Microfinace is called small finance that means small loans.Mr.Mahammed Yunus is called the father of Microfinace.He was awarded in 2006 at UN for Nobel peace prize.He has established the Grameen Bank at Bangladesh in 1983.When he observed that Banks are not provided loan to the poor peoples then they are going to money lenders to fulfilling their needs like social,medical or any other expenses and taken loan from the money lenders in high rate of interest and also deposited some security like gold,land etc.against the loan.Banks told that the poor are not credit worthy.
So Mr.Yunus decided that he is providing loan to these customers in door step and also help the peoples to alleviate the poverty.Then he started his journey in 1983 and still hole world follow his model of operation in the field of Microfinace.He has served near about 9 million of peoples in 80,000 villages in Bangaledesh.Where majority customers are women.
In India Microfinace companies are called NBFC but after Mr.Y.H.Malegan report this companies are categories as NBFC-MFI.These companies are register in RBI.RBI clearly mentioned that these companies are not authorized to take public deposit.They were only authorized for giving loan to poor people with out any collateral security.
Click the link for download the report: Y.H.Malegam Report
In 1992 NABARD circulated a guideline for SHG bank linkage by NGO or agents.This program is very successful to linkage village peoples with Bank.As per RBI guideline for Banks in PSL development all major banks are started SGH linkage program directly or through BC model.
MBFC-MFI are create there funds from the Nationalized banks,Private Banks,Investors.As per RBI guideline for credit pricing NBFC-MFI should taken maximum interest rate 26%per annum in decline method.