Microloans, small-scale financial aids provided primarily by micro-credit organisations, have emerged as a beacon of hope for underprivileged communities. Introduced by Nobel Laureate Dr Muhammad Yunus through the Grameen Bank, micro-credit has since been embraced by organisations such as BRAC and ASA, expanding its reach with government support.
The primary purpose of microloans is to offer financial assistance to rural people for business ventures and other essential needs. Unlike traditional bank loans, which require extensive documentation, collateral, and higher repayments, microloans are accessible, flexible, and tailored to the needs of the poor. For many rural communities, where banking services are unavailable, micro-credit organisations have bridged the gap, extending their services to even the most remote areas of Bangladesh.
Notably, women constitute the majority of microloan recipients. This is due to their higher repayment rates and the accessibility of microloans through micro-credit organisations. These loans are utilised not only for starting small businesses but also for housing, education, healthcare, and emergencies.
Despite their success, micro-credit organisations have faced criticism for their high interest rates and short repayment periods. However, it is undeniable that microloans have empowered countless individuals to overcome economic hardships and contribute to the national economy. By fostering entrepreneurship and sustainable livelihoods, these small loans have proven to be a powerful tool in empowering women and combating poverty.
Moreover, microloans help create a ripple effect in local economies, generating employment opportunities and stimulating community development. This widespread impact has the potential to create a more resilient and self-sufficient society, where economic challenges are met with innovation and determination.
Microloans may not be perfect, but for many families and individuals, they are nothing short of a blessing.
Mahzabin Saznath Subah
Department of Accounting and Finance
North South University, Dhaka
[email protected]
