Is Micro Finance Really Micro
- Submitted by: deepakjodhani
- Views: 568
- Category: Other
- Date Submitted: 11/06/2010 09:34 AM
- Pages: 2
- Report this Essay
IS MICRO FINANCE REALLY MICRO???
By – DEEPAK JODHANI
Well a lot of headings today are talking about a new field or lets say a new chapter in finance called “Micro finance” which is nothing but in simple terms can be defined as –
“The provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services “
But the question here arise is that –“ is micro finance is really micro”?
Well while answering this question I understand it is extremely important to discuss the scope of this vary topic……Traditionally we have seen that lenders were only interested in those borrowers who are already having money or lets say who have something which is of worth in terms of lenders..while following this tradition a huge group which is needy and who deserve to get money (by the way of lenders) for their development is discarded in large terms which created imbalance in society. On one side there are those who already have , who barrow and grow and on the other side there are those who neither have , nor they borrow and become poor and poor. This gap attracted principle called PARETO 20/80 principle which says-
“To focus on trivial many than vital few”
In India we have maximum population with very low income which according to Pareto principle:
• Generate huge market for lenders
• Deserve to grow equally
Well in real terms this is not just meant for India but for the whole world. In a very recent G8 summit some of the very important points which broaden the scope of the term micro finance are :
• Poor people need savings, insurance like services in addition to loans.
• Micro finance must help poor to raise income and build up assets.
• It means integrating the financial needs of poor people into a country's mainstream financial system
• The job of government is to enable financial services and not directly provide them.
Indian government and private players are doing their...
By – DEEPAK JODHANI
Well a lot of headings today are talking about a new field or lets say a new chapter in finance called “Micro finance” which is nothing but in simple terms can be defined as –
“The provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services “
But the question here arise is that –“ is micro finance is really micro”?
Well while answering this question I understand it is extremely important to discuss the scope of this vary topic……Traditionally we have seen that lenders were only interested in those borrowers who are already having money or lets say who have something which is of worth in terms of lenders..while following this tradition a huge group which is needy and who deserve to get money (by the way of lenders) for their development is discarded in large terms which created imbalance in society. On one side there are those who already have , who barrow and grow and on the other side there are those who neither have , nor they borrow and become poor and poor. This gap attracted principle called PARETO 20/80 principle which says-
“To focus on trivial many than vital few”
In India we have maximum population with very low income which according to Pareto principle:
• Generate huge market for lenders
• Deserve to grow equally
Well in real terms this is not just meant for India but for the whole world. In a very recent G8 summit some of the very important points which broaden the scope of the term micro finance are :
• Poor people need savings, insurance like services in addition to loans.
• Micro finance must help poor to raise income and build up assets.
• It means integrating the financial needs of poor people into a country's mainstream financial system
• The job of government is to enable financial services and not directly provide them.
Indian government and private players are doing their...