Wednesday, October 18, 2006
What is Micro Credit...
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This is my first post about Micro Credit. I gathered some information on it and I like to share my knowledge with others, so now I start. First of all what is Micro Credit?
In the Micro Credit has two words, one is micro and another is credit. Micro stands for mini or small and credit means loan. The key implications of microcredit are in its name itself: 'micro'. Micro credit is the extension of small loans to the unemployed, entrepreneurs and others who are too poor to qualify for traditional bank loans. These people don’t have any assets that secure a debt obligation also they don’t have any steady income source and therefore cannot meet even the most minimum qualifications to gain access to traditional credit. The above mentioned definition also varies from country to country but some basic features remain same at all time. The basic features are:-
- Size – The size or amount of the credit is very small.
- Target users – Micro entrepreneurs and low-income households,
- Utilization - The use of funds for income generation, enterprise self-employment and housing for the poor also for community use (health/education) etc.
- Terms and conditions - most terms and conditions for micro credit loans are flexible and easy to understand, and suited to the local conditions of the community.
Micro Credit is a one of the great financial innovation which originated in developing countries. Where it helps people (mostly women) to be a self employed that allows them to generate an income and, in many cases, begin to build wealth and exit poverty. Today this Micro Credit Project becomes very popular in finance industry and many large finance organizations are adopt this concept as a source of future growth.
I will come soon with some more information….
Labels: definetion, grameen bank, micro credit
