Difference between Microfinance and Microcredit
Microcredit and Microfinance are two terms which are used interchangeably without realizing the difference between them. Essentially these are two terms which are used for describing the activities which are aimed at helping the people living under poverty line or are unemployed. These are also used for funding social programs in various countries.
Microcredit, also known as banking for poor, is a new approach which aims to bring people above the poverty line and improve their lives by strengthening their financial status and boosting their confidence by providing employment to them. The concept of microfinance is the innovation of Mohammad Yunus and it originated in Bangladesh and was put to test with the help of Grameen bank. Mohammad Yunus won Nobel peace prize in 2008 for this concept that involved grant of small loans to the poor so that they can start self employment activities. These loans were even lower than $100.
Microfinance covers many financial services which aim to work for upliftment of the poor. Microfinance includes savings, housing loans, insurance, remittance transfers and providing guidance to the poor to lead a healthy and good life. Training for imparting skills which can help them in earning, education about importance of education, health, hygiene and ways to lead a better life etc are all part of activities covered under microfinance.
It is realized that traditional skills are not capable of getting the required income and this is why training the people to adapt to the newer technology helps them in increasing their income. Microcredit or small loans have helped them to get the required tools, supplies etc for their work. Microfinance aims to help communities to work together to improve their lives. Just a little help can help the people in boosting p their work and eventually increase their income.
A little help in the works like sewing, catching fish, weaving, poultry etc can help people grow on their own. Microfinance aims at providing financial help while Microfinance takes care of all other factors influencing financial activities.