In 1860, social reformer Friedrich Wilhelm Raiffeisen invented microloan. The microloan idea has returned to Europe, since the early nineties, entrepreneurs starting up a business have been awarded such loans in France and the Netherlands and since 2005, such loan also available in Germany. The central coordinating institution is the German Micro finance institution (DMI). It certifies and coaches regional organization s that offer microloans. The microfinance do not awarded any loan themselves, however, they check the loan application and if their assessment is positive. They forward it to a bank that award microloans. The financer and the state share the liability risk. (iReport, posted by Fancybear,cnn.com,06.01.11)
Microfinance is essentially a very simple concept. The idea is to take small amount of money and loan this money to someone who otherwise couldn’t get a loan so the person can start a business. This simple concept is being employed broadly right now, all around the world (us based summit campaign,1997, www.cgap.org/p/site/c (Published in international journal of Legal Information)
The word “microcredit” refers specifically to the giving of small (micro) loans (credit) to clients while the term “Microfinance” is broader and in compasses loans , savings, Insurance, leasing and other financial services. Since most microcredit program has grown in scope and most provider of microcredit also offer their clients access to other financial services, this paper will generally use the term “MFI” to describe initiative that involve microcredit and microfinance , except when commentary is specific to “microcredit” program only, or where “microcredit” has a meaning separate from “microfinance” (Muhammad yunus,2006)
Nobel peace prize in 2006, Muhammad yunus says “Microfinance and Microcredit programs can literally end world poverty” (in the Book By Muhammad yunus ,Creating the world without poverty,2007, page 237-248)
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