Microfinance services are provided to unemployed or low-income individuals because most of those trapped in poverty, or who have limited financial resources, do not have enough income to do business with traditional financial institutions. Microfinance allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices. Although they exist all around the world, many microfinance institutions focus on helping women in particular.
The benefits of microfinance extend beyond the direct effects of giving people a source for capital. Entrepreneurs who create successful businesses, in turn, create jobs, trade, and overall economic improvement within a community. Empowering women in particular, as many microfinance organizations do, may lead to more stability and prosperity for families.
In order to reduce the list of defaulters, TransUnion CIBIL has set up a new division called the CIBIL Microfinance Credit Information Bureau, specifically for microfinance institutions. CIBIL has decided to create a database that will help MFIs and banks determine the credibility of small and medium sized enterprises who are looking for an extended line of credit