Microcredit

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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 number borrowers taking out cash loans from the micro-lenders is growing at an unprecedented rate, according to the lending companies and the government.
Recently Bangladesh's Prime Minister stated that Grameen and other micro-lenders in the country were "sucking blood from the poor in the name of poverty alleviation" and the government has enacted laws constraining micro lending.
Poverty in the developing world seemed ineradicable until micro-lenders saw millions of low-income, destitute women as potential entrepreneurs.
This heavy-handed and expensive approach has forced micro-lenders to go dark and enter a time-consuming registration process, just when they are most needed in the economy.
Marketing gateway* Tamweelcom, one of the Kingdom's major micro-lenders, held an event on Saturday to launch an educational grant program and a newly developed "marketing gateway".
Asia Pacific: In an area where education is valued but student loans are scarce, a grant to Vittana connects Filipino students with micro-lenders to open the doors to a brighter future through education.
Besides, just a few of the micro-lenders 319 branches will not be switched to the branches of IDFC Bank, whereas the rest will serve as business correspondents.
The rise in household credit largely reflected strong growth in installment credit and overdraft loans, furthermore loan disbursements by micro-lenders for 2013 have increased to N$2.
The event is an opportunity for business owners and others to talk to community lenders, micro-lenders, business advisers and/or technical assistance organizations to briefly discuss specific needs.
On August 3 the apex bank modified the margin cap for MFIs from a flat 12 percent to 10 percent for large lenders, and 12 percent for other micro-lenders.
We have been asked to review the operations of Grameen Bank and also how its lending rate compares to other micro-lenders," the BBC quoted Professor Ahmed, as saying.