Microfinance and Islamic Banking Essay

Assignment

On

Microfinance and Islamic Banking

Submitted to:

Dr . Mohammed Nurual Islam

Division of Business Administration

International Islamic College or university Chittagong

Dhaka Campus

Submitted by:

Rabiul Hossain

ID: B092070

Batch zero: FIN-5

Particular date of Submitting: 22/02/2013

Microfinance

1 . Advantages:

Micro financing is not a new concept. Tiny microcredit businesses have been with us since the the middle of 1700s. Even though most modern microfinance institutions function in developing countries, the interest rate of repayment default to get loans is surprisingly low - much more than 90% of loans happen to be repaid.

Like standard banking operations, microfinance organizations must charge their loan providers interests in loans. While these rates of interest are generally lower than those proposed by normal financial institutions, some opponents of this strategy condemn microfinance operations for making profits off of the poor.

The earth Bank estimates that there are much more than 500 million people who have indirectly benefited from microfinance-related functions.

2 . Meaning of Microfinance:

A form of banking service that is supplied to jobless or low-income individuals or groups who does otherwise have no other way of gaining finance. Ultimately, the purpose of microfinance should be to give low income people an opportunity to turn into self-sufficient by providing a means of saving money, funding money and insurance.

Microfinance, according to Otero (1999, p. 8) is " the supply of financial solutions to low income poor and very poor self-employed people”. These finance according to Ledger real wood (1999) generally include financial savings and credit but also can include other financial services including insurance and payment companies.

3. Good Microfinance:

Microfinance can be not a completely new concept of financing and its origins can be found in medieval Europe, specifically Ireland and Germany, instead of Bangladesh where famous beginning father of Grameen Bank, Professor Muhammad Yunus, having its own loaning policy began its businesses in the 1970s and who is at present a suggestions for microfinance. In The european union in the fifteenth century, the Catholic Cathedral founded socalled pawn shops in order to guard people from shady financial loan sharks and moneylenders whom gave out loans by usurious interest levels. These pawn shops later on spread through the entire continent (Helms, 2006, 2). As additional described by simply Seibel: " informal financial and self-help have been at the origin of microfinance in Europe” (Seibel, 2005, 3). More formal credit and savings corporations for the indegent were already established in Ireland by the Irish Mortgage fund program as early as 1720, using expert monitoring to enforce the repayment in weekly repayments of at first interest cost-free loans by donated assets (Seibel, the year 2003, 2).

Robinson states that the 1980s displayed a level in the great microfinance in that MFIs such as Grameen Financial institution and BRI 2 started to show that they can could provide small loans and savings services profitably on a large scale. They received no ongoing subsidies, had been commercially funded and totally sustainable, and may attain large outreach to clients (Robinson, 2001). It absolutely was also at this time that the term " microcredit” came to popularity in creation (MIX3, 2005). The difference among microcredit and the subsidized non-urban credit coders of the 1955s and 1960s was that microcredit insisted upon repayment, on charging interest rates that covered the cost of credit rating delivery and by focusing on clientele who were influenced by the simple sector for credit (ibid. ). It had been now obvious for the first time that microcredit may provide considerable outreach of course profitably.

The importance of microfinance in the field of development was reinforced together with the launch with the Microcredit Peak in...

Popular

 Tapping the strength of Analogy Composition
Tapping the strength of Analogy Composition

www.hbr.org Much of the time, executives use analogies to generate strategic alternatives. The best strategists know both power and peril of such side by side comparisons. How Strategists…...

 Assignment for Novel Merchandise Essay
Assignment for Novel Merchandise Essay

Name: Mennatallah Yehia El Sayed Date of submission: 19/3/2011 Apple, Incorporation Is an American multinational company that patterns and market segments consumer electronics, software applications, and personal computers.…...

 Explain the Key Features of the design argument Composition
Explain the Key Features of the design argument Composition

The look argument endeavors to explain the existence of god through things you observe in the world about us. It really is otherwise known as the " teleological argument”.…...

 Project Stakeholder Management Essay
Project Stakeholder Management Essay

To Dr Alex Manzoni The evolution of management thought and it's relation to project administration organisational set ups. Author: Jarrod Belle Executive…...