Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, and a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans. As of 2009 an estimated 74 million people held microloans that totaled US$38 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent. The first economist who had invented the idea of micro loans was Jonathan Swift I the 1720’s Microcredit is part of microfinance, which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983. Many traditional banks subsequently introduced microcredit despite initial misgivings. The United Nations declared 2005 the International Year of Microcredit. As of 2012, microcredit is widely used in developing countries and is presented as having "enormous potential as a tool for poverty alleviation." Microcredit is a tool that can possibly be helpful to reduce feminization of poverty in developing countries.
Microfinance is a of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. ID Ghana is an example of a microfinance institution.
Opportunity International is a 501(c)(3) nonprofit organization chartered in the United States. Through a network of 47 program and support partners, Opportunity International provides small business loans, savings, insurance and training to more than 14 million people in the developing world. It has clients in more than 20 countries and works with fundraising partners in the United States, Australia, Canada, Germany, Switzerland, Singapore, Hong Kong and the United Kingdom. Opportunity International has 501(c)(3) status as a tax-exempt charitable organization in the United States under the US Internal Revenue Code.
Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.
The National Bank for Agriculture and Rural Development (NABARD) is an All India Financial Institution (AIFI) and an apex Supervisory Body for overall supervision of Regional Rural Banks, State Cooperative Banks and District Central Cooperative Banks in India. It was established under the NABARD Act 1981 passed by the Parliament of India. It is fully owned by Government of India and functions under the Department of Financial Services (DFS) under the Ministry of Finance.
The Association for Social Advancement is a non-governmental organisation based in Bangladesh which provides microcredit financing.
Micro financing in Tanzania started in 1995 with SACCOS and NGOs. It has since then contributed to the increasing success of international micro financing. Microfinance stills remains a relatively new in Tanzania since it has not penetrated yet. Since 1995, microfinance has been linked to poverty alleviation programs and women. The government made efforts to ensure commercial banks have continued to provide financial support to the small entrepreneurial business. However a microfinance National Policy was implemented in 2002 to encourage and support microfinances in the country. Since the implementation, micro financing was officially launched and recognized as a poverty alleviation tool. Due to its increase exposure and use in the nation, commercial banks have developed interests in to offer microfinance. There are various microfinance banks that functions as supporting institutions in the country that usually provide microfinance services. These may include the CRDB, National Microfinance Bank, and AKIBA. However there are also other few banks that are concerned with micro financing in Tanzania such as the PRIDE and SEDA, Tanzania Postal Bank and FINCA. Community and small banks have also expressed interest in the same including the NGOs and other non-profit organizations.
Village banking is a microcredit methodology whereby financial services are administered locally rather than centralized in a formal bank. Village banking has its roots in ancient cultures and was most recently adopted for use by micro-finance institutions (MFIs) as a way to control costs. Early MFI village banking methods were innovated by Grameen Bank and then later developed by groups such as FINCA International founder John Hatch. Among US-based non-profit agencies there are at least 31 microfinance institutions (MFIs) that have collectively created over 800 village banking programs in at least 90 countries. And in many of these countries there are host-country MFIs—sometimes dozens—that are village banking practitioners as well.
A rotating savings and credit association (ROSCA) is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending. Members all chip in regularly and take turns withdrawing accumulated sums.
Solidarity lending is a lending practice where small groups borrow collectively and group members encourage one another to repay. It is an important building block of microfinance.
A CVECA is a self-reliant village savings and credit bank. CVECAs are designed to operate in rural areas with clients who are primarily subsistence farmers, with minimal non-farm income. While most banks have less than 250 members, they achieve service flexibility and economies of scale through networking together into regional federations. "Each bank is managed by 2 part-time local staff and a board composed of members, all of whom have minimal education."
Financial inclusion is the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services which include banking, loan, equity, and insurance products. It is a path to enhance inclusiveness in economic growth by enabling the unbanked population to access the means for savings, investment, and insurance towards improving household income and reducing income inequality
Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business or chit-fund business, but does not include any institution whose principal business is that of agriculture, industrial activity, purchase or sale of any goods or providing any services and sale/purchase/construction of immovable property.
The SIDBI foundation for Microcredit (SFMC) is an Indian financial division that provides bulk loans to microfinance institutions (MFIs) in India. It is a division of Indian governments Small Industries Development Bank of India (SIDBI). In practice, it acts as an oversight over MFIs which are the intermediaries between the retail borrowers consisting of poor people and individual borrowers living in rural areas or urban slums and the public sector development finance institutions.
Society for Elimination of Rural Poverty (SERP) is an autonomous society of the Department of Rural Development, Government of Andhra Pradesh. SERP is implementing Indira Kranthi Patham (IKP), a statewide community driven rural poverty reduction project to enable the poor to improve their livelihoods and quality of life through their own organizations. It aims to cover all the rural poor households in the state with a special focus on the poorest of the poor households. SERP also played an active part in the relief efforts taken up by the Andhra Pradesh Government during the devastating Indian Ocean tsunami in 2004.
Khayerkhal is a village situated under the Maynaguri block at "Padamati I Gram Panchayat" in Jalpaiguri District, West Bengal, India. Its length round covers around 4-4.5km. Its total population is 2471 of which 1315 are male and 1156 female, occupying 560 households. The total families are 282 and BPL families are 237.{all data in 2006*)
The Rajiv Gandhi Charitable Trust (RGCT) is a registered non-profit institution which was established in 2002 by the Indian National Congress. Named after the 6th Prime Minister of India, the trust is headed by the Interim President of the Indian National Congress.
The Rajiv Gandhi Mahila Vikas Pari Yojana (RGMVP) is the flagship program of Rajiv Gandhi Charitable Trust, a registered non-profit institution, working for poverty reduction, women empowerment, and rural development in Uttar Pradesh, India, since 2002. RGMVP believes that "the poor have a strong desire and innate ability to overcome poverty." It aims to organize poor rural women into community institutions and promotes financial inclusion, health care, livelihood enhancement, education, and the environment.
The impact of microcredit is the study of microcredit and its impact on poverty reduction which is a subject of much controversy. Proponents state that it reduces poverty through higher employment and higher incomes. This is expected to lead to improved nutrition and improved education of the borrowers' children. Some argue that microcredit empowers women. In the US and Canada, it is argued that microcredit helps recipients to graduate from welfare programs. Critics say that microcredit has not increased incomes, but has driven poor households into a debt trap, in some cases even leading to suicide. They add that the money from loans is often used for durable consumer goods or consumption instead of being used for productive investments, that it fails to empower women, and that it has not improved health or education.
Community banking is a non-traditional form of money-lending. Unlike banks or other classic lending institutions, the funds that community banks lend to borrowers are gathered by the local community itself. This tends to mean that the individuals in a neighborhood or group have more control over who is receiving the capital and how that capital is being spent. This practice has existed in some form for centuries; in ancient Egypt, for example, when grain was often used as currency, local granaries would store and distribute the community’s food supply. Since that time, a variety of community banking models have evolved.
