What is Microfinance ?

Latha, a 29-year-old married woman with three children borrowed Rs. 18,000 from the micro-financial service of a bank to set up a small provision store in Kothaipalli, a small village, in the north of Andhra Pradesh. Within a year, she started earning Rs. 3,500 a month from the store. With this money, she was able to provide her children a good education at a local private school. She was a part of a self help group in Andhra Pradesh which received financial assistance from a  Multinational Bank. These are real-life examples to illustrate how the micro-lending initiatives of banks affect the lives of the poor in India.

Basic financial services, like credit, savings and insurance, give people an opportunity to borrow, save, invest and protect their families against risk. But with little income or collateral, poor people are seldom able to borrow money from banks and other formal financial institutions. Even when they do have income or assets, the amounts they require are often too...

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