The incomes of working people living in poverty are not only low, but
also volatile. Poor people, aware of the risks of not having sufficient earnings
to meet daily needs, tend to save proportionally more than families with
more secure, higher incomes. However, most banks do not offer savings and
loan facilities to poor people. Many must hide their savings in cash somewhere
and, when they need a loan, resort to the local moneylender for credit
at onerous rates of interest. Microfinance is the provision, on a sustainable
basis, of financial services such as credit, savings, insurance, payments and
guarantees to poor people generally outside the reach of the formal financial
market.
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