Fiinovation - Microfinance Investment Vehicle

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Author: Anand Kumar

Microfinance investment vehicle, an mediator that mobilizes funds from investors to MFIs in the developing countries. They are the supplier of financial services to poor or low-income earning individuals, very often women, which may include microcredit's i.e. very small loans, micro savings programs and micro-insurance. The term also refers to the practice of sustainably delivering those services. It caters a full range of banking needs for poor people. Those who promote microfinance generally believe that such access will help poor people out of poverty. Micro finance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services.

Through microfinance many poor people and poor households are possible to have permanent access to high quality financial services, including not just loans but also savings, insurance and fund transfer. Benefits of microfinance helps to manage the assets of the poor and generate income. Through Institutions such as credit unions, financial non-governmental organizations and even commercial banks poor people can obtain small loans and safeguard their savings. The limitations of microfinance are that through this savings plan participants are losing money by having to pay a fee. The user can also pay back their loans whenever they chose therefore encouraging a borrower to have various outstanding loans. The lender is also vulnerable in that there is no guarantee of the loan being repaid in the given arranged timeframe, and the cost to defaulting are not defined. When looking at a micro-finance enterprise, there are three main benefits and limitations for the model. These are based on a basic micro-finance initiative though they can be applied to many variations. When looking at the three benefits and limitations, they revolve around three key ideas, poverty, mistrust, and promoting change.

According to Fiinovation a micro-finance enterprise wishes to address these issues in a positive way. For example, micro-finance can be an alternative program to address poverty reduction where the tools needed to raise an individual or a family out of poverty are given to them directly. In a micro-finance project these tools include money primarily, and may also be accompanied with a savings program, and financial help. Along with poverty reduction, a micro-finance initiative can aim to avoid a general sense of mistrust between the citizens and their national banks. The money in this case, is not coming from a bank, but rather within the community which allows those participating to foster social capital and community cohesion. Lastly, a microfinance program can promote larger poverty reduction movements by increasing the financial knowledge of the average citizen. Fiinovation believes microfinance can uplift people from poverty, but it also needs to reach out to the people who are at the bottom of the pyramid.

Fiinovation Fiinovation is the India’s No.1 leading fundraising company; we help all the NGO’s in their social project with new fund raising opportunities that are why people called us Innovative Financial Advisors Pvt. Ltd.

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Fiinovation , investment , Microfinance