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TITLE OF THE PAPER : “MICRO FINANCE & THE ROLE SELF HELP GROUPS (SHG) IN MICRO CREDIT”

Author:- Dr. Jayeshkumar C. Jani
Faculty of Business Administration
Dharmsinh Desai University
Nadiad

Content

Introduction
What is Micro Credit
Grameen Credit
Banking Rates and Norms
Role of SHG
Advantages of Financing Through SHG's
Role of NGQ in Micro Credit
Micro-Finance Credit Lending Models
Micro Credit Loan Delivery Models

Recent Studies on Micro Credit
Legal Frame Work

BACKGROUND

Availability of credit is the basic requirement to any citizen, more so, to a poor person. Credit, should be timely as well as easily available. Formal institutions, including nationalized banks are unable to meet the micro credit requirements of the poor people, as normally credit for income generation has been institutionalized rather than micro credit for various purposes. This has left poor persons with no option except to depend on moneylenders for credit. Money lenders with abundant common sense offer timely - but a exploitative credit, which act as a poverty trap for the poor. Various studies have proved that in rural India, a person taking credit from money lender for health or for a ritual like marriage forever has gone below poverty line.

Poverty as we understand is a complex phenomena and it cannot be solved only by providing income generation assets but through comprehensive personality development of poor person enabling him/ her to meet various needs.

MICRO CREDIT

Micro Credit is defined as provision of thrift, credit and other financial services and products of very small amount to the poor in rural, semi-urban and urban areas for enabling them to raise their income levels and improve living standards. Micro Credit Institutions are those which provide these facilities

GRAMEEN CREDIT
"Whenever I use the word "micro credit" I actually have in mind Grameen type micro credit or Grameen credit. But if the person I am talking, to understands it as some other category of micro credit my arguments will not make any sense to him. Let me list below the distinguishing features of Grameen credit. This is an exhaustive list of such features. Not every Grameen type programme has all these features present in the programme. Some programmes are strong in some of the features, while others are strong in some other features. But on the whoie they display a general convergence to some basic features on the basis of which they introduce themselves as Grameen replication programmes or Grameen type programmes. Grameen Credit is based on the premise that the poor have skills which remain unutilised or under-utilised. It is definitely not the lack of skills which make poor people poor. Grameen believes that the poverty is not created by the poor, it is created by the institutions and policies which surround them. In order to eliminate poverty all we need to do is to make appropriate changes in the institutions and policies, and/or create new ones. Grameen believes that charity is not an answer to poverty. It only helps poverty to continue. It creates dependency and takes away individual's initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty. Grameen brought credit to the poor, women, the illiterate, the people who pleaded that they did not know how to invest money and earn an income. Grameen created a methodology and an institution around the financial needs of the poor, and created access to credit on reasonable term enabling the poor to build on their existing skill to earn a better income in each cycle of loans. If donors can frame categorywise microcredit policies they may-overcome some of their discomforts. General policy for microcredit in its wider sense, is bound to be devoid of focus and sharpness. General Features of Grameen Credit are :

a) It promotes...
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