Lending to people that do not present the traditional borrower's profile (poor people, unemployed...) small amounts of money (compared to the average amount lent by commercial banks in these countries)  for productive projects are the main characteristics of micro credits.

 

The professor Muhamad Yunus was the first one to have lent to poor people in Bangladesh so they could break the vicious circle of borrowing, selling at very low prices their production to the lenders and borrowing again to be able to buy some new raw material...

 

He has been the initiator of a new perception of credit worthiness of poor people and original garanties to avoid repayment problems

 

  • Decentralized structure very close to the borrower

  • Group structure where borrowers could not only pressure bad payers but also help each other 

  • Weekly installment for a better follow-up and quick actions in case of repayment problems

  • Link credit and saving

  • Mostly women borrowers

 

The high repayment rate of Grameen speaks for itself...

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