AWARENESS OF MICRO FINANCE IN DEVELOPING ECONOMIES
A developing economy, also called as a less developed country or an underdeveloped country, is a nation or a sovereign state with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. Microfinance is widely used in these kinds of countries.
Micro finance institutions (MFI), were encouraged for the precise purpose of providing financial services for the poor, specifically to the developing economies, especially with credit, in order to alleviate poverty, which is considered as a complex phenomenon. Almost half of the population in developing economies are living in the rural areas and most of them belong to the agricultural sector, which is one reason as to why they are stagnant.
The policies of the government are not benefitting the rural economies, even though the whole economic development is relying heavily over the production from agriculture in most of the emerging countries. Because of such obstacles, poverty is taking over the people in this economy.
Due these hindrances, the people in developing economies are helping themselves by taking entrepreneurial startups that are financed, supported and run by a number MFIs, who are working quite hard for helping them out in gaining health care, financial support and educational facilities and getting free from hunger. They have been involved in building and developing infrastructure such as shelters, research centers, hospitals and schools for improving the standard of living and keeping people safe from the disasters, often serving in poor communities where banks often cannot be found.
Lately, the microfinance sector has reached the realm of commercial organizations and the idea of sustainable microfinance has become an integral part of the development of financial markets in many countries. This led to the gross loan portfolio in developing countries to increase by more than 1700% and its number of active borrowers increased by 400%.
Some MFIs operating in developing countries such as Bangladesh, Vietnam, Thailand, and indonesia jointly have achieved greatest savings mobilisation and loan distribution in terms of the worldwide Gross National Product (GNP). In South Asia, three MFIs such as Grameen Bank, BRAC, and ASA serve around 75% poor community where a high number of their clients are poor woman, and the intensity of outreach is also measured in terms of woman clients.