Posts Tagged ‘india’
Micro Loans Have Changed India
April 6, 2011 | 
Author How Micro Loans have changed India
Dola Tikader lives in the village of Bankura in West Bengal. For years, she has struggled to make ends meet with her family’s craft of making beaded jewelry. But now Dola is free of most of her financial troubles, is working on expanding her business and has employed 9 other women from her village as well. All of them make a decent income and are generally quite a happy bunch. How has this been possible?
Well, the thing that made this huge difference was a micro loan. Dola got a micro loan of Rs 15,000 from an MFI working in her village and she used it smartly. First she got trained in the Self Help Group (SHG ) initiative where she learnt all about making fancy costume jewelry and updated herself on the latest styles and trends women in Calcutta prefer. After that she used the micro loan to get the raw material required and started producing jewelry. She sold her hand- made jewelry to sellers in Calcutta and made a decent profit. And then she employed other women from her village in her business as well.
It may sound corny, but micro loans and other micro financing have actually changed India. The success rate of SHGs’ who have availed of micro loans is so high that it makes loan sharks look bad. The repayment of micro loans has been estimated to be more than 97%, which is very good by any standards. As support for micro loans keep increasing, so does their influence.
Posted in Micro Loan Success Stories | 
Tags: india, loan, MFI, micro loan, micro loan india, micro loans in india, Micro Loans India, Microloan, Microloans in India, SHG | 
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Micro Loan Repayments
How micro loans have made entrepreneurs out of supposedly simple rural people
The truth about human beings is that everyone is a born entrepreneur. Everyone has the desire of doing something on his own, but few people actually get the chance to do it. The problem is obviously money. Poverty in a third world country like India had become a vicious cycle; a trap that promised to kill whoever dared to cross its path. The poor people had all the initiative in the world, but where would they get the money to do anything? This is the premise which made Professor Mohammad Yunus start the Grameen Bank of Bangladesh in making micro loans available to economically- disadvantaged people. India borrowed the example and developed MFIs to give out micro loans to mainly rural women, though men were not left out.
A micro loan can do wonders for a person belonging to a low- income background. As said earlier, poor people don’t lack the initiative, all they need is the money. Once they got hold of micro loans, they had the freedom of starting their own small home- based businesses. Women engaged themselves in making stuffed toys, pickles, detergents, soaps, chapattis, etc. while men set up small shops or started a woodworking business.
Micro loans in India mark a turning point. The supposedly simple rural folk with nothing to show on their resumes became entrepreneurs. Their success can be easily measured by the 97% repayment of micro loans MFI’s in India have calculated. With micro loans in India, it’s been success all the way!
Start Up A Business With Micro Loans
How to start a business with a Micro Loan in India
For people from a low- income background, availing a micro loan in India is really easy. Whether one wants it to start a business or spruce up an existing one, a micro loan can be really useful. The easy installment and repayment methods of micro loans in India make them a wonderful option for impoverished people looking for the right business break.
The first step is to get a micro loan. For this, going to a Micro Financing Institution or MFI is important. Telling the representative of the MFI exactly why one needs a micro loan and submitting a proper business plan is necessary. The terms of repayment also need to be finalized. It is okay for the person not to have any verifiable credit history as that is the beauty of micro loans. It enables people from the poor rural community to avail them and start their own businesses.
Once a micro loan is got hold of, a business needs to be started. For this, one has to rely on one’s own skills and abilities. For instance, a woman who has had training in making cane furniture and artifacts would do great by starting a small business making and selling cane articles.
It is important for a business to have publicity. One not only should produce goods, but sell them as well. A good idea would be to spend weekdays at producing goods and weekends selling them at the local market.
A great idea is to employ other people in the business.
Micro Loan Success In Tamil Nadu
Women in Tamil Nadu become financially independent with Micro loans
Micro loans in India have ushered in an era of independence among poor rural women. The micro loan schemes have specially benefited the southern Indian state of Tamil Nadu where women from low- income families have come forward to take part in Self Help Group (SHG) initiatives. The SHG’s are helped financially by both by the central and state governments by letting them avail micro loans easily. Krishnagiri district has written yet another success story of the SHG’s and micro loans in India.
In this district, cottage industries have been set up to cater to the needs of rural women. One such SHG involves 20 women who spend their days making soft toys and beautiful accessories. These women have been taught how to make beautiful articles with their hands and they earn a decent Rs 100 to Rs 110 for each day of work. This translates to about Rs 3000 a month. The women are also taught regularly to update their skills and increase their repertoire. They learn the latest designs in soft toys and accessories, which help them keep in sync with the demands of the market.
Not only do the SHG volunteers help the women with training, but also for availing micro loans from Micro Financing Institutions (MFI’s). They also organize fairs and exhibitions to show off the handiwork of the women and make sales regularly. Their success story has shown what a micro loan can do for the poor, disadvantaged, disabled and minority community.
How Micro Loans Help Low-Income Families
Micro loans: A helping hand to low- income families in India
With roughly 1.2 billion people in India living below the poverty line, it is no wonder that government initiatives for poverty alleviation became a serious concern to be considered in the 90’s of the last century. After a lot of thought, it was decided that micro loans would be made available according to the commendable example set by the Grameen Bank of Bangladesh. Micro loans are easily available, do not require a collateral or verified credit history and were available in amounts varying from a few hundreds to a lakh rupees.
Micro loans are meant to be a helping hand for low- income families. They were mainly meant for women, though a lot of men have enjoyed their benefits. A micro loan is usually given out because it is expected that the borrower will use it as capital investment for starting a small scale business, preferably employing a few other people as well. Self Help Groups (SHG’s) were linked to the mainstream banking system through micro loans in India. There are options for multiple micro loans as well.
The concept of micro loans in India is such that low- income persons who would otherwise have not been eligible for a loan from a normal bank or financial institution for setting up a business can take advantage of. With more than 2.5 million SHG’s in India started with the money got from micro loans, micro finance has truly achieved what it set out to.
Micro Loan Success For SHG’s In India
SHG’s in India are thriving: Thanks to Micro Loans
When the government initiated the doling out of credit to Self Help Groups (SHG’s) in India, it was with the purpose of poverty alleviation. It was felt that group lending would ensure better loan repayment and a greater equity in the amount of money given out. The concept of SHG’s was the brainchild of Professor Mohammad Yunus of Bangladesh, from wherein India adopted it. The small loans being given out to poverty stricken people who have no verifiable credit history came for the purpose of setting entrepreneurial ventures came to be known as micro loans in India.
Programs such as ‘Maharashtra Rural Credit Project’, ‘Development of Women and Children in Rural Areas’ and ‘Swarna Jayanti Gram Swarojgar Yogana’ were developed to ensure that the money reached the right people. Since availing of a micro loan is easy, more and more poor people from rural communities came forward and started home- based, small- scale businesses which not only helped them in meeting their own financial requirements, but allowing other people in the community earn a living too.
The number of SHG’s in the country has been rapidly increasing and going by statistics, repayment of such micro loans have been excellent as well. Rough estimates state that there are 2.5 million separate SHG’s functioning in Indian villages and small towns. Thanks to the disbursement of micro loans in India, rural women and men are gaining self- sustainability, increase in incomes and a valid way of empowerment.
Problems With Micro Loans In India
Problems plaguing Micro Loans in India
Micro loans first came into prevalence in India when NABARD started the scheme for poverty stricken disadvantaged people to start their own small scale businesses. For lending of money to the poor rural community, the government set up MFIs’. They were created as a helping hand, a ray of light for impoverished people who did not have the capital to start a small business. MFI’s doling out micro loans replaced the traditional moneylender. But there are many problems plaguing the Micro loan.
Though micro loans were meant to alleviate poverty, a lot of MFI’s started misusing the funds and exploiting those who were in need.
Many MFI’s have been accused of using inhuman methods to collect money. Not only are the poor beneficiaries harassed, they are intimidated, abused and tortured physically and mentally in the name of loan collection.
Micro loans in India have often taken the form of a cycle of loans which borrowers find hard to repay. For instance, a woman borrows a certain amount of money from an MFI. Since she needs to repay a certain part of that money every week, she borrows again from another MFI. Then to repay the second loan, she borrows from a 3rd MFI. And so the vicious cycle continues.
A lot of MFI’s have been accused of charging exorbitant rates of interest on micro loans. Sometimes it is more than what a traditional moneylender would charge.
What these problems highlight is the need of monitoring of MFI’s. There are a huge number of good MFI’s who have been working in this field with commendable success.
Posted in Microloan Problems | Tags: india, MFI, MFI's, micro loan, micro loan problem, micro loans, Microloan, Microloan India, Microloans in India, problem | No Comments »
The Importance Of Micro Loans In India
How important are Micro loans in India?
A micro loan is a loan that has been specially designed to meet the needs of people who are not bankable in the eyes of the average bank or financial institution. Micro loans are usually small amounts of money loaned out to home based or small- scale businesses that have the potential of meeting the financial needs of the entrepreneur and workers. Such type of loans can be repaid when the small business makes profits.
The reason why micro loans in India started out way back in the early part of the 1990’s by NABARD was because of the large number of unemployed people who were poverty stricken. Though it was done basically keeping the requirements of women entrepreneurs in mind, it frequently offered the working poor men a helping hand for starting a small business. The truth about the Indian financial system is that a poor person from a rural community will not have a credit rating that will allow him to get a standard loan from a traditional bank or financial institution. For them, a micro loan is a boon to propel them to start a business to meet their financial requirements.
Micro loans in India have come a long way. Now many MFI’s operate in this sector specifically to help the poor community. Grammeen Foundation, Asmitha, Myrada Bnadhan, Grameen Financial Services and Micro Credit India are a few of the financial institutions which are specializing in providing micro loans to the people who need them the most.