .Net, Java, JavaScript in business management applications. This way the business management software is getting more advanced and it is helping the MFI sector to grow.
If we look deeply, we can see that both the Microfinance sector and software industry is getting benefitted from each other. To make it better, Software companies are using advanced automation systems to make the business management tool, more effective.
Modern microfinance companies not only provide microloans and micro-savings opportunities to their clients, but they have also enabled mobile banking, ATM services, and many more.
If anyone can check the features of Microfinance Software, they can feel the transformation. It comes with all the modules of core banking and has many extra sections for Microfinance.
As time will change, so the industry will. Everyone is trying to adapt themselves to the tide of time. Things are much different now as it was in 50 years ago. The microfinance industry is getting revolutionized with the demand from the Market. Let’s see how far it can go.
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