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BANKING

Microfinance: The worldwide impact

Some MFIs are tiny operations; others, such as Grameen and SKS, are trailblazers, known far beyond their shores. Sahara India Financial Corporation, part of Sahara India Pariwar group, is one. It acted like a microfinance institution long before the concept existed and it could, in the absence of reliable data, very well be the world’s largest micro lender.

The impact of microfinance is being felt far and wide, and not just in emerging or frontier states such as Bangladesh, Peru and Costa Rica. Others are popping up in the most unlikely places, from the Netherlands and Poland to Canada and China, where micro insurance is being heavily promoted.

Then there is the US. The world’s most powerful economy is also one of the most financially unbalanced, lacking the most rudimentary of safety nets. People below the poverty line tend to struggle: America’s Federal Deposit Insurance Corporation estimated that at end-2009 one in 10 New Yorkers and one in four citizens of Dallas had no bank account and no credit history.

Hence Grameen’s decision in January 2008 to set up a US division. Grameen America is based on one of the tumbledown streets that carpet Jackson Heights, Queens, a down-at-heel district of New York City, sandwiched between a fried chicken joint and a Korean barbershop.