Posts Tagged ‘loan’
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 Role In India
The role of Micro loans in India: A boon
Most people have heard of Micro finance and micro loans in India, but very few actually give serious thought to it. The truth is that micro loans have changed the way the rural community lives. Once upon a time, someone from a low- income background without any verifiable credit history couldn’t dream of getting a loan fro a bank, but due to government initiative the person can have access to a micro loan without any collateral. Poor disadvantaged people can now set up small cottage industries and earn a decent living for themselves and their families. That is the case in Krishnakari in Tamil Nadu.
With the help of the Mahalir Sangam, a Self Help Group initiative by the state and central government, the economic condition of the people of Krishnakari is changing. Many SHG’s have been formed with the help of the money got from micro loans and poor women and men are earning a livelihood as employees. One such success story is of an SHG which sells ‘Chapatis’. With a micro loan of Rs 22,000 from a Micro Financing Institution (MFI), this SHG started a smart Chapati- making service. They even bagged an order for making 3000 Chapatis for TVS employees everyday. The SHG has not only repaid the micro loan fully, but are making a decent profit as well.
The role that micro loans in India have played is truly commendable. As awareness about micro loans grow, so does the rural economy.
Posted in Microloans In India | Tags: bank, credit, loan, Loans, Mahalir Sangam, Micro Finance, micro loan, Micro Loan In India, micro loan india, micro loans, Self Help Group, SHG | No Comments »
SHG’s Benefitting From Micro Loans
How SHG’s can benefit from Micro loans in India
The concept of Self Help Groups or SHG’s in India was started with the motive of poverty alleviation of disadvantaged people. Community participation is what SHG’s depend on. When the community participates in creating wealth, it ensures that the profits are equitably distributed. This has worked extremely well for the rural poverty stricken community of India. NABARD introduced Micro Finance or Micro loans to help SHG’s way back in the 90’s of the previous century.
The government of India with the help of NABRD made sure that such SHG’s were developed in as many villages as possible, keeping the requirements of people, especially women in mind. The idea was to empower them, create a feeling of community and meeting the financial requirements of those who participated. The response has been overwhelming. Not only have the rural women displayed wonderful entrepreneurship skills, they have also helped in the creation of jobs for other people in their community.
Micro loans in India were started as a scheme to help SHG’s get credit. Regular loans would not have done anything because these people were not considered credit- worthy by mainstream banks. A micro loan could be anything from a few hundred rupees to one lakh rupees and availing it was easy and required no collateral. With such micro loans, an enterprising individual can easily set up a small scale, home- based business. Truly, micro loans in India came as a boon to financially disadvantaged people and have ushered in a rural revolution.
Posted in SHG's In India | Tags: credit, loan, micro loans, Microloans in India, Self Help Groups, SHG | No Comments »
Difference Between Regular Loans And Micro Loans
What is the difference between Regular Loans and Micro Loans?
Micro loans in India have helped a substantial number of people to start small businesses and reduce poverty. According to statistics, over 3 million Self Help Groups have been helped by micro loans in setting up businesses. These Self Help Groups or SHG’s have been linked to mainstream banks and financial institutions. So what is the difference between regular loans and micro loans?
The most important difference lies in the eligibility criteria. A regular loan is given to a person who has the collateral and in case the person fails to repay the loan, legal action can be stared against him. In case of a micro loan, people who are considered unworthy of a loan, i.e. they don’t have collateral, are given the proceeds so that they can create a self- employing business.
Before a person is given a regular loan, his credit history is thoroughly checked to understand whether he will be able to repay the loan. In case of micro loans in India, the financial institution giving the loan is actually taking a sort of risk by giving a supposedly- unbankable person a loan.
Regular loans may be up to several lakhs of rupees. In case of micro loans, there is a certain limit. A micro loan can range between several hundred rupees to a lakh; nothing above that is allowed. It can be repaid in days or several years; depending on the amount of the loan.
Posted in What Is A Microloan | Tags: loan, micro loan, micro loans, Microloan, Microloans, regular loan, Self Help Groups, what is a micro loan | No Comments »
Advantages And Disadvantages Of Micro Loans
Micro Loans: The advantages and disadvantages
It can be truthfully said that micro loans have managed to change the profile of the rural unemployed community in India, in however small a way. Before the advent of micro loan schemes in the country, poor people living in villages and small towns had no way of starting small, home- based businesses in case they were unemployed for the simple reason that they were just not considered ‘loan- worthy’ by mainstream banks. With micro loans in India brought out by NABARD, they rightfully found a helping hand in the form of small loans which they could use in setting up small businesses, therefore meeting their own financial needs as well as employing a few other poverty- stricken people as well.
Advantages
The fact that micro loans in India are easily available is a great advantage. A rural woman will find it easy to get a micro loan and start a small business with it.
Since institutions which provide micro loans work at a local level, it is a lot easier for someone to approach and negotiate a loan from them. Going to a bigger financial institution would have been a lot more intimidating.
A micro loan can be used for a variety of purposes, as deemed fit by the person taking the loan.
Disadvantages
There is a limit as to the amount of money that can be borrowed as micro loans in India.
If a person uses a micro loan as operational cost for his business instead of as a capital investment, it may lead to a cycle.
Posted in What Is A Microloan | Tags: loan, micro loans, micro loans in india, Microloan, NABARD | No Comments »