Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not considered bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of financial services to the very poor; apart from loans, it includes savings, microinsurance and other financial innovations. For other uses, see Loan (disambiguation). ... For the sequel to the computer game Entrepreneur, which has no article of its own, see The Corporate Machine. ... A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows what he found. ... Collateral within a financial context is used to indicate assets that secure a debt obligation. ... This article is about work. ... Credit history or credit report is, in many countries, a record of an individuals or a companys past borrowing and repaying, including information about late payments and bankruptcy. ... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... Microfinance is a term for the practice of providing financial services, such as microcredit, microsavings or microinsurance to poor people. ... In common usage, saving generally means putting money aside, for example, by putting money in the bank or investing in a pension plan. ... Microinsurance is the provision of insurance to poor and low income households. ...

Microcredit is a financial innovation which originated in developing countries where it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry and many traditional large finance organizations are contemplating microcredit projects as a source of future growth. Although almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun in its modern incarnation as pilot projects with ACCION and Muhammad Yunus in the mid-1970s, the United Nations declared 2005 the International Year of Microcredit.  High human development Medium human development Low human development Unavailable (colour-blind compliant map)   Developing countries not listed as least developed countries or as newly industrialized countries, in their respective articles. ... The examples and perspective in this article or section may not represent a worldwide view. ... A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows what he found. ... For other uses, see Bank (disambiguation). ... Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... Dr. Muhammad Yunus (Bengali: , pronounced ) (born June 28, 1940) is a Muslim Bangladeshi banker and economist. ... UN and U.N. redirect here. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... The United Nations launched the International Year of Microcredit on November 18, with the purposes of reducing poverty and hunger and improving health and education. ...

Focus on Women

Women have become the focus of many microcredit institutions and agencies worldwide. The reasoning behind this is the observation that loans to women tend to more often benefit the whole family than loans to men do. It has also been observed that giving women the control and the responsibility of small loans raises their socio-economic status, which is seen as a positive change to many of the current relationships of gender and class.

According to the Microcredit Summit Campaign:

"1.2 billion people are living on less than a dollar a day. Women are often responsible for the upbringing of the world’s children and the poverty of the women generally results in the physical and social underdevelopment of their children. Experience shows that women are a good credit risk, and that women invest their income toward the well being of their families. At the same time, women themselves benefit from the higher social status they achieve within the home when they are able to provide income."

Many microcredit organizations focus completely on women borrowers. Pro Mujer, SKS Microfinance and NamasteDirect are some organizations that directly work with women. The Grameen Foundation, retired UN Secretary General Kofi Annan, and Hillary Rodham Clinton all emphasize women when they speak about microcredit. Pro Mujer (meaning, in Spanish, Pro Woman) is an organization aimed at improving the life conditions in Latin America, primarily though Microcredit programs. ... NamasteDirect, a project of the Namaste Foundation, is a microcredit non-profit organization based out of San Francisco, California. ... Grameen Foundation, founded as Grameen Foundation USA, is a global 501(c)3 non-profit organization based in Washington DC that works to replicate the Grameen Bank microfinance model around the world through a global network of partner microfinance institutions. ... The United Nations Secretary-General is the head of the Secretariat, one of the principal divisions of the United Nations. ... Kofi Atta Annan (born April 8, 1938) is a Ghanaian diplomat who served as the seventh Secretary-General of the United Nations from January 1, 1997 to January 1, 2007, serving two five-year terms. ... Hillary Diane Rodham Clinton (born October 26, 1947) is the junior United States Senator from New York, and is a candidate for the Democratic nomination in the 2008 presidential election. ...

History

The concept of microcredit can be traced back to portions of the Marshall Plan at the end of World War II in the middle of the 20th century or even back to the mid-1800s and the writings [3] of abolitionist/legal theorist Lysander Spooner who wrote concerning the benefits of numerous small loans for entrepreneurial activities to the poor as a way to alleviate poverty. It is also tied to New York's Providence Fund. However, in its most recent incarnation it can be linked to several organizations starting in the 1970s and onward. Map of Cold-War era Europe and the Near East showing countries that received Marshall Plan aid. ... Combatants Allied powers: China France Great Britain Soviet Union United States and others Axis powers: Germany Italy Japan and others Commanders Chiang Kai-shek Charles de Gaulle Winston Churchill Joseph Stalin Franklin Roosevelt Adolf Hitler Benito Mussolini Hideki Tōjō Casualties Military dead: 17,000,000 Civilian dead: 33,000... This article is about the abolition of slavery. ... Lysander Spooner (January 19, 1808 – May 14, 1887) was an American individualist anarchist political philosopher, abolitionist, and legal theorist of the 19th century. ... This article is about the state. ...

Opportunity International

In 1971, Stefan stojkovic resigned as president of Bristol Myers and established Opportunity International’s first US office in Washington DC. The first loan was made to Carlos Moreno in Colombia to expand his one-man spice and tea business. About the same time Australian philanthropist, David Bussau, began making microloans in Indonesia. The two men met and formed Opportunity International, which provides opportunities for people in chronic poverty to transform their lives by creating jobs, stimulating small businesses, and strengthening communities. Small loans ranging from USD 25 to USD 500 helped poor families lift themselves out of poverty. Other Opportunity International offices are in Australia, Great Britain and Canada, each targeting countries within their region. // Opportunity International General Information Opportunity International started as a world pioneer of microfinance being one of the first microfinance networks. ... Flag Seal Nickname: DC, The District Motto: Justitia Omnibus (Justice for All) Location Location of Washington, D.C., with regard to the surrounding states of Maryland and Virginia. ... For other uses, see Spice (disambiguation). ... For other uses, see Tea (disambiguation). ... “USD” redirects here. ...

ACCION International

In 1973 Accion International, a Peace Corps-like group, started to switch their focus toward providing economic opportunity to poor people instead of working on construction/infrastructure projects in order to create lasting improvements in the lives of those they were helping. Their plan first appeared in Recife, Brazil in 1973 when ACCION staff began to offer microloans to poor people eager to start small businesses. ACCION offered an alternative to the under-served population that were ineligible for traditional loans and wanted to avoid the exploitive lending practices of loan sharks. ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... It has been suggested that Crisis corps be merged into this article or section. ... Nickname: Motto: Ut luceat omnibus Latin: That it may shine on all (Matthew 5:15) Location in Brazil Country Region State Pernambuco Founded March 12, 1537 Incorporated (as village) 1709 Incorporated (as city) 1823 Government  - Mayor João Paulo Lima e Silva (PT) Area  - City 218 km²  (84. ... ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... A loan shark is a person or body that offers illegal unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. ...

Within four years, the experiment had shown its success in having provided 885 loans with a repayment rate of over 90%. The loans also helped to create or stabilize 1,386 new jobs. This success in making a lasting impact in peoples lives, as contrasted with the previous projects they had done seemingly steered ACCION firmly in the direction of being a microfinance organization. Since this beginning ACCION has expanded its microlending operation to countries throughout South and Central America, the United States, Africa and India. ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ...

ACCION claims that these loans were the first modern pioneers of microcredit. ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ...

Grameen Bank

Main article: Grameen Bank

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Around the same time as ACCION's experiment, and apparently independently, Muhammad Yunus, a professor of economics at Chitagong University started a similar experiment. Around 1974, during a famine in his native Bangladesh, Yunus discovered that very small loans could make a difference in a poor person's ability to survive, but that traditional banks were not interested in making tiny loans to poor people, who were considered repayment risks. His first loan consisted of $27 from his own pocket which he lent to 42 people including a woman who made bamboo furniture, which she sold to support herself and her family. The Grameen Bank (Bangla: গ্রামীণ ব্যাংক) is a microfinance organization and community development bank started in Bangladesh that makes small loans (known as microcredit) to the impoverished without requiring collateral. ... Image File history File links Acap. ... ACCION International is a non-profit organization founded in 1961 whose mission it is to provide small loans to those around the world who are under-serviced by local banks. ... Dr. Muhammad Yunus (Bengali: , pronounced ) (born June 28, 1940) is a Muslim Bangladeshi banker and economist. ... The meaning of the word professor (Latin: one who claims publicly to be an expert) varies. ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... Year 1974 (MCMLXXIV) was a common year starting on Tuesday (link will display full calendar) of the 1974 Gregorian calendar. ... For other uses, see Bamboo (disambiguation). ... For the UK band, see Furniture (band). ...

In 1976, Yunus founded the Grameen Bank to make loans to poor Bangladeshis. Since then the Grameen Bank has issued more than $5 billion in loans to several million borrowers - at the close of 2005 the number of outstanding loans is more than 4 million. To ensure repayment, the bank uses a system of solidarity lending through "solidarity groups": small informal groups, nearly all of them exclusively female, that meet weekly in their villages to conduct business with representatives of the bank, and who support each other's efforts at economic self-advancement. As it has grown, the Grameen Bank has also developed other systems of alternate credit that serve the poor. In addition to microcredit, it offers housing loans as well as financing for fisheries and irrigation projects, venture capital, textiles, and other activities, along with other banking services such as savings. Year 1976 Pick up sticks(MCMLXXVI) was a leap year starting on Thursday (link will display full calendar) of the Gregorian calendar. ... Solidarity lending involved collateral-free loans through solidarity groups and village organizations like this one in Bangladesh. ... Irrigation is the artificial application of water to the soil usually for assisting in growing crops. ... Venture capital is a general term to describe financing for startup and early stage businesses as well as businesses in turn around situations. ... For other uses, see Textile (disambiguation). ...

The success of the Grameen model has inspired similar efforts throughout the developing world and even in industrialized nations including the United States. Many, but not all, microcredit projects also emulate its emphasis on lending specifically to women. Close to 96 percent of Grameen loans have gone to women, who have been found to be much more likely than men to repay loans and to devote their earnings to serving the needs of the entire family. Originally the program started with men and women, but later focused on women when data showed a dramatically lower credit risk in women. In 2006, Yunus and the Grameen bank were honored for this achievement with the Nobel Peace Prize. Lester B. Pearson after accepting the 1957 Nobel Peace Prize The Nobel Peace Prize (Swedish and Norwegian: Nobels fredspris) is the name of one of five Nobel Prizes bequeathed by the Swedish industrialist and inventor Alfred Nobel. ...

Women's World Banking

In 1976, Women's World Banking was founded in New York by Ela Bhatt (India), Esther Ocloo (Ghana) and Michaela Walsh, an American investment banker. Bhatt had earlier founded the Mahila SEWA Cooperative Bank in 1974, and she served as WWB's chair from 1980 until 1998. The WWB president was reported in 2002 as claiming that of half the microcredit loans made worldwide to 25 million people, three-quarters of them were made to women, and had been made by WWB.^[1] Womens World Banking (WWB) is a non-profit organization, based in New York, whose mission is to expand the economic assets, participation and power of low-income women entrepreneurs by helping them access financial services and information. ... Ela Bhatt is the founder of the Self-Employed Womens Association (SEWA) and served as the General Secretary of SEWA from 1972-1996. ... Esther Afua Ocloo (April 18, 1919 - February 8, 2002 ) was a Ghanaian entreprenuer and pioneer of microlending. ...

FINCA International

In the 1980s FINCA International continued the successful trend of microcredit in Bolivia. John Hatch, founder of FINCA, had worked on other international credit programs and started doing microcredit on his own in Bolivia, stressing local autonomy and putting the poor in charge of the programs. “Give poor communities the opportunity, and then get out of the way!” he said. He called his approach village banking. The 1980s refers to the years from 1980 to 1989. ... http://www. ... Dr. John Keith Hatch (born November 7, 1940) is an American economic development expert and a pioneer in modern day microfinance. ... Village Banking is a microcredit methodology developed by FINCA International founder John Hatch. ...

After Hatch had had assembled a team, within four weeks, they had created 280 village banks serving 14,000 families with loans worth $630,000. While the original program was shut down, it was not because of a lack of success, but because its backers felt uncollateralized lending was too risky.

Despite this setback, Hatch continued to pursue his work and incorporated FINCA in 1985, this time working in El Salvador. In El Salvador the program focused on women, as many of the other micro credit programs have.

The mission of FINCA International is to provide financial services to the world's lowest-income entrepreneurs so they can create jobs, build assets, and improve their standard of living. In 2005, FINCA reached more than 400,000 clients, providing in excess of $100 million in small loans averaging $360. FINCA currently operates programs in 21 countries in Africa, Latin America and the Caribbean, Eastern Europe and Central Asia. Women comprise 80 percent of its small loan clients, and the organization has a loan repayment rate of 97 percent.

TMSS

Thengamara Mohila Sabuj Sangha (TMSS) is an NGO from Bangladesh. It was established in 1964 in Bogra District of Bangladesh. TMSS is a Women-oriented Leading Bangladeshi National Non-government Organization. The history says a lady with the lamp who was a day laborer formed along with other poor women in Thengamara village of Bogra. In 1980, a botany professor Dr. Hosne-Ara Begum came forward to redirect the NGOs social activty. She engaged herself as the Founder Executive Director of TMSS.

With the main patronizer Palli Karma Shahayak Foundation (PKSF),TMSS is engaged in uplifting the living condition of the most distressed poor people particularly women and children of both urban and rural areas. TMSS believes in self-help sustainable development of the targeted beneficiaries through their own efforts and resources. Main objective of TMSS is to alleviate poverty and upgrade the living standard of the most degraded poor to a dignified level through diversified ways. Over the years, TMSS has emerged as one of the most efficient and dynamic NGOs in the country. It has extensive network almost all over the country. TMSS has a large contingent of well-trained and skilled manpower, including 9000 regular staffs, 7,000 voluntary and part-time staffs. The number of target beneficiaries increased from 126 in 1980 to more than 1.8 million in 2005. The microcredit loan disbursement increased from US $ 8,000 to US $ 125 million during the same period with a recovery rate of 99%.

SKS India

SKS Microfinance was founded in 1998 by Vikram Akula to provide loans to women living in poor regions of India. According to its website, SKS has provided over $205 million (Rs 835 crores) in loans to nearly 632,000 clients. Borrowers take loans in order to develop a variety of income-generating farming and home-based manufacturing activities. Interest-free loans for emergencies and life insurance are also offered to borrowers. SKS runs an affiliated program to improve education for poor children.^[2] Vikram Akula is the founder of SKS Microfinance a company that offers microloans on plastic cards in India. ... The United States dollar is the official currency of the United States. ...

In May 2006, Vikram Akula was named to TIME Magazine’s Top 100 List of Most Influential People for the year 2006, wherein he was highlighted for his work as a pioneer in the microfinance industry and dedication to improving the lives of the poor in India.^[3]

In 2006, SKS Microfinance attracted the attention of Venture Capitalists such as Vinod Khosla, Small Industries Development Bank of India, Unitus Equity Fund, Sequoia Capital and they have invested in SKS India.^{[citation needed]} Vinod Khosla (born January 28, 1955 in Pune, India[1]) is an Indian-American venture capitalist. ...

Some recent developments in India

The Government of India is mulling some regulation for the Microfinance / Microcredit industry in India and in his budget speech on 28 February 2006, the Finance Minister P Chidambaram said "I had proposed major initiatives in respect of micro finance in the last Budget. RBI has since issued guidelines to enable banks to appoint banking correspondents and banking agents. A window to access ECB funds has also been opened. A Bill to provide a formal statutory framework for the promotion, development and regulation of the micro finance sector will be introduced in this session". P. Chidambaram is the finance minister of India in the Congress-led UPA government (2004-2009). ...

At a seminar on microfinance organised by the Confederation of Indian Industry (CII) and the Small Industries Development Bank of India (SIDBI) in Delhi, in September 2006, the Chairman & Managing Director of the Indian Bank, K C Chakrabarty, said "Micro Finance Institutions are limited in their delivery - most are simply engaged in lending. Micro finance is also about saving, insurance, and investment. Sadly, these products are not being delivered. So far, micro finance initiatives have failed to link the beneficiaries to the capital market, and have met with little success when it comes to developing micro-entrepreneurship. In most of rural India, people still borrow to meet their daily consumption, not to fund an income generating enterprise".

Today

The World Bank estimates that there are now more than 7,000 microfinance institutions, serving some 16 million poor people in developing countries. CGAP experts estimate that 500 million households benefit from these small loans. Cambodia and Kenya were put forward as examples. Asia and the Pacific region represent 83% of the opened accounts in developing countries, which is equivalent to 17 accounts for 100 persons ^[4]. In November 1997, more than 2000 delegates from 100 countries gathered at a Microcredit Summit in Washington, DC, with the goal of reaching 100 million of the world's poorest families, with credit for self-employment and other financial and business services by the year 2005. Support for these goals has come from prominent world leaders and major financial institutions. The World Bank (the Bank), a part of the World Bank Group (WBG), was formally established on December 27, 1945, following the ratification of the Bretton Woods agreement. ... For the band, see 1997 (band). ... A summit is: Summit (topography), a point higher than all the ground immediately surrounding it; the highest point of a hill or mountain Route summit, the highest point on a transportation route crossing high ground Summit (meeting), a meeting of heads of state or other leaders Summit may also refer... Aerial photo (looking NW) of the Washington Monument and the White House in Washington, DC. Washington, D.C., officially the District of Columbia (also known as D.C.; Washington; the Nations Capital; the District; and, historically, the Federal City) is the capital city and administrative district of the United... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ...

The Economic and Social Council of the United Nations proclaimed the year 2005 as the International Year of Microcredit to call for building inclusive financial sectors and strengthening the powerful, but often untapped, entrepreneurial spirit existing in communities around the world. There are five goals associated with "The Year" which are: The Economic and Social Council (ECOSOC) of the United Nations assists the General Assembly in promoting international economic and social cooperation and development. ... UN and U.N. redirect here. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... The United Nations launched the International Year of Microcredit on November 18, with the purposes of reducing poverty and hunger and improving health and education. ...

1. Assess and promote the contribution of microfinance and microcredit to the MDGs;
2. Increase public awareness and understanding of microfinance and microcredit as vital parts of the development equation;
3. Promote inclusive financial sectors;
4. Support sustainable access to financial services, and
5. Encourage innovation and new partnerships by promoting and supporting strategic partnerships to build and expand the outreach and success of microcredit and microfinance for all.

The United Nations Millennium Development Goals are eight goals that all 191 UN member states have agreed to try to achieve by the year 2015. ... Look up Inclusive in Wiktionary, the free dictionary. ...

2006: Microcredit awarded Nobel Peace Prize

Grameen Bank and its founder Muhammad Yunus were awarded the Nobel Peace Prize for 2006. The press release states: The Grameen Bank (Bangla: গ্রামীণ ব্যাংক) is a microfinance organization and community development bank started in Bangladesh that makes small loans (known as microcredit) to the impoverished without requiring collateral. ... Dr. Muhammad Yunus (Bengali: , pronounced ) (born June 28, 1940) is a Muslim Bangladeshi banker and economist. ... Lester B. Pearson after accepting the 1957 Nobel Peace Prize The Nobel Peace Prize (Swedish and Norwegian: Nobels fredspris) is the name of one of five Nobel Prizes bequeathed by the Swedish industrialist and inventor Alfred Nobel. ...

"The Norwegian Nobel Committee has decided to award the Nobel Peace Prize for 2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty.
Micro-credit is one such means. Development from below also serves to advance democracy and human rights. Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh, but also in many other countries. Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.
Every single individual on earth has both the potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.
Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions. Economic growth and political democracy can not achieve their full potential unless the female half of humanity participates on an equal footing with the male.
Yunus’s long-term vision is to eliminate poverty in the world. That vision can not be realised by means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, micro-credit must play a major part."

Fundamental Principles

This article or section may contain original research or unverified claims. Please improve the article by adding references. See the talk page for details. (September 2007)

An increasingly large body of published literature and conference proceedings has begun to seriously study the implications and debate the relative significance of different aspects of this important financial innovation. For those who are interested in a reading more detailed, theoretical studies of this field of economics and finance, a separate ESR Review has existed since the fall of 1999. From published literature and conference proceedings, it is possible to summarize several fundamental lessons from the microcredit success and failures over the last three decades. Image File history File links Emblem-important. ...

A savings|investment as preferable aid: Independent borrowers earn the dignity and lasting self-confidence associated with responsible loan repayment. Institutional managers are more careful to ensure borrower success and generally perform better when there are risks involved.

Entrepreneurial talent and energy are scarce invaluable resources for economic growth: Our economies cannot afford not to find and develop independently responsible entrepreneurs and public bankers who are financial critical thinkers. These individuals can be attracted to the microcredit industry, but they are individuals with options – they will not risk their future on short-term or unpredictable bureaucratic support.

Traditional private banks should not be expected to offer microcredit: Existing banks with a traditional operating philosophy typically have significant investments in facilities and costly operating structures. Because of the significant overhead of such banking operations, these bank operations naturally gravitate to large, profitable transactions with affluent borrowers.

A new generation of banking institutions [and the banking professionals to run them] is arising: Banking institutions motivated by a less myopic vision of profitably serving the common good can be capitalized for the primary purpose of entry-level economic development. By lowering the transaction costs through institutional specialization and innovation in delivery systems, they will be able to operate profitably in markets characterized by very small transaction sizes and less affluent clients.

Poor entrepreneurs possess the same survival skills as the toughest, most affluent business operators: Poor entrepreneurs save money, carefully apply their entrepreneurial energy and repay debts as scheduled to maintain access to future loans. In other words, poor entrepreneurs are not only prebankable, they represent the population of those individuals who will be aggressively pursued as successful, very affluent captains of enterprise in 10, 25 or 50 years from now.

A radically efficient, large-scale, NEW banking operating infrastructure required: Simply modifying old methods will not successfully expand poor people's participation in their country's economy. Investment in self sustaining institutions that finance poor residents is a comparatively cost-effective use of scarce subsidies for economic development. The costs of doing research in the microcredit and microenterprise areas are extremely low compared to other strategies to stimulate economic development such as tax abatement or continued support for welfare programs. In economics, cost-effectiveness refers to the comparison of the relative expenditure (costs) and outcomes (effects) associated with two or more courses of action. ... Scarcity is a central concept in economics. ... This article is about financial assistance paid by government organizations. ...

Beyond enterprise lending and savings: Increasingly, microfinance is expanding beyond its roots in savings and business lending and now offers other forms of financial services, including most notably insurance and housing microfinance. In many ways, microfinance offers the promise that it could eventually evolve into a specialized form of banking catering to economically active poor people who currently happen to be unbanked. Some new microfinance focused-organizations, see for instance the Development Innovations Group (DIG), have embraced this more expanded vision of microfinance and speak of financial services for the poor or of development finance, rather than of microfinance.

Strengths

In the past few years, savings-led microfinance has gained recognition as an effective way to bring very poor families low-cost financial services. For example, in India the National Bank for Agriculture and Rural Development (NABARD) finances more than 500 banks that on-lend funds to self-help groups (SHGs). SHGs comprise twenty or fewer members, of whom the majority are women from the poorest castes and tribes. Members save small amounts of money, as little as a few rupees a month in a group fund. Members may borrow from the group fund for a variety of purposes ranging from household emergencies to school fees. As SHGs prove capable of managing their funds well, they may borrow from a local bank to invest in small business or farm activities. Banks typically lend up to four rupees for every rupee in the group fund. Groups pay a reasonable 11-12% annual rate of interest. Nearly 1.4 million SHGs comprising approximately 20 million women now borrow from banks, which makes the Indian SHG-Bank Linkage model the largest microfinance program in the world. Similar programs are evolving in Africa and Southeast Asia with the assistance of organizations like Opportunity International, Catholic Relief Services, CARE, APMAS and Oxfam. Microfinancing also helps in the development of an economy by giving everyday people the chance to establish a sustainable means of income. Eventual increases in disposable income will lead to economic development and growth. National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India. ... Nabard, which stands for National Bank for Agriculture and Rural Development, was established on 12th July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981. ... In a support group, members provide each other with various types of nonprofessional, nonmaterial help for a particular shared burdensome characteristic. ... Second harmonic generation (SHG, also called frequency doubling) is a nonlinear optical process, in which photons interacting with a nonlinear material are effectively combined to form new photons with twice the energy, and therefore twice the frequency and half the wavelength of the initial photons. ... Caste systems are traditional, hereditary systems of social restriction and social stratification, enforced by law or common practice, based on endogamy, occupation, economic status, race, ethnicity, // 1555, a race of men, from L. casto chaste, from castus pure, cut off, separated, pp. ... Look up care, carer in Wiktionary, the free dictionary. ... Oxfam International logo Oxfam International is a confederation of 13 organizations working with over 3000 partners in more than 100 countries to find lasting solutions to poverty and injustice. ...

Criticism

Gina Neff of the Left Business Observer has described the microcredit movement as a privatization of public safety-net programs.^[5] Enthusiasm for microcredit among government officials as an anti-poverty program can motivate cuts in public health, welfare, and education spending. Neff maintains that the success of the microcredit model has been judged disproportionately from a lender's perspective (repayment rates, financial viability) and not from that of the borrowers. For example, the Grameen Bank's high repayment rate does not reflect the number of women who are repeat borrowers, and have become dependent on loans for household expenditures rather than capital investments. Studies of microcredit programs have found that women often act merely as collection agents for their husbands and sons, such that the men spend the money themselves while women are saddled with the credit risk.^[6] As a result, borrowers are kept out of waged work and pushed into the informal economy.

Many studies in recent years have shown that risks like sickness, natural disaster and overindebtedness are a critical dimension of poverty, and that very poor people rely heavily on informal savings to manage these risks (see for example The Microfinance Revolution: Sustainable Finance for the Poor by Marguerite Robinson). It might be expected that microfinance institutions would provide safe, flexible savings services to this population, but -- with notable exceptions like Grameen II -- they have been very slow to do so. Some experts argue that most microcredit institutions are overly dependent on external capital. A study of microcredit institutions in Bolivia in 2003 for example, found that they were very slow to deliver quality microsavings services because of easy access to cheaper forms of external capital.^[7] Global data tables from The Microbanking Bulletin show that savings represent a small source of funds for microcredit institutions in most developing nations.

Bangladesh's Finance and Planning Minister M. Saifur Rahman charges that some microfinance institutions use excessive interest rates.^[8]

Debate is also generated by the constraints faced by vulnerable groups, like in the case of people with disabilities, in accessing mainstream microcredit facilities and the need to adapt their policies and practices towards more inclusive models. ^[9]

There are other related critics in the section of critics to microfinance Microfinance is a term for the practice of providing financial services, such as microcredit, microsavings or microinsurance to poor people. ...

See also

• FINCA International, a major US-based, global microfinance institution
• Freedom from Hunger, US charity promoting Credit with Education
• Cooperative banking
• Friends of Women's World Banking, a major Indian apex Microfinance Institution.

http://www. ... The United Nations Food and Agriculture Organisations five year campaign, Freedom from Hunger, was launched in 1960. ... This article, image, template or category belongs in one or more categories. ... Friends of Womens World Banking, India, often shortened to FWWB, India, or just FWWB, is a Indian apex Microfinance and Microenterprise promoting organization, founded in 1982 by Ela Bhatt. ...

References

• Yale Economic Review. Microcredit in South Africa, Summer 2006
• The Economist. The hidden wealth of the poor: A survey of microfinance, November 2005.
• Helms, Brigit. Access For All: Building Inclusive Financial Systems, The World Bank, 2006.

Esther Afua Ocloo (April 18, 1919 - February 8, 2002 ) was a Ghanaian entreprenuer and pioneer of microlending. ... The New York Times is an internationally known daily newspaper published in New York City and distributed in the United States and many other nations worldwide. ... is the 229th day of the year (230th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... “TIME” redirects here. ... is the 120th day of the year (121st in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... is the 229th day of the year (230th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era in the 21st century. ... Logo of the World Bank The World Bank Group is a group of five international organizations responsible for providing finance to countries for purposes of development and poverty reduction, and for encouraging and safeguarding international investment. ...

External links

• Building a Microfinance Institution from Scratch Institution's objective is to offer financial services on a self-sustaining yet efficient basis to microentrepreneurs.
• Journal of Microfinance, a forum for practitioners in microfinance and microenterprise development to exchange information and ideas
• Omidyar-Tufts Microfinance Fund, a partnership between Pierre Omidyar and Tufts University.
• "Microfinance in the U.S." Helping ensure egalitarian access to needed financial services.
• The Promise of Microfinance for Poverty Relief in the Developing World