Micro-credit operations
Sunday, 22 November 2009
MICRO-credit should be provided only to the ultra poor and poor. But studies conducted by development agencies from time to time show micro-credit is given to the well-off as well. And the interest charged on publicly run micro credit programmes continue to be oppressive for the poor borrowers.
The government should lend to the poor at much lower rates. Of course, the government should not be in the business of squeezing out undue interest from the poor. Big financial gains from credit to the poor cannot be the objective of a government, which claims to be keen on poverty reduction.
The NGOs, without exception, charge high rates of interest for their micro credit. The NGOs should also drastically reduce their micro credit lending rate to benefit the poor, rather than charge high interest rates to multiply profits out of micro credit.
Despite a sharp increase in institutional small credit, the poor still fall prey to private money lenders or 'mahajans'. Studies show that 'mahajans' continue to be a big source of small loans where institutional credit is unavailable. The money lenders exploit the gap where institutional credit is not available. Institutional credit network of the government and NGOs should, therefore, be increased.
Ruhul Amin
New Eskaton, Dhaka.
The government should lend to the poor at much lower rates. Of course, the government should not be in the business of squeezing out undue interest from the poor. Big financial gains from credit to the poor cannot be the objective of a government, which claims to be keen on poverty reduction.
The NGOs, without exception, charge high rates of interest for their micro credit. The NGOs should also drastically reduce their micro credit lending rate to benefit the poor, rather than charge high interest rates to multiply profits out of micro credit.
Despite a sharp increase in institutional small credit, the poor still fall prey to private money lenders or 'mahajans'. Studies show that 'mahajans' continue to be a big source of small loans where institutional credit is unavailable. The money lenders exploit the gap where institutional credit is not available. Institutional credit network of the government and NGOs should, therefore, be increased.
Ruhul Amin
New Eskaton, Dhaka.