Microcredit Essay & Paragraph
‘Microcredit’ is a new and fruitful concept in economics. This means a very small amount of loan. To get a loan from a bank, one has to mortgage any property. So those who do not have property, those who are very poor, can not take any loan from the bank. That is why Muhammad Yunus has come up with the idea of microcredit through which thousands of poor people can get loans without any kind of mortgage or collateral. His idea has proved to be effective in alleviating poverty all over the world. Therefore, Muhammad Yunus and his Grameen Bank have been jointly awarded the Nobel Prize. The following essay and paragraph shed light on the importance and role of microcredit.
Microcredit Essay in English, 600 Words
Introduction: ‘Microcredit’ means a very small amount of credit. However, this small amount of money can be very important for an extremely poor person. But it is difficult for a poor man to get any amount of loan from a bank without any security. Dr. Muhammad Yunus thought about this problem and invented a system through which thousands of people are getting microcredit without any kind of mortgage or security. It is also amazing that the rate of loan repayment is very high. It is about 98.85%.
Invention: The poverty of the people of Bangladesh made Dr. Md. Yunus sorry. He noticed that many active people could not become self-reliant for want of a small amount of money. He began to think to find a way of extending loans to the extremely poor people without any security. At that time he was an Associate Professor in the Department of Economics at the University of Chittagong. He went to a local branch of Janata Bank near the University of Chittagong and asked the manager of the bank to extend loans to some poor people in the locality without any security. But the bank refused to extend the loan without any security. Then he personally stood as guarantor for those people. Those people were from a village named Jobra. Within six months the poor villagers repaid the loans. He expanded his work to some other villages. Then he prepared a project proposal for extending loans to poor people without any security and submitted the proposal to Bangladesh Krishi Bank. In 1976 the project started as a branch of Krishi Bank named Bangladesh Krishi Bank Experimental Grameen Branch but the overall authority of the branch was not given to Dr. Yunus by the board of the bank. From that project after overcoming many problems and managing Bangladesh Bank, the Minister of Finance and the Government, ‘Grameen Bank’ started as a bank on the 1st October 1983. At first as the Experimental Grameen Branch, then Grameen Bank Project, and at last, the scheme started operating as the Grameen Bank. In the beginning, the loan was extended to 42 people from the personal fund of Dr. Yunus. The number multiplied soon. At first, the government had 60% ownership of the project and the poor people had 40% ownership.
Present Situation: Grameen Bank has, so far, distributed about 29,000 crore taka as loans. The loan recovery is about 99%. The major portion of the borrowers is the poor village women. In this way, this micro-credit is playing an important role in ensuring women’s empowerment and gender equality. Now Grameen Bank has 2,226 branches. The members have 93% ownership and the rest 7% ownership goes to the government. In the beginning, the scheme operated with the personal fund of Dr. Yunus. Then the project ran for six years with government funding. From 1982 to 1995 loans and aid were taken from the donor agencies. In 1998 Grameen Bank took a loan from the local bank by issuing bonds through a government guarantee. Now Grameen Bank operates fully on its own money. The bank ensures development locally with the money of the local people. This idea of poverty alleviation through microcredit has become very popular and is being implemented in more than one hundred countries of the world.
Conclusion: There are certain allegations against the lenders of microcredit. Such allegations include a high rate of interest, deception, torture of the borrowers, and so on. Such problems should certainly be addressed properly for getting benefits from the microcredit system.
Microcredit Paragraph, 100 Words
‘Microcredit’ means a very small amount of loan. Although the amount of money is small, it can be very important for a very poor person. Because it is difficult for a poor person to get a loan from a bank without any security. Dr. Mohammad Yunus has come up with the idea of micro credit through which thousands of people are getting microloans without any kind of mortgage or collateral. It is also surprising that the debt repayment rate of these poor people is much higher. It is about 98.85%. Thus the concept of poverty alleviation through microcredit has become very popular and is being implemented in hundreds of countries around the world.