Posts Tagged ‘Microloan’
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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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 Jharkhand
Women in Jharkhand become self- dependent with the help of micro loans
Micro loans in India have helped pave the way for empowerment of women throughout the country. Success stories from far- flung villages of India have made micro loans the buzzword in rural economy. At one time, these women had nothing to do except household work and looking after children. But now they are starting businesses and helping their own families economically and also employing other people as well. A small village called Gumla in Jharkhand has a success story that speaks highly of what micro loans and Self Help Group (SHG) initiatives have achieved so far.
Gumla is a tribal village with mostly economically – disadvantaged people. The district administration gave women from this village training in a variety of vocations such as making of soaps, pickles, detergents, and phenol. The training went on for 15 days after which they were given the option of being able to avail of a micro loan. Most women who underwent the training started their own home- based businesses or joined another SHG and started earning their living. One of the women is Nita Kumari who has joined an SHG and she makes pickles everyday. She is happy that she has been able to improve her family’s condition a lot.
Micro loans have actually enabled people like Nita Kumari to actually do something on their own and become self- reliant. Perhaps more than the money is the self- confidence that a micro loan can give to these simple folks.
Posted in Micro Loan Success Stories | Tags: gumla, home based business, jharkhand, micro loan, Micro Loan Success, micro loans, Microloan, SHG | No Comments »
Benefits Of Micro Loans In India
What are the benefits of Micro Loans in India?
Whatever positive things that are said about what Micro loans have done in India does not really match what they have done in actuality. The empowerment of rural women is a huge benefit micro loans have caused. But there are other benefits worth mentioning as well.
The fact that a micro loan is not a hand- out is something that should be talked about. Giving out food, blankets and money to the poor is a noble gesture no doubt, but none of this makes anyone self- reliant. A micro loan helps an individual do something with his skills and abilities. It gives the borrower the self- confidence to think that he is being given a loan so that he can do something good out of it and repay the loan along with interest. This self- confidence boost goes a long way in making people realize their inner potential.
Micro loans in India have helped millions of rural, poverty- stricken women from low- income families to set up small businesses , making soft toys, accessories, cane artifacts, etc. These women have gained the respect of society because they are now doing something that is financially helping their families.
Micro loans have paved the way for long- term economic growth. As more and more people avail such micro loans and set up businesses, however small they are, it is actually helping the country’s economic growth.
Micro loans in India truly deserves the good feedback it gets from all quarters.
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.
Rural Micro Loan Success
Rural women’s success story tastes sweet: What micro loans in India have achieved
Since the early 90’s of the previous century, micro loans in India have continued to become more and more important to the social and economic structure. Till its advent, it was not considered that poor women from villages could actually become self- reliant and become the breadwinner of their families. But now, this is a reality; not a far-fetched dream. The success of micro loans in the country has been unprecedented as more women from far- flung parts of the country are coming forward to set up small- scale cottage industries with the help of micro loans financed by Micro Financing Institutions (MFI’s).
One such success story is that of a Self Help Group (SHG) in Tamil Nadu which involves women in making a particular variety of milk sweets and sells them in the market. The special sweet is called ‘Palkova’ and is made with milk and sugar as its main ingredients. The sweet is sold not only to the locals, but also to people in Bangalore, Erode and Coimbatore. The very fact that people from such big cities are buying the sweets proves that the SHG women are doing a great job. Shops, retailers and even corporate offices are falling for the Palkova!
All this success has been made possible with the help of a micro loan that this SHG obtained. Truly, the advent of micro loans in India has ushered in a new era of economic empowerment of the rural women.
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 »
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 »
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.