Poverty alleviation and micro finance payback.

Byline: Nazir Ahmed Shaikh

Introduction

Microfinance services have emerged as an effective tool for financing micro-entrepreneurs to alleviate poverty. It is a tool to enable poor to start their own business to survive in the society. It refers to savings, insurance, loans, transfer services, microcredit and other financial products to customers who have low incomes.

As these does not have any physical collateral and have a higher risk in return payments of the borrowing money, therefore they have only small credit in views of financial institutions and the amount of money that they can borrow is relatively small. Especially in developing countries, microcredit makes it poor for self-employment projects that generate income, allowing them to improve the quality of life for themselves and their families.

What is the difference between microfinance and microcredit?

Microfinance refers to savings, insurance, loans, transfer services, microcredit and other financial products to customers who have low incomes. Microcredit is a small amount of money provided to the client by the Bank or other institutions. Because the poor people have no physical collateral and have a higher risk in return payments of the borrowing money, that's why they have only small credit in views of financial institutions and the amount of money that they can borrow is relatively small.

Features of microfinance

Microfinance provides access to low-income financial and non-financial services access to money to start or develop their income generating activities. Individual loans and savings for the poor Small customers. Microfinance has been noted with satisfaction that some micro-entrepreneurs and poor people it can be "repaid", that is, how can you pay the loan and interest on time, and also make savings; Services are designed to meet your needs. Microfinance has created financial products and services, with low-income people to be customers of the bank (Khan andRahaman, 2007).

The characteristic of this model are following:

* Provides short term loan (one year).

* Funds mainly granted to women

* Weekly compensation

Poverty alleviation is one of the most important components of Sustainable Development Goal (SDG) of United Nation (UN). Financing micro-entrepreneurs for job creation and income generating activities shows some success in many developing countries. Consequently, poverty alleviation is necessary to deal with by any effective program related to sustainable development.

Background

In the past 25 years, microfinance service has been considered as one of the most significant innovations in development policy around the world. Microfinance service offers not only the microcredit but also the allied services such as consulting and training for the microenterprises as well as market information and access to wider market...