Monday, May 28, 2012

Micro Credit

what is micro credit

Micro credit: a scale development

Introduction: money generating money. Adam Smith in his famous book The Wealth of the nation said: 'When you have a little' coverage, it is often easy to get more. The difficult thing is to get that big 'little. Microcredit is a very small size of loan that is given to skinny to self-employment. The institutional arrangement is an innovation in micro-hot revolution poverty. The revolt has started micro credit among rural women in 1970. The revolt had its roots in the claim that the poor need credit and could use more highly than bad credit and responsible. (to konw aBout Electronic government)
Definition of Micro Credit: Conceptually, microcredit can be described as an advance security petite offered free to the poor to create jobs in small income-generating activities based on the methodology set loan.
Microcredit can generally be defined as a programmer who offer credit for self-employment and other financial and business services including bundle, and technical assistance to the population Broke.
Definition of Microfinance: Microfinance is a combination of savings, loans, investment opportunities, additional options of insurance and financial services.
Poverty, the empowerment of women, nutrition, health, planning people, education, housing, self sufficiency, sustainability are all addresses of microfinance.
Features Micro credit: The microcredit system, service providers go to the door of the scale based on the belief that poor people should not go to the bank rather than bank must go to the people. The recognition is another important micro coating. (to know about caretaker government)
- Microcredit is known with less paperwork.
- Workers must make the usual visits to the construction of the borrower to provide advice and oversight.
- A small mass of the loan.
- And 'free security.
- The recovery time is more than 90 percent.
- All loans to be a new employee in instilments paper or bi-weekly basis.
Difference between micro-credit and bank credit
Micro Credit Bank credit
1. Loan system is simple 1. On loan is complicated.
2. Poor may simply access to micro credit 2. The poor have little access to bank credit imperfect.
3. Employment rate loan up to 85 percent 3. Supervision of credit loan, then recovery rate is 40-60 percent.
4. Credit highly guarded, so as to rate of recovery is about 99 percent 4. Credit less controlled, in order to rate of recovery is 40-60 percent.
5. NGO staff are friendly and helpful to poor borrowers 5. Bank staff are regularly in a friendly way with the poor borrowers.
6. Repeat loans are easier to within 2 or 3 days to repay the previous loan 6. Loan recovery is difficult.
7. No certificates or documents are required to receive loans 7. The certificates or documents are required to receive loans.
8. The lawsuit after borrowers default not to be taken 8. Bank adopts the judicial process as certified cases.
9. Borrowers have 95 percent women face gender 9. Poor women have access to a very partial to the banks.
10. Landless and illiterate in touch with lending by 10 NGOs. Landless and illiterate, have no access to banks.
11. Borrowers have the power through the stipulation of education on development issues 11 different counts literacy. There is such a scale in a bank.
The birth and evolution of Micro Credit: Microcredit is not a new event in our country. The birth and evolution of micro-credit have been enumerated below:
Usurers A. Traditional: The first time, people would use the money from loan sharks conformist. They will receive a high interest rate and in this estimate were similar to blood suckers. The fishes of reminders used to lend money to the subject only to shake their lands. The Kabuliwalas were more interested in getting the concern over capital.
Debtors Agriculture Act 1937 and the Money Lenders Act (1938) has imposed restrictions on the activities of money lenders. Sher - E - Bangla AK Fazlul Hoq saved poor farmers by the Boards of moneylenders to issue debt settlement.
B. Comilla Model: The model has been urbanized Comilla Bangladesh Academy for Rural Development (BARD) in 1960 with the main propitious Aktar Hamid Khan. This model was also based on a team approach and the micro conditions of glory to the Cooperators. It 'was extended to the whole country in 1970, includes a rural development program (IRDP). Under IRDP farmers were trained in two groups of first-level profits, credits and production factors are mobilized. Later, IRDP has been distorted in BRDB (Bangladesh Rural Development Board). Currently, BRDB is a top supplier of micro-credits in the government distributes among the poor.
C. Grameen Model: Prof. Dr. Mohammad Yunus led loans and distribution device in 1976 in Zobra petite village of Chittagong. And 'persistent state in a project enabled Geameen Bank Prakalpa money with the help of the Bangladesh Bank. After the success of this system, the government said in 1983 Grameen Bank Ordinance. In fact, Dr. Mohammad Yunus trandformed microcredit practices in institutionalized reorganized and innovative method which recognized worldwide as the Grameen model.
In addition to these unusual micro-credit approaches have been urbanized by BRAC, ASA, Proshika and other NGOs. Today Bangladesh is called the laboratory of micro-credit and micro-credit revolution.
Campaign Microcredit: Microcredit, which was urbanized in a poor country like Bangladesh is now considered one of the most powerful weapon to alleviate shortages around the world. In order to duplicate the program to organize globally, the first Micro Credit Summit was arrested in Washington DC, USA in 1997. The peak of microcredit launched a global group to reach 100 million poorest families with credit for the world of nature and the employment of other military and monetary affairs by 2005. At that summit prof. Yunus said, 'we believe that poverty does not belong to a refined human society. It belongs to museums. "The Micro Credit Campaign has successfully designed three local meetings: October 2000 in Harare in Zimbabwe. February 2001 in New Delhi in India, in October 2001, the pueblo of Mexico and in February 2004 in Dhaka of Bangladesh.

Micro-credit Global Perspective: The image around the world concerning the coverage of microcredit shows the donations made by the program. Until December 21, 2001 for a total of 2186 banks reported Micro achieving 54 million customers, 26.8 million of which were among the poorest when it is started with the program. Of 2186 institutions that had reported to the unit Microreader 1075 were in Asia. 740 in Africa, 230 in Latin America and the Caribbean, 59 in North America, 59 in Europe and 23 in the Middle East. Of the 54.90 million global customers 47.90000000 in Asia, in Africa 4.5 million and 2 million in Latin America and the Caribbean.
Microcode has become a global agenda for economic and social development. Grameen Bank, the mother of effective micro-credit program has supported 113 organizations in 34 countries in Asia and the Pacific, Africa, Latin America and Europe. The full report of these organizations are now one million members, 99% of whom are women. NGOs, like other major BRAC. ASA were replicate their programs in different countries of the world.
Micro credit initiatives and Government: The Government of Bangladesh microcredit is interested in two ways:
one. Funding for NGOs: the PKSF (Palli Karma Sahayak Foundation) is an apex public for the provision of military and institutional credit to NGOs. PKSF government established in 1990. Since then PKSF has lent about U.S. $ 252-250 NGOs cover more than 3.8 million borrowers. As the largest association of micro-credit loans in the world's standards of PKSF, the rule and the procedures are approved by several countries to develop their own micro-credit sectors.
b. Provide micro-credit: At present, thirteen ministries and partition of the Government of Bangladesh and its neighboring departments have distributed micro-credit. Government departments and the organization has so far disbursed about Tk. 15 billion to 10 million people living in poverty through microcredit. Currently owned by the Government Krishi Bank, Rajshahi Krishi Unnayan Bank, Sonali Bank, Janata Bank, Agrani Bank, Bangladesh Ansar and VDP Bank Bank jobs are in service microcredit programs.
Credit and Development Forum (CDF) is an organization of their government, which is a network of NGOs MFLS (Microfinance Institutions). CDF provides a basic training and require the service to its members changed MFLS NGOs.
Microcredit and Poverty Reduction: The main entities of the Micro credit is to make low-income families and thus reduce poverty. Micro-credit leads to improvement in income and income growth to lift the poor above the poverty line.
The Secretary-General Kofi opines that eradicating poverty is perhaps the most challenging global economy. Out of 6 billion world population 2.8 billion survive on less than two dollars a day progresses. Of the 1.2 billion people, 50 million live in Asia and 30 million in Africa. Microcredit programs in these regions show that the Micro Credit is a poverty alleviating muscular arms. More than 64 million poorest people in the world have a full part in the previous seven years of microfinance projects in the function out of the circle of poverty cruel.
Micro Credit and Women Empowerment: micro ruffles a noteworthy role in the positive empowerment of rural women. Through their involvement in microcredit, many women have hit leaders, instigating change in the common practices and relationships and mobilizing social action. The status of women both in their homes and communities is best when they are responsible for the loan and asset management. When generating their own power and self-control and with more respect. Poor women boast the best credit rating. In Bangladesh, for example women default on loans less often than men and women full credit has a much better home use and quality of life for the family. The direct effect of microcredit programs on women's position in the public sphere as the bank. Thane headquarters, hospitals, etc.
High Interest Rate-A Dilemma: It is assumed that the distributors of microcredit in Bangladesh is high time the interest charged on credit. As a result, borrowers are getting poorer. The critic says that the credit is much more expensive NGOs in favor of a poor borrower to make money in a bank. But we focus on the same side of the question at issue.
A. Interest Rate is not high:
- Rate of 15% flat credit the attention of NGOs is essential to its sustainability in the long term extended.
- NGOs take trains on the threshold of borrowers that reduces the transport cost and time borrower.
- A programmer credit NGOs can never be sustainable if they can not cover the total outlay of his action, in particular the following: * The salary costs of personnel cradle * annual * funds * The annual costs of depreciation and the cost inflation.
- There is no denying the effectiveness of strict supervision and monitoring of the glory NGOs operated on household incomes of poor borrowers. Cost of supervision and control make the rate of attention these sane.
- With Micro is not charity. Interest rates have to attack the cost of micro credit institutions. Otherwise, this body would cease to exist. So let the market agree on the rate.
Interest rate on credit B. Micro is very high: NGOs are charging high interest on microcredit. They are doing business in the name of poverty reduction. According to one study, the micro system with interest charges as above 30% to 40%. In this position, the receivers of credit run the risk of taking new loans from which the damage rate. They reality is that the Micro Credit perpetuate the poverty of the borrowers. Among the other persons who administer the program are better and have colorful beetle.
Other criticisms:
- The pros and cons of micro-credit system, its efficiency is a matter of dispute.
- The cost of the Micro recognition is very impressive. Micro credit operations can be vilified as Kabuliwalah activities.
- Microloans are serious procedural problems and do more than good mali.
- There is good governance and transparency in Micro Credit as the organization.
- The recovery system of paper creates pressure on borrowers.
- There is no legal framework for the control and the Micro Credit overseas, where the organization. As a result, many NGOs are not allowed corrupt the poor.
- Many NGOs are limited unregistered transactions in the name of the micro-credit and the reduction of scarcity.
Policy recommendations: microcredit system has some functional and procedural problems. Some recommendations have been placed to overcome these problems.
- Micro credit collapse operators should focus on poverty rather than use it as a business.
- You should cut rates on credit warning. This should reduce operating costs.
- The size of the loans should be inflated so that people can go out to start the cycle of poverty.
- The micro-credit banks under the government's initiatives may be well known in rural areas to streamline micro financing.
- Each financial institution wants to surveillance and control. A regulatory commission should be set for the operation of overseas Micro credit programs.
- Good governance and transparency are vital factors that should be aimed at ensuring the functioning of microcredit.
- In Bangladesh, the majority of citizens are Muslims. We can see the Islamic economic system and Islamic banking in Islam. So, micro-credit system should be in line with the principles of the principles of Islam.
Conclusion: Despite some limitations, microcredit has been established as an effective means of alleviating shortages and approach to development. This is a material of pride that Bangladesh is a global center of excellence in micro and home to many successful micro lending support to the institutions. Mrs. Mbeki, the woman from South Africa has really defined Bangladesh as the 'University of Microfirorce'. Poverty can be eradicated throughout the world list of effective micro-credit that originated in a country like Bangladesh thin.( to know about saarc)

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