The microfinance industry has transformed from a small-scale effort to provide small loans to the poor into a global financial industry offering a wide range of services. The 1,700+ institutions reporting to the Microfinance Information eXchange (MIX) (www.mixmarket.org) reported $39.4 billion in total gross loan portfolio and 75.7 million borrowers as of 2008 (current estimates suggest that MFIs reach approximately 100 million borrowers).

The modern concept of microfinance was pioneered by the Grameen Bank and similar institutions in Bangladesh in the 1970s. Originally it focused on the provision of micro-credit – small loans to borrowers (often women) who were usually organized into small self-help groups.   The Grameen Bank revolutionized access to credit for the poor, particularly poor women, by utilizing social collateral requirements to replace traditional economic collateral. Micro-credit loans were initially directed toward income-generating activities. Today, many MFIs also offer loans for other purposes, including education, consumption, and asset creation. WaterCredit loans often fall under these non-income generating (but income-enhancing) activities. Moreover, microfinance programs also may include the provision of savings, insurance, and other asset-building activities.