What is Microfinance ?

Microfinance is the provision of financial services to individuals who have little or no other means of access to credit or other financial services. Microfinance is primarily concerned with developing countries and particularly remote and rural areas. More specifically microcredit is provision of small loans.

Contrary to most people's initial assumptions, the rate of default on microfinance loans is usually surprisingly lower than that of conventional bank loans in developed economies.

The client group for a given financial organisation depends on that organisation's mission and goals. Among them may be female heads of households, pensioners, artisans or small farmers. A microfinance institution (MFI) is an organization that provides financial services targeted to the poor. While every MFI is different, all share the common characteristic of providing financial services to a clientele poorer and more vulnerable than traditional bank clients.