From an international popular point of view, microfinance refers to small amounts of continuous credit services provided to low-income groups and micro-enterprises. Its basic characteristics are small amounts, no guarantees, no mortgages, and serving the poor. population. Microfinance can be provided by formal financial institutions and specialized microfinance institutions or organizations. According to the characteristics of business operations, microfinance organizations are divided into two categories: commercial and welfare, also known as institutionalism and welfarism. The former places more emphasis on institutional sustainability in microfinance management and target design, represented by the People's Bank of Indonesia; the latter focuses more on the role of projects in improving the economic and social welfare of the poor, represented by Grameen Bank of Bangladesh.

Small secured loans originated in Bangladesh. In the 1970s, Muhammad Yunus founded the Grameen (meaning rural) pilot branch of the Bangladesh Agricultural Bank of Bangladesh in Bangladesh, and the Grameen microfinance model began to gradually take shape. Yunus proposed reforming capitalism. Original capitalism advocated competition and the profit-seeking nature of capital. Yunus proposed changing the original capital model theory because, first of all, everyone has the potential to be an entrepreneur. , even a very poor person still has the basic potential to be an entrepreneur, so as entrepreneurs or capitalists, they have no right to be more favorable than the poor, such as tax policies, land policies, etc. This is unfair to everyone in society. Due to the existence of Matthew's Law, this will cause the poor to become poorer and the rich to become richer. The gap between the two poles will gradually widen, thus causing social instability. Second, social value maximization should replace existing profit maximization. A social value orientation should be established so that companies are not limited to greedily profiting shareholders.

On this theoretical basis, Yunus established the Grameen Bank, advocating that loans should become a human right and an inclusive financial service system should be established. Since resources are naturally inclined towards capital, the rich can make compound profits, while the poor will find it difficult to escape poverty without the first money. Grameen provides this first money and believes in the creativity and potential of the individual without requiring any guarantee from the poor. He built a system that allowed poor people to form groups of five to take out loans, and used layers of trust—the trust of neighbors, relatives, and friends, and Grameen’s trust in the poor—to increase loan repayment rates. In June 1979, under the guidance of the Central Bank of Bangladesh, each state-owned bank was to provide three branches to launch the Grameen Bank project. In 1983, the Bangladesh Parliament passed the Special Grameen Bank Act of 1983, officially establishing the Grameen Bank. In October 2006, Yunus won the Nobel Peace Prize for his successful founding of the Grameen Bank, the Grameen Bank of Bangladesh.