Microcredit

Introduction

Microcredits are small loans to poor people to generate their own income.

Origin of microcredit

This idea started in 1974 when a man called Mohamend Yunus went on a trip through poor villages of Bangladesh. He came across with a group of women who made bamboo furniture and he realizes that they need a credit to develop their business. This group of women couldn’t afford a real bank loan because they didn’t have valuable assets to pledge. So Yunus came with the idea of microcredit. Nowadays remains the same idea.

In 1983 Yunus founded Grameen Bank which started giving small microcredits. Yunus won Nobel Peace Prize for this reason.

Aims

Microcredits are aimed firstly at reduct poverty in third world countries and secondly at empower the world economy. In fact poor people usually have difficulties in getting loans from the bank because they do not have valuable assets to pledge. In order to help these people microcredits started. This system extend banking facilities to the poor men and women who want to develop their businesses. From a business point of view, microcredits allow also the empowerment of the world economy. In fact if third world countries had more money we would do more business with them: they would be buying from us and we would be dealing with them.

Who are the people that can receive microcredit?

Anyone who due to their economic and social situation cannot access bank credit to create or develop a small independent business. In fact they live in a poor country, where the chance to get a bank loan to create a business are little.

Who can give loans?

Banks generally do not provide this type of service, because they can earn more money by big loans, than small ones. Everyone can make these investments, because the amount of money people can invest is small!

In fact also you as students can give microcredit loans to a group of people living in a poor country.

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