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.
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