2. Loans to those who lack:
— Collateral
— Steady employment
— Credit history
— Therefore, can’t get traditional credit.
— Village money lenders have been only source of credit.
— Objective to develop self-employment projects.
3. Grameen Bank
— Founded by Muhammad Yunus in 1976 in Bangladesh.
Won Noble Prize in 2006.
— In 1974 loaned his own money to 42 people including a
woman who made bamboo furniture.
— 96% of loans to women.
— Loans to “solidarity groups” helps ensure repayment.
4. Microfinance Now
— Thousands of institutions.
— Serving millions of poor people.
— Loan is preferable to aid.
— Banks now offering micro loans.
— Poor entrepreneurs possess skills just don’t have the
capital.
— Typical interest rate 11-12%.
5. Criticism
— Microcredit provides govt’s rationale for reducing
their anti-poverty, education & health programs.
— Success primarily judged from lender’s view (high
repayment rates & financial viability).
— Borrowers’ become dependent on for normal hh
purchases rather than investment.
— Men spend the money while women stuck with the
debt.
