Micro finance Grameen Bank
.Micro-credit
is something which is not going to disappear... because this is a need of the
people,
whatever
name you give it, you have to have those financial facilities coming to them
because it is
totally
unfair... to deny half the population of the world financial services..Dr. Muhammad Yunus, Founder . Bangladesh Grameen Bank, in March 2002.Micro
finance has tremendous potential as an instrument for poverty reduction..Shahid Khandker, Senior Economist, World Bank, in 1999.
rural finance policy pursued in most developing countries beginning from 1950s
was based
on
providing subsidized credit through state controlled or directed institutions
to rural segments
of
population. The key problem areas visualized in rural financial markets
includes- lack of
credit
in rural areas, absence of modern technology in agriculture, low savings
capacity in rural areas
and
prevalence of usurious moneylenders. Emergence of micro credit in late 1970s
and early 1980s in
the
backdrop of growing world attention on deficiencies of earlier approach in
rural finance explains
much
of its dominant theoretical underpinning.
Microfinance
refers to providing loans and finance to poor people for self-employment.
Generally, smallamounts
are disbursed as loans, and the timeframe for repayment of loans is longer
compared to
commercial
banks. Together with providing financial services, many microfinance institutions
work
for
social development in the areas in which they operate.
Microfinance
institutions generally have the following characteristics:
l
Providing small loans for the working capital requirements of the rural poor.
l
Minimal appraisal of borrowers and investments as compared to commercial banks.
l
No collateral demanded; however, these institutions impose compulsory savings
and group
guarantees.
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