Micro-financing
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Microfinancing
Evolution: • It was the year of 1974. Bangladesh was struck by a great famine. • A professor of economics at University of Chittagong was very worried o the disaster. During a visit to the nearby village of Jorba, he was astonished to find that a sum of $27 could radically change the lives of 42 people in the village. This was the sum of money they collectively needed to buy bamboo to make the stools they sold to make a living. He took $27 from his pocket and made 42 loans to the stool makers in that tiny village. They were able to pay him back with interest and take a step towards lifting themselves out of poverty.
What is microfinancing?
• "Microfinance is the supply of loans, savings, and other basic financial services to the poor." • “Microfinance, is banking the unbankables, bringing credit, savings and other essential financial services within the reach of millions of people who are too poor to be served by regular banks, in most cases because they are unable to offer sufficient collateral.”
History of microfinancing: Micro-financing in 1800s century: •Lysander Spooner
Micro-financing at present • Mohammad Younas • Akhtar Hameed Khan
Grameen‘s success and its impact
Report of WORLD BANK: • 16 Million people • 7000 micro-finance institutions
International year of micro-financing: 2005 was declared as the international year of micro-financing
Institutions of microfinancing: • • • •
Grameen Bank Morgan Stanley Deutsche Bank Citi group of Banks
Microcredit • Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to others living in poverty.
Principles of microcredit: • Microcredit is based on a separate set of principles, which are distinguished from general financing or credit. Microcredit emphasizes • Building capacity of a micro-entrepreneur, • Employment generation, • Trust building • Help to the micro-entrepreneur on initiation and during difficult times.
Five goals of Microcredit: • The International year of Microcredit consists of five goals: • Assess and promote the contribution of microfinance to the MFIs • Make microfinance more visible for public awareness und understanding as a very important part of the development situation • The promotion should be inclusive the financial sector • Make a supporting system for sustainable access to financial services • Support strategic partnerships by encouraging new partnerships and innovation to build and expand the outreach and success of microfinance for all.
Strengths
Micro-financing in developed world
USA:
Role of developing countries— a recent Forbes ranking: US business magazine Forbes ranked world's top 50 microfinance institutions. India and Bangladesh are the home of most MFIs. • Seven of them were from India, most of any country. • 5 from Bosnia and Herzegovina, • 4 each from Morocco and Peru, • 3 from Colombia, • 2 each from Ecuador, Ethiopia and Serbia, • 1 each from 15 other countries, Russia, Pakistan, Mexico, Brazil etc. • Grameen Bank ranked 17th in the list. Forbes magazine states: • "microfinance has become a codeword of the decade for development of the poor." • "Billionaires, global leaders and Nobel Prize recipients are hailing these direct loans to uncollateralized would-be entrepreneurs as a way to lift them out of poverty while creating self-sustaining businesses".
Grameen Bank
History Grameen Bank started in 1976 when Professor Muhammad Yunus launched a research project to examine the possibility of designing a credit delivery system to provide banking services targeted to the rural poor. The organization and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize in 2006; the organization’s Low-cost Housing Program won a World Habitat Award in 1998.
Operational statistics:
Equity of the bank:
• the borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh.
Kashf Foundation
Evolution: • It was the year of 1974. Bangladesh was struck by a great famine. • A professor of economics at University of Chittagong was very worried o the disaster. During a visit to the nearby village of Jorba, he was astonished to find that a sum of $27 could radically change the lives of 42 people in the village. This was the sum of money they collectively needed to buy bamboo to make the stools they sold to make a living. He took $27 from his pocket and made 42 loans to the stool makers in that tiny village. They were able to pay him back with interest and take a step towards lifting themselves out of poverty.
What is microfinancing?
• "Microfinance is the supply of loans, savings, and other basic financial services to the poor." • “Microfinance, is banking the unbankables, bringing credit, savings and other essential financial services within the reach of millions of people who are too poor to be served by regular banks, in most cases because they are unable to offer sufficient collateral.”
History of microfinancing: Micro-financing in 1800s century: •Lysander Spooner
Micro-financing at present • Mohammad Younas • Akhtar Hameed Khan
Grameen‘s success and its impact
Report of WORLD BANK: • 16 Million people • 7000 micro-finance institutions
International year of micro-financing: 2005 was declared as the international year of micro-financing
Institutions of microfinancing: • • • •
Grameen Bank Morgan Stanley Deutsche Bank Citi group of Banks
Microcredit • Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to others living in poverty.
Principles of microcredit: • Microcredit is based on a separate set of principles, which are distinguished from general financing or credit. Microcredit emphasizes • Building capacity of a micro-entrepreneur, • Employment generation, • Trust building • Help to the micro-entrepreneur on initiation and during difficult times.
Five goals of Microcredit: • The International year of Microcredit consists of five goals: • Assess and promote the contribution of microfinance to the MFIs • Make microfinance more visible for public awareness und understanding as a very important part of the development situation • The promotion should be inclusive the financial sector • Make a supporting system for sustainable access to financial services • Support strategic partnerships by encouraging new partnerships and innovation to build and expand the outreach and success of microfinance for all.
Strengths
Micro-financing in developed world
USA:
Role of developing countries— a recent Forbes ranking: US business magazine Forbes ranked world's top 50 microfinance institutions. India and Bangladesh are the home of most MFIs. • Seven of them were from India, most of any country. • 5 from Bosnia and Herzegovina, • 4 each from Morocco and Peru, • 3 from Colombia, • 2 each from Ecuador, Ethiopia and Serbia, • 1 each from 15 other countries, Russia, Pakistan, Mexico, Brazil etc. • Grameen Bank ranked 17th in the list. Forbes magazine states: • "microfinance has become a codeword of the decade for development of the poor." • "Billionaires, global leaders and Nobel Prize recipients are hailing these direct loans to uncollateralized would-be entrepreneurs as a way to lift them out of poverty while creating self-sustaining businesses".
Grameen Bank
History Grameen Bank started in 1976 when Professor Muhammad Yunus launched a research project to examine the possibility of designing a credit delivery system to provide banking services targeted to the rural poor. The organization and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize in 2006; the organization’s Low-cost Housing Program won a World Habitat Award in 1998.
Operational statistics:
Equity of the bank:
• the borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh.
Kashf Foundation
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