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Sunday, 3 July 2011
Part2-Lending and Borrowing While Bypassing the Bank
Driven by the power of the Internet, this type of people to people lending allows borrowers to make their case for a loan to put their cards - or in this case, your credit score - on the table. The creditors, who may invest up to $ 50 or $ 25,000, can offer loans in the same way that a buyer can bid on an auction online. Once the auction closes, Prosper.com awards the bids with the low interest rates, consolidates the financing and administering the loan. Borrowers to repay their loans as they would with traditional lending institutions and, by default, the community knows. Lenders can diversify their investments and reduce its credit risk for small quantities of many borrowers.
In such people loans to people, form groups (or communities, as they are often called) to establish a good reputation of the group that will lead to higher interest rates and lower reliability. Registration of a solid payment history, for example, allow a community member for a loan at a lower interest rate of a person who belongs to a group.
In the case of Prosper.com, the most popular group (with about 6000 members) is two millionaires. Started by - you guessed it - two millionaires, the group has contributed more than $ 1.5 million for a wide variety of borrowers.
The concept of social online banking is a natural consequence of the need both for borrowers in the current economic climate and the popularity of social investment. Well by doing good is a strong incentive for lenders who enjoy helping those in need, while getting a return on investment. In the process, lenders and borrowers are bypassing the banking system on the road to prosperity.
Article Source: http://EzineArticles.com/479166
Saturday, 2 July 2011
Part1-Lending and Borrowing While Bypassing the Bank
A lack of a better word, "alternative" forms of lending and borrowing power lately largely won in 2006, Nobel laureate Muhammad Yunus, founder of the Grameen Bank in Bangladesh. Yunus discovered that micro loans - sometimes amounting to only a few dollars per loan - could lift entire communities out of poverty. Of course, the situation in the United States is a little different, but alternative forms of credit and loans are gaining weight, and the result is that lenders and borrowers began to prosper.
United States, consumer debt is at an altitude of all time. Many individuals and families have bought homes with unconventional mortgages during the housing boom expensive and have maximized their credit cards on the road. Now that the housing market is cooling, unemployment in some areas, and even Alan Greenspan, predicted the arrival of a recession, consumers are feeling the effects. It is more difficult for people to meet their monthly obligations, which may lower your credit score and start a downward spiral. As a result, many people can not get loans from traditional banks.
While giant banks seem to have a stranglehold on the flow of loans in this country, there is a resurgence of people for loans to people who, before the long tradition of bank loans. A good example of this type of lending and borrowing is Prosper.com, an online service that brings together lenders, who are interested in investing their money and borrowers can apply for funding to consolidate loans, start a business , make a movie, record a CD, or any other company you can imagine.
Friday, 1 July 2011
Part 2. Rural Development in Asia Through Micro Credit
Although there are many problems to be addressed, he focuses on these key areas and focus their energy and commitment to programs have a long-term impact in the regions where it operates. With the success of programs implemented in Bangladesh plans GHC Foundation programs to regions of Mongolia to the end of 2011.
Although microfinance is believable in many ways to alleviate the socio-economic development, there are problems in the system. If the concept is not implemented correctly, the benefits of micro-credit are no longer effective. For example, in many countries, micro-loans without due consideration of the nature of the business, both within the region and profitability, and there is lack of education about the methods and schedules of loan repayment for borrowers.
More often than not, in many regions of the borrower to use the money for daily expenses, defeating the purpose of income-generating micro-credit, and thus leads to situations of people in more debt. NGOs, government agencies and private institutions to collaborate in hand to these problems and processes of implementation, evaluation and improvement of education in a system of micro-credit in question. The way forward is for organizations like George Haligua Cohen Foundation to continue with determination, with the vision of Dr. Yunus. To create "poverty museums" and build a world free of poverty!
Article Source: http://EzineArticles.com/6329162
3. Microfinance Business Model
As a sales representative in a position of power to the side and are evaluated on the reimbursement rates that the first measure of success, they sometimes apply to coercive tactics and even violence to collect micro-credit payments. Some recipients of loans fall into a cycle of debt, with the help of a micro-credit organization for the interest of other commitments.
Indian govt recent decision of borrowing by farmers to repay certain segment is the result of the crime. To avoid such incidents again, it is better to invest in education in this segment by establishing a regular source of income for families.
The need for technology
Microfinance technology will not only help recover data for deserving borrowers, but also in monitoring the flow of money to help. Theoretically, the micro-finance all efforts to increase access to one or improve the quality of financial services to the poor currently use or during use of advantage. The poor borrow from informal lenders and save with informal collectors: For example. They received loans and donations. You buy the insurance of state enterprises. You will receive transfers by wire transfer networks (such as hawala). Technology can help monitor and improve the accessibility of resources to be acquired part of the company, while microfinance institutions can help to measure and report their performance, both financially and socially for the government.
On the lines of the core banking solutions, all MFIs in a country to each other over the network, which ultimately connected assist Govt. Organization to follow the flow of the source of funds. Doing so may help in the LAM.
Good advice can decide to MFIs and NGOs, to the appropriate industry that can help create in a particular place. Have a place regarded as Vidarbha, which lacks adequate irrigation facilities, can best be in place for an energy company to have a solar system can be assessed. It is much more affordable than loan borrowing struggling families of farmers who are in repayment of existing loans.
Completion
Some valuable lessons can be learned from the experience of the functioning of microfinance.
First, the poor repay their loans and are willing to pay a higher interest rate than the commercial banks under the condition that the company pay to take the credit, they successfully held.
The technique should be used for good, while streamlining the flow of funds to create a transparent business model for MFIs.
Consultants should be used to determine whether to ensure the establishment of heavy industry to a greater stability of the target segment.
Article Source: http://EzineArticles.com/3286900
Indian govt recent decision of borrowing by farmers to repay certain segment is the result of the crime. To avoid such incidents again, it is better to invest in education in this segment by establishing a regular source of income for families.
The need for technology
Microfinance technology will not only help recover data for deserving borrowers, but also in monitoring the flow of money to help. Theoretically, the micro-finance all efforts to increase access to one or improve the quality of financial services to the poor currently use or during use of advantage. The poor borrow from informal lenders and save with informal collectors: For example. They received loans and donations. You buy the insurance of state enterprises. You will receive transfers by wire transfer networks (such as hawala). Technology can help monitor and improve the accessibility of resources to be acquired part of the company, while microfinance institutions can help to measure and report their performance, both financially and socially for the government.
On the lines of the core banking solutions, all MFIs in a country to each other over the network, which ultimately connected assist Govt. Organization to follow the flow of the source of funds. Doing so may help in the LAM.
Good advice can decide to MFIs and NGOs, to the appropriate industry that can help create in a particular place. Have a place regarded as Vidarbha, which lacks adequate irrigation facilities, can best be in place for an energy company to have a solar system can be assessed. It is much more affordable than loan borrowing struggling families of farmers who are in repayment of existing loans.
Completion
Some valuable lessons can be learned from the experience of the functioning of microfinance.
First, the poor repay their loans and are willing to pay a higher interest rate than the commercial banks under the condition that the company pay to take the credit, they successfully held.
The technique should be used for good, while streamlining the flow of funds to create a transparent business model for MFIs.
Consultants should be used to determine whether to ensure the establishment of heavy industry to a greater stability of the target segment.
Article Source: http://EzineArticles.com/3286900
2. Microfinance Business Model
The business model on which the majority of the joint work of the microfinance loan. Solidarity lending is a loan in which small groups of members to encourage borrowing group companies against each other to repay. It is an important part of microfinance. Solidarity lending lowers the cost of a financial institution in terms of assessment, management and collecting loans and can eliminate the need for collateral.
A pioneer of group lending, describes Dr. Muhammad Yunus of the Grameen Bank in Bangladesh, the dynamics of lending through solidarity groups as follows:
"... Group membership not only provides support and protection, but also smooth the misconduct of individual members, so that any borrower in the process more reliable. Peer pressure sometimes subtle and not so subtle, in each group remains online with the overall objectives of the credit program .... because the group agrees to the loan application each group member accepts the moral responsibility of the loan. When a group member in trouble, will meet the group at the most forward to help. "
According to this model minimizes the crime rate. Source of income for most microfinance institutions (MFIs) are the high interest rates they charge borrowers, the average real return portfolio was a sample of 704 microfinance institutions, the Micro Banking Bulletin 2006 voluntarily provided 22.3% per year. Microfinance institutions can expand their resources through the mobilization of savings, capital markets, loan funds and effective support for institutional development. To use a logical way to the capital markets, the securitization of loans through micro-enterprise institutions with funds by issuing bonds on the purchases of capital goods. At least one pilot tried to securitize microfinance portfolio in this direction in Ecuador. Alternatively, Bolivia BancoSol a certificate of deposit, which are traded in the Bolivian market. In 1994, he also gave certificates of deposit in the United States (Churchill, 1996). The Foundation for Development Cooperation and obligations of Paraguay to capital for micro-loans (Grameen Trust, 1995). Successful MFIs such as Grameen Bank also generate income through training / research for journalists on new MFIs.
Another type of MFIs in India has acquired the development known as chit funds, they are the closest to a bank in many parts of India. They mobilize a large number of small and offer the same savings as a kind of micro-financing. Chit funds properly is an effective tool for unexpected costs, unexpected and unpredictable, especially for the middle class and small businesses used to meet. Chit Fund is an instrument with a dual use for loans and savings. He has no credit and insurance. Each group is chit in a sense a self-help group. Members invest a fixed amount per month. This collection is available for loan. The auctions are conducted each month. To attract new members with the highest discount. The dividend for each sale is available to subscribers of the discount (the difference between the chit and the amount of the offer) to pay, unless the group leader of the Commission. Shriram chits over 22 lakh subscribers.
The proposed model for MFIs
Considering that give the role of the IMF to lend to the poor sector of society, so to increase their standard of living and to provide a stable life for their families, is only possible if a group member can be with a business idea. But how successful the company is after training and in the timely repayment of the loan can not be guaranteed to perform. Personally, I think, rather than decide the inexperienced group, the company all the time, MFIs or NGOs to target companies that are either a subsidiary of the existing stable or something that can be negotiated outside community to ensure that the money flows. This will provide a stable and regular source of income for many households without the stress of the loan. The reason is behind the criticism of microcredit. Some experts suggested that most microfinance institutions are overly dependent on foreign capital. A study of microfinance institutions in Bolivia in 2003 as they found were really slow, to improve the quality of the micro savings services by easy access to cheaper forms of external data tables capital.Global Micro Banking Bulletin of the show, that the savings of a small source of funding for microcredit in most developing countries represent.
A pioneer of group lending, describes Dr. Muhammad Yunus of the Grameen Bank in Bangladesh, the dynamics of lending through solidarity groups as follows:
"... Group membership not only provides support and protection, but also smooth the misconduct of individual members, so that any borrower in the process more reliable. Peer pressure sometimes subtle and not so subtle, in each group remains online with the overall objectives of the credit program .... because the group agrees to the loan application each group member accepts the moral responsibility of the loan. When a group member in trouble, will meet the group at the most forward to help. "
According to this model minimizes the crime rate. Source of income for most microfinance institutions (MFIs) are the high interest rates they charge borrowers, the average real return portfolio was a sample of 704 microfinance institutions, the Micro Banking Bulletin 2006 voluntarily provided 22.3% per year. Microfinance institutions can expand their resources through the mobilization of savings, capital markets, loan funds and effective support for institutional development. To use a logical way to the capital markets, the securitization of loans through micro-enterprise institutions with funds by issuing bonds on the purchases of capital goods. At least one pilot tried to securitize microfinance portfolio in this direction in Ecuador. Alternatively, Bolivia BancoSol a certificate of deposit, which are traded in the Bolivian market. In 1994, he also gave certificates of deposit in the United States (Churchill, 1996). The Foundation for Development Cooperation and obligations of Paraguay to capital for micro-loans (Grameen Trust, 1995). Successful MFIs such as Grameen Bank also generate income through training / research for journalists on new MFIs.
Another type of MFIs in India has acquired the development known as chit funds, they are the closest to a bank in many parts of India. They mobilize a large number of small and offer the same savings as a kind of micro-financing. Chit funds properly is an effective tool for unexpected costs, unexpected and unpredictable, especially for the middle class and small businesses used to meet. Chit Fund is an instrument with a dual use for loans and savings. He has no credit and insurance. Each group is chit in a sense a self-help group. Members invest a fixed amount per month. This collection is available for loan. The auctions are conducted each month. To attract new members with the highest discount. The dividend for each sale is available to subscribers of the discount (the difference between the chit and the amount of the offer) to pay, unless the group leader of the Commission. Shriram chits over 22 lakh subscribers.
The proposed model for MFIs
Considering that give the role of the IMF to lend to the poor sector of society, so to increase their standard of living and to provide a stable life for their families, is only possible if a group member can be with a business idea. But how successful the company is after training and in the timely repayment of the loan can not be guaranteed to perform. Personally, I think, rather than decide the inexperienced group, the company all the time, MFIs or NGOs to target companies that are either a subsidiary of the existing stable or something that can be negotiated outside community to ensure that the money flows. This will provide a stable and regular source of income for many households without the stress of the loan. The reason is behind the criticism of microcredit. Some experts suggested that most microfinance institutions are overly dependent on foreign capital. A study of microfinance institutions in Bolivia in 2003 as they found were really slow, to improve the quality of the micro savings services by easy access to cheaper forms of external data tables capital.Global Micro Banking Bulletin of the show, that the savings of a small source of funding for microcredit in most developing countries represent.
Article Source: http://EzineArticles.com/3286900
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