Microcredit

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Related to Micro credit: Microfinance

Microcredit

A form of lending that originated in the 1970s with small loans made to very small enterprises in Bangladesh, called micro-enterprises, with the intention of alleviating high poverty levels. Microfinance institutions (MFIs) issue micro-loans that have higher-than-normal interest rates meant to cover the high costs associated with issuing small loans. Given that the purpose of microcredit is to be a poverty relief mechanism, individuals with low credit scores who lack capital and steady employment are then able to receive loans to develop their enterprises. See: Microfinance

Microcredit

The practice of making loans to extremely poor persons to help them rise from poverty through entrepreneurship. That is, one may make a loan of, say, $25 which gives someone the start-up capital necessary to make something small to sell. Microcredit loans are usually either interest-free or carry interest that does not compound. Additionally they offer flexible repayment plans; generally one is asked to pay anything one can so long as one pays something. Microcredit is most common in the developing world; it started in Bangladesh in the 1970s. See also: Grameen Bank, Mohammed Yunus.
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The micro credit summit is an international alliance initiated (by global micro credit campaign) in 1997, and the first conference was held in the same year in Washington, with partnership of AGFUND.
However, contrary to the global trends, micro credit sector has witnessed a robust growth in Pakistan, which has been ranked by the Economic Intelligent Unit among top countries for offering conducive environment for microfinance sector growth.
Man Sang International expands into the new Micro Credit Business in Mainland China
It operates in the villages through its various programmes such as Self Help Groups (SHGs), Joint Liability Groups (JLGs), Enterprise Development Loan, Urban Micro Credit, Dairy Loan and Agriculture Transportation Loan.
The Microcredit Insurance Cooperative Fund (Takaful) is formed by a specified percentage donated from the credit provided by a group of eight commercial banks insuring micro credit operations financed by The Central Bank of Sudan under a partnership model, using partnership (musharaka) and speculation (mudaraba) modes of finance.
Small and medium enterprises represent an important market for micro credits and loans.
Micro Credit programs have their beginning roots in the late 1980's.
Beyond Micro Credit argues that the applications of micro-finance are more varied than those of the traditional sources and may include empowerment and local democracy in addition to livelihood promotion.
Members of Coventry Results, flaunting pink hair and bright clothes, met the MP at the Lady Godiva statue in Broadgate to ask him to make micro credit available to the world's poorest people.
It is in this context that micro credit has emerged as the most suitable and practical alternative to the conventional banking in reaching the hitherto unreached poor population.
While loan seekers will approach MFIs for micro credit, huge loans will be provided by small finance banks .
Nobel Laureate Mohammed Yunus, considered to be the founder of the micro credit concept, has said that microcredit companies in India should be provided with banking licenses.