History of Microfinance

In this paper we will be trying to find the origin of microfinance. Mainly after the 1970s, some personal attempts had been made to build microfinance institutions, like ACCION, Grameen Bank etc. Before that, several institutions had been working in many countries but the effect was too small. So we will mainly concentrate on the post 1970 era.In the late 1970s, the concept of microfinance had evolved. Although, microfinance has a long history from the beginning of the 20th century we will concentrate mainly on the period after 1960. Many credit groups have been operating in many countries for several years, for example, the "chit funds" ( India), tontines" ( West Africa), "susus" (Ghana), "pasanaku" (Bolivia) etc. Besides, many formal saving and credit institutions have been working for a long time throughout the world. During the early and mid 1990s various credit institutions had been formed in Europe by some organized poor people from both the rural and urban areas. These institutions were named Credit Unions, People's Bank etc. The main aim of these institutions were to provide easy access to credit to the poor people who were neglected by the big financial institutions and countries. The poor people had been given some small loans to invest in micro-business. This kind of microcredit was given on the basis of solidarity group lending, that is, each and every member of that group guaranteed the repayment of the loan of all the members. banks. In the early 1970s, few experimental programs had started in Bangladesh, Brazil and some other

Many banks and financial institutions has been pioneering the microfinance program after 1970. These are listed below: ACCION International: This institution had been established by a law student of Latin America to help the poor people residing in the rural and urban areas of the Latin American countries. Today, in 2008, it is one of the most important microfinance institutions of the world. It's network of lending partner comprises not only Latin America but also US and Africa. SEWA Bank: In 1973, the Self Employed Women's Association (SEWA) of Gujarat (in India) formed a bank, named as Mahila SEWA Cooperative Bank, to access certain financial services easily. Almost 4 thousand women contributed their share capital to form the bank. Today the number of the SEWA Bank's active client is more than 30,000. Grameen Bank: Grameen Bank (Bangladesh) was formed by the Nobel Peace Prize (2006) winner Dr Muhammad Younus in 1983. This bank is now serving almost 400,0000 poor people of Bangladesh. Not only that, but also the success of Grameen Bank has stimulated the formation of other several microfinance institutions like, ASA, BRAC and Proshika.