Related Content: MGT604 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Management of Financial Institutions
Microfinance in its broadest terms can be defined as provision of a range of financial services such as deposits, loans, payment services, money transfers and insurance to poor and low income households, and their micro enterprises (Source: Asian Development bank report on microfinance development strategy). While a commercial bank is a financial institution that offers a broad range of deposit accounts, including checking, savings, and time deposits, and extends loans to individuals and businesses.
The decision as to whether the commercial banks be involved in microfinance is a sensitive and debatable issue which requires a deep analysis of many factors.
Primarily, the microfinance customers are large in number, scattered in far-flung areas with
very minute transaction sizes. Only government or state bank alone cannot reach out to
millions of potential Microfinance beneficiaries; a whole well knitted network with almost
doorstep reach is required, which is only possible when the commercial banks will be
involved in microfinance. In Pakistan it is estimated that as many as 5.6 million households
need microfinance services but these services reach only to less than 1 percent, most
probably because of the absence of commercial banks from the microfinance sector.
(Source: Pakistan microfinance Network PMN) This way a poor person just need to visit
his local commercial bank to get access to microfinance benefits, which will help reduce
many economic problems.
One criticism over involving the commercial banks in microfinance is that commercial
banks will charge higher interest rates, further lower the standard of living and will exploit
the public. The ground realities are totally different; empirical evidence has demonstrated
that participants in microfinance programs have improved their living standards at both the
Read more: MGT604 - Management of Financial Institutions - Lecture Handout 21
Related Content: MGT604 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Management of Financial Institutions
A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face to face service to its customers.
It’s a written order, drawn by one branch of a bank upon another branch of the same bank, upon other bank under special arrangement to pay a certain sum of money to or to the order of a specified person.”
A Pay Order is a written authorization for Pmt, Made in a receipt from issued & Payable by the bank, to the person named & addressed therein on his giving a proper discharge thereon.
Read more: MGT604 - Management of Financial Institutions - Lecture Handout 20