What is micro credit?And why is it talked about?
From Wikipedia:
Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not considered bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.
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Anyways,one thing is certain that this focuses on helping the poor women to earn their own living.And that is very very good..because when an women is empowered ,it benefits an entire family.
Celebration of Micro Credit:
Muhammad Yunus of Grameen bank was awarded the Nobel Peace prize for uplifting the lives of millions of poor Bangladeshi women....This bank is based on the micro credit concept...if this model can work so well..perhaps the world leaders should give a serious thought in implementing it.
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2 comments:
I have always thought helping impoverished women is a great idea. I have paid some rent bills and support a cousin monitarily, but it is difficult to find someone who really needs to money and won't waste it. I wonder how the organizations who do the micro-loans manage this?
Mark... u are leading by example....hope others can also follow such examples...
u have raised a very valid point.
How does organisations like Grameen bank make sure that the loans they give are well spent?
Here's the answer:
"
Grameen Bank does not require any collateral against its micro-loans. Since the bank does not wish to take any borrower to the court of law in case of non-repayment, it does not require the borrowers to sign any legal instrument.
Although each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility solely rests on the individual borrower, while the group and the centre oversee that everyone behaves in a responsible way and none gets into repayment problem. There is no form of joint liability, i.e. group members are not responsible to pay on behalf of a defaulting member
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This is the most innovative part in this micro finance concept.This way:
1.the group deters the individual to mis
spend the money.
2.there is a feel good factor with the knowledge that she is not alone
3.the frequent get togethers causes a lot of exchange of ideas.
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