Utilization of Micro-finances

Social and economic inequalities lead to imbalances in opportunities for advancement and
growth. These imbalances lead to a greater sense of insecurity and lack of control.
Microfinance or village banking programs are approaches used to encourage shared risk,
security in savings, and opportunities for capacity building. Discuss the potential of such
microfinance programs in lower-income communities where irregular income is common
and their impact on reducing social and economic disparities. In your response, identify a
specific example of such a program in a low-income or middle-income country and
critically discuss one challenge and one benefit of the program. Evaluate the relationship
between economic microfinance programs and social inequalities.

Utilization of Micro-finances

The arrangement of small-scale credit to the poor, particularly women and the youth
populace in poor rural set-up, is an essential empowering tool in poverty-level reduction.
Several research cases have demonstrated a few upgrades in work creation, just as increments in
pay levels driven by self-employment. There have been indications of women’s social
improvements in personal independence on issues to do with family expense consumption and
similarly is translated to youths by raising their income from self-employment.
West Bengal is among the most noteworthy fish and fishery consumers within India,
recording per capita utilization of 15.6 kg contrasted to public consumption of eight kilos.
NABARD\’s renegotiate on behalf of the entire fishing industry in West Bengal developed from
Rs20 M as from 1998 to about Rs68 million by early 21 st century (2002) (Barua et al. 2012).
Microcredit is generally utilized for creation purposes as opposed to consumer needs, as
illustrated by the below case. Around 150 individuals coming together to form a women’s
cooperative group in the Purva, Medinipur, Paraganas areas and Bijipatuli in Kolkata were
effectively occupied with the production and promotion of sales for minced fish items, which
included: fish pickles, soup powder, and fish sauce and others which have a generally increased
the value of minced fishery end-products (Barua et al. 2012).

Utilization of Micro-finance 2
Similar to other financial sectors, microfinance is confronted with budgetary, operational,
and strategic risks. Given the idea of the business sectors where MFIs work, there are a few
dangers, such as the danger of over-indebtedness, which is more predominant in microfinance
(Nasir. 2013). Furthermore, because of the expanding utilization of technology in mobile devices
and computers, the business is confronted with information security issues and dangers identified
with cybercrimes (Nasir. 2013). Right from its inception, microfinance has improved living
conditions in societies where it has been fruitfully implemented by empowering mostly women
and the youth with capital, which enables further production through self-employment. It leads to
an equal society as women can be financially independent, sent their children to school, and
hence having an opportunity to better their livelihood.

Utilization of Micro-finance 3

References

Barua, P., Chakraborty, S., Das, J., Sen, S., Barua, P., Chakraborty, S., … & Sen, S.
(2012). Fishing industry and fisherfolk existence through microcredit services for India and
Bangladesh. Bangladesh Research Publications Journal, 7(1), 36-45.
Nasir, S. (2013). Microfinance in India: Contemporary issues and challenges. Middle-east
journal of scientific research, 15(2), 191-199.

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