Posts Tagged ‘Microloans in 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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Why Micro Loans
Why giving Micro Loans is better than dole- outs in India
Micro financing and micro loans in India have come a long way since the government started such initiatives way back in the 1990’s after the example set by the Grameen Bank of Bangladesh. Various programs such as the Swarnajayanti Gram Swarozagar Yojana were started to help people from low- income families to start Self Help Groups (SHG’s). SHGs’ are meant to act as initiatives where not only disadvantaged people can help themselves earn a living, but also help similar people from their community do so. It helped foster a spirit of team wok among people. All this has been made possible because of micro loans.
The reason why micro loans are a lot better than dole- outs is because it helps in building self confidence. Rural people without any land or property often have to wait for days for work. They are impoverished and have difficulty in providing for their families. Giving them free food, blankets, clothes and even money may help for the time being, but it will do nothing for their long- term finances. A micro loan on the other hand, makes them feel that a financial institution actually holds them in high esteem. Micro loans help them understand that they have the abilities and skills required for setting up a SHG and running their own business. This is perhaps the reason why repayment of micro loans is at such a high in the country.
Truly, poor people work better with a micro loan than a dole- out.
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 »
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 »
SHG’s In India
Micro loans and SHG’s in India
Laughter echoes as a group of women sit under a banyan tree making cane chairs, small tables, baskets and various artifacts and knick- knacks. They look relaxed, content to be working in a group in a remote village. They are a Self Help Group or SHG who produce cane artifacts and sell them at the nearest town themselves every week. – This is a picture that is increasingly seen in rural communities in India and it has been made possible because of the wonderful entrepreneurship skills of women across the country, with a little help from micro loans.
SHG’s have changed the way women function in the rural community of India. Not only has it led to empowerment of women, it has also given them the power to accelerate the economy. In their small way, SHG’s of India are causing a rise in the country’s GDP. The easy availability of micro loans in India has made this possible. A micro loan is an amount of money loaned out to people who cannot afford to get a loan from a mainstream bank or financial institution. Poverty- stricken women can avail of such micro loans from their local bank if they have a business plan. It was NABARD who started the concept of micro loans in India in the 1990’s and since then, they have come a long way.
A SHG with access to a micro loan can get anything from a few hundreds to a lakh of rupees to kicker their small home- based business.
Posted in SHG's In India | Tags: micro loan, micro loans, Microloans in India, NABARD, SHG's In India | No Comments »
Microloans In India
Microloans in India: How important they are
Microloans are very small loans extended to those who are in poverty for spurring entrepreneurship. Microloans in India are usually given to people who lack steady employment, a credit history that is verifiable and collateral and hence suffer from non- accessibility to traditional means of credit. Microloans for Self-Help Groups (SHG’s) as a program was started by NABARD (National Bank for Agriculture and Rural Development) in the early 90’s of the previous century.
At present, SHG’s model in India helps link informal groups of women who want to start or maintain a small- scale business by connecting them to the mainstream banks and financial system. The SHG model in the country is also the highest when it comes to reaching microfinance clients in the whole world. According to statistics available, since the SHG program was started by NABARD, over 3 million of the groups have been linked to almost 500 mainstream banks. 11 million households across the country has been touched and helped by the scheme, which remains till date one of most successful wealth- inducing programs for the vast rural community.
The truth is that a microloan can effectively change the lives of several people belonging to the rural community or those who are poverty stricken. Microloan in India has created an important link between poor women and mainstream banking, allowing the former to access an array of financial services. They have also provided the government with a way of distributing financial benefits to people who need them.
Posted in Microloans In India | Tags: India Microloan, India Microloans, Microloan, Microloan India, Microloans, Microloans in India, NABARD, Self Help Groups, SHG Program | No Comments »