Posts Tagged ‘MFI’
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.
About Micro Loans In India
The truth about Micro Loans in India
When the government introduced various initiatives for starting Self Help Groups (SHG’s) in the 1990’s, a lot of people were skeptical as to how it would be possible for poor women to find the money to start such businesses. Micro loans came to the rescue. The government started allowing Micro Financing Institutions (MFI’s) to make micro loans available to poor rural women who had no verifiable credit history. Though the amount available through a micro loan was not big, it was enough to start SHG’s dealing with home- based, small- scale businesses.
In Punjab, using the Swarnajayanti Gram Swarozagar Yojana (SGSY), one of the programs brought out by the government, rural women were given assistance with how they could start their own SHGs’. They were given vocational training in how to make stuffed toys, do embroidery, stitching and knitting tasks, etc. The Mukstar district in the state of Punjab has presently 330 SHGs’ who have been helped by this program. What’s more, the women are also made to understand how they could avail of a micro loan from an MFI.
The success of Kuldeep Kaur, one of the women who have taken part in the government initiative and now runs her own SHG shows clearly on her face. She is a differently- abled woman who learnt the tricks of the trade and finally started her own SHG employing other women. She availed of a micro loan which gave her the initial capital investment she required.
Micro loans in India truly deserve the accolades it gets.
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.
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 »