Fundamental Thoughts Of Micro-Credit

Micro-credit is a process. Poor peoples ensure their development through this process. The poor becomes aware, efficient and hopeful. Credit is provided without any security. People are motivated to be engaged in productive activities and inspired to carry on trades and commerce. Savings, Credits, Insurance etc. are included in micro-credit management. Although the poor people has got a very little entrance in the conventional finance institutions used to get different types of financial assistance in micro-credit management system.

In the decade of 1980, micro credit process was given due importance. Remarkable and important difference of micro-credit process with the conventional credit process is that, there is no risk of bearing the responsibility for the accumulated huge amount of previous loan (family loan also). In this process top most priority is given on the building up of sustainable enterprise by the local poor rather than the subsidized loan distribution. Micro-credit process is a non-profitable and non-political activity by which money is lent to the poor for their socio-economic development.

In conventional theme the loan is meant to borrow money from Bank, Special financial institution, money lending agent and close relatives. To provide loan, bank and other financing agencies maintain a few formalities and requires equitable mortgage which is difficult for the general people. On the other hand, monopoly arrestment and the high interest rate create helpless position of the borrowers.

By the micro-credit program people are committed to work together, who are Like-minded, neglected, failed to fulfill their basic need, having similar financial status and confident on each other. In this process rate of service charge is fixed and loan is provided to the poor people with make them aware through training. Supervision is carried out through the members, installment is realized at their doorstep and other facilities are ensured. All activities of micro-credit program are operated through group or society. Development of poor people especially women are ensured. Women get involved in the income-agnatic activity. They can also be involved in decision-making and can ensure food security, health and education of the family.

In the meantime micro-credit has been recognized in the world as a standard credit program. Through this process it has been proved, the poor also needs various types of financial facilities like well-to-do people to accumulate wealth for necessary expenditure and to save themselves from risks. Micro-credit process is quite sufficient to fulfill this demand of the poor. The challenge for micro-credit process is that to find out the dependable avenues for providing services as per their demands.

Poor people are failed to fulfill their basic needs due to Poverty, Mal-nutrition, Illiteracy, Unemployment, Working capital, Disasters, Un-equal distribution of wealth etc. To address this situation and improve their socio-economic condition, micro-credit program was started.

In micro-credit process to up lift the ill fate of the poor, they are organized under special issue and groups are formed. The poor are provided training to build up awareness and guidance for proper investment of the loan money. At the time of providing loan special steps are taken to monitor the borrower’s improvement at his family level.

Agriculture is the main profession of the people in our country. But ownership of most of the land property is being possessed by only a few persons. The people dependent on agricultural work has got no other work throughout the year. The farmers used to loss their crops in the field due to natural calamity. Sometime they loss/expanded their capital & property due to health problem of their own and their family members. In these circumstances, micro-credit program plays a very important role to create employment for the poor. As a result of inspiring for education and family planning, undesirable problems and expenditure are reduced. Micro-credit program, in the same way, helps a lot to the urban slam dwellers, to increase their income and ensure their better and healthy life.

Through micro credit process preference can be given and capital money may be provided to the women to build up their awareness, capacity for bringing them in the profit earning activities. As a result income of poor family’s increases and the women get the opportunity to participate in the decision making meetings.

Due to combined decision making, the development of the family is ensured. Micro-credit system creates the opportunity to work for around the year. In micro-credit process all decisions are taken through the society/committee and that’s why the fellow feelings among the committee members increase.

Landless: In view of the micro-credit process, that family which has less then 5 decimal cultivable lands will be recognized as land less.

Wealth less: In view of the micro-credit process, that family which has the total property worth taka less then the sale value of .50 decimal/one acor of land of that area is recognized as wealth less.

Overall, those families which are not capable to meet primary basic needs of life are treated as poor and can be classified as landless and wealth less in the eye of micro-credit process.

In view of the micro-credit process, generally the poorest families in developing countries as the bottom 50% of those live below their country’s poverty line or those living on less than $1 a day adjusted for purchasing power parity. In the industrialized world, who live below the poverty line. The World Bank estimates that 1.2 billion people (roughly 240 million families) are living on less than US$1 a day.

Experience shows that women are a good credit risk, and that women invest their income toward the well being of their families. Women themselves benefit from the higher social status they achieve within the home when they are able to provide income. Women are often responsible for the upbringing of the world’s children and the poverty of the women generally results in the physical and social underdevelopment of their children.

General Banking System	Micro-credit System
Landless and wealth-less are not allowed to get loan	Landless and wealth less are allowed to get loan.
Committee formation is not required, individual and organization are allowed loan based on their financial strength.	Formation of committee or group is a must. Discipline of the individual activities and of the organization are taken into consideration along with the capacity for investment, loan is provided
Social status or confidence of the borrower is not taken into consideration.	Social status or confidence of the borrower is taken into consideration.
Loan is provided on the basis of mortgage.	Loan is provided on the basis of mortgage.
Loan is repaid through midterm or long term installment as per contract.	Loan in realized through weekly/fortnightly/ monthly installment or as per contract.
No provision for meeting of the borrowers.	There is a provision for holding meeting among the borrowers.
Regular saving is not mandatory for the borrowers	Borrowers are to deposit their saving regularly.
No training is provided to the borrowers.	Training is provided to the borrowers.
The borrowers are to go to the bank for the repayment of the loan	Installment is collected at the doorsteps of the borrowers.
To get loan, recommendation form the unconcerned persons are required.	Recommendation from the society is required.
One staff can invest much money among a few borrowers.	One staff can invest comparatively less money as loan.
Operational cost is comparatively less.	Operational cost is comparatively high