GSP

Introduction

Today, with increasing emphasis on equitable access to financial services, a new wave of financial inclusion is taking root around the world. Financial Inclusion, also known as the Prahri System, is a system of providing finance to the underprivileged communities, who have traditionally been ignored by financial institutions. This system is primarily aimed at granting access to credit or banking services that are usually barred from lower-income households or small businesses. It helps them to get access to an organized financial umbrella and to make them a part of the social and economic mainstream. The Prahri system has become increasingly relevant as more people are recognizing the importance of financial inclusion.

Background Information

The Prahri system was initiated in India as part of The microfinance initiative. The system emerged to provide access to proper microfinance services to the lower-income households. The framework of the Prahri system is based on specific guidelines outlined by the National Bank for Rural and Agriculture Development (NABARD), which focuses on financial inclusion of the “unbanked” rural population and promoting access to the organized financial services through the banking institutions.

Benefits of the Prahri System

The Prahri system is beneficial for both the financially excluded communities as well as established financial institutions. For the underprivileged households, the access to credit ensures that even those households with limited resources can start up small businesses or avail loan for personal needs. Additionally, since the loan is provided at an affordable rate, it reduces their dependence on other sources of money. Furthermore, the integrated platform of the Prahri system acts as an efficient, secure and convenient payment integration mechanism for the underprivileged.

On the other hand, for the banking institutions, the Prahri system is an efficient way of reaching out to a population that has historically been ignored. By becoming a part of the Prahri system, financial institutions not only expand their customer base, but they also gain insights into the functioning of the financially excluded communities, enabling them to come up with better strategies and guidelines to reach out to these neglected segments.

Moreover, the Prahri system has also contributed to the financial literacy of the lower-income households. The lenders, in their attempt to make the application process easier, have come up with several measures that help these households to understand the basics of financial management.

Conclusion

The Prahri system is gradually taking root around the world, providing much needed financial services to the underprivileged. Through this system, access to credit and other banking services are now made available to households that have traditionally been ignored by financial institutions. The system is beneficial for both the financially excluded communities and established financial institutions, as it helps to expand customer base and gain insights into the neglected segments, while providing access to affordable credit to the lower-income households and helping them become financially literate. The Prahri system is thus helping to bridge the gap between the excluded and the mainstream and is playing an important role in the financial inclusion of the underprivileged.

Poverty has become a global issue, with 1.2 billion people living in extreme poverty worldwide. In response, a new concept of financial inclusion known as microfinance has emerged. Microfinance is a system of providing financial services, such as loans, savings, insurance and other financial services, to people living in poverty, who traditionally have been unable to access such services due to economic and social restrictions. Microfinance is based on the concept of providing individuals with small loans of capital, in order to help them develop their own businesses and ultimately improve their standard of living.

The idea of microfinance is simple: by providing small loans of capital to individuals in poverty, those individuals can start their own businesses, gain employment or better their skills, thus breaking out of the cycle of poverty. Microfinance institutions, such as Grameen Bank, have seen success in helping people increase their incomes, save, and build assets. Those who practice microfinance also help to build and strengthen communities by providing mentorship and education on financial and entrepreneurial planning.

Microfinance also goes beyond financial services. Social entrepreneurship, for example, has become an increasingly popular area for microfinance. Social entrepreneurs, who address social and environmental issues through their business models, are able to access microfinance services to help start and grow their businesses. The World Bank estimates that 1.7 billion people living in extreme poverty are unable to access even basic financial services, making the development of microfinance doubly important.

Through microfinance, people in poverty are able to access the resources they need to develop businesses and find employment. With access to more meaningful financial opportunities, individuals are able to break free from the cycle of poverty, while social entrepreneurs are able to develop businesses that create positive social change. Microfinance has thus become an important way to empower people living in poverty, provide access to financial services and opportunities, and improve the overall living conditions of people living in poverty.