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An important source of detailed data on selected microfinance institutions is the MicroBanking Bulletin, which is published by Microfinance Information Exchange. At the end of 2009, it was tracking 1,084 MFIs that were serving 74 million borrowers ($38 billion in outstanding loans) and 67 million savers ($23 billion in deposits).
The real average portfolio yield cited by the sample of 704 microfinance institutions that voluntarily submitted reports to the MicroBanking Bulletin in 2006 was 22.3% annually. However, annual rates charged to clients are higher, as they also include local inflation and the bad debt expenses of the microfinance institution. [20]
Indeed, the local microfinance organizations that receive zero-interest loan capital from the online microlending platform Kiva charge average interest and fee rates of 35.21%. [44] Rather, the principal reason for the high cost of microcredit loans is the high transaction cost of traditional microfinance operations relative to loan size. [45]
Village Banking, also called community banking, self-help groups or micro banking means to build an institution on grassroot levels. Financial literacy and money management training is a key factor to build a sustainable village bank. Further on, the village bank needs to be rooted in the community to experience ongoing support.
The Calmeadow Foundation was another important pioneer. The Microbanking Bulletin tracks solidarity lending as a separate microfinance methodology. Of 446 microfinance institutions worldwide that it was tracking at the end of 2005, 39 lent only through this method, while another 205 used a mix of solidarity and individual lending.
The concepts of micro-enterprise and microfinance were pioneered in 1976 by Nobel Prize recipient Muhammad Yunus, founder of the Grameen Bank (Bank of the Rural), in Bangladesh. The bank was established for the purpose of making small loans to the poor − predominantly women – to help them obtain economic self-sufficiency.
Financial inclusion is the availability and equality of opportunities to access financial services. [1] It refers to processes by which individuals and businesses can access appropriate, affordable, and timely financial products and services—which include banking, loan, equity, and insurance products.
Community banking is a form of empowerment-based economics which falls under the larger umbrella of micro-finance.Micro-finance as a whole is focused on the entrepreneurship of individuals, generally with a goal of lifting low-income or disadvantaged groups out of poverty and providing the means for them to prosper. [3]