Banking, Financial Services and Insurance (BFSI) Trends

Microlending refers to the practice of offering small loans to individuals or small businesses. This financial service is majorly based on trust and is observed in the developing countries. The loan payment for the same is based on mutual accountability. These loans are opted for by micro-entrepreneurs, small scale companies, and others. The interest rates on microloans are higher than bank loans owing to the higher risk and administrative costs. They have short repayment terms and frequent installment schedules. Microlending uses different fintech platforms and mobile apps to digitalize as well as expand awareness about financial services.   How microlending is adapting to a changing world?   Microlending offers accessible credit to the global population, especially in rural or low-income communities, which is generally not offered by the traditional financial systems. This increases the adoption of microlending in the financial sector. Governments and NGOs promote microl...

Highlights:     Microlending introduction     Government support initiatives     Technological advancements     Recent development - American Express's digital hub     Microlending involves offering small loans to communities or individuals who have limited access to financial services. These loans are provided by various entities such as microfinance institutions, online platforms, traditional banks, and peer-to-peer lenders. The practice of microlending is common in a range of sectors including healthcare, livestock farming, retail, technology startups, agriculture, crafts, catering, tailoring, transportation, recycling, and education .       Its benefits include promoting financial inclusion, encouraging entrepreneurship, reducing poverty, empowering women in developing nations, or supporting local businesses in underserved areas. Moreover, micro lending helps communities recover from disas...