Sheila McLeod Arnopoulos

Microcredit

Small loans offered in developing countries, mostly to impoverished women, with no requirement for collateral, so that they can start small businesses.

1974

The Self-Employed Women’s Association bank was started by 6,000 grassroots women in India, one of the first to lend to marginalized women.

$27

In 1976, Muhammad Yunus lent $27 to 42 poor women in Bangladesh, leading to the Grameen Bank in 1983.

137 million

Poor people with access to microcredit, 113 million of them women, according to the State of the Microcredit Summit Campaign Report 2012.

24%

Average microcredit interest rate in India, against about 35% worldwide, because of the high cost of serving the poor.

Figures as reported in 2012.

How it works

The Grameen model, or peer-lending system, consists of five self-selected women who guarantee the loan taken by their members. Other variations, called self-help groups and trust groups, are practised by non-government organizations and microfinance institutions.

To monitor interest rates being charged, and to guard against exploitation, an NGO called Microfinance Transparency has been set up.

Microcredit started with a strong social mission and depended largely upon donor money, but now sustainability gained by profits is becoming a requirement. Big commercial banks have entered the arena and some microfinance institutions are now trading on the stock exchange. This has created a spirited debate over social mission versus profit, and the right balance between the two.

Microcredit, accompanied by training and varying kinds of insurance, continues to grow. Microcredit schemes have now sprung up in countries such as Canada and the U.S., where people without collateral have also been denied access to credit.

Resources

Montreal

Quebec

Organizations in Saris on Scooters