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- Title
Study of the Functionally Effective Credit Lending Models of Microfinance.
- Authors
Sinha, Sanjay
- Abstract
Microfinance means transaction of financial services with small amount of capital. In past three decades microfinance has emerged as a high impact tool of financial inclusion thereby promoting inclusive growth. All the governments across the globe broadly have the same objective of moving towards inclusive growth and microfinance is seen as a tool that can fulfill this objective beyond a mere financial instrument. Microfinance has varied products like microcredit, micro-insurance, micro-savings and many more. The success of Grameen Bank of Bangladesh founded Prof Mohammed Younus is an excellent example of turnaround that microcredit can bring in the lives of millions of people who are at the bottom of economic pyramid. The method of funds disbursal of microcredit as adopted by Prof Mohammed Younus led to the formation of Grameen Bank in Bangladesh. It has been observed that microcredit assists capacity building of beneficiaries and acts as an instrument directed towards eradication of poverty. However, effectiveness of credit disbursals and economic progress largely depends upon the method adopted by financial institutions in disbursal of funds. Credit Lending Models that are functional at ground level have evolved in course of time based upon local socio-economic and cultural traits prevalent in a particular geographical location. Further, it has been observed that there is multitude of credit lending model across cultural landscapes. The existence of myriad credit lending model leads to overlapping of their features and difficult to understand by practitioners and academicians. This research paper attempts to bring these credit lending models on one platform. The objective of this research paper is two pronged first, compilation of various operational credit lending models and second, classification and description of features of these credit lending models. In order to fulfill the above two objectives of this research, detailed study has been conducted by visiting microfinance beneficiaries, attending meeting of institutional representatives with beneficiaries, discussion with practitioners, experts of microfinance, regulators and academicians. The secondary sources of data have been gathered through magazines, journals, articles and various websites. The outcome of this comprehensive study is detailed enlisting and describing features of operational and effective models of microfinance. The research is descriptive in nature as it compiles various operational models in a theoretical framework for academic understanding and learning.
- Subjects
BANGLADESH; GRAMEEN Bank (Company); MICROFINANCE; FINANCIAL instruments; CREDIT; FINANCIAL institutions; CULTURAL landscapes
- Publication
International Journal of Business Insights & Transformation, 2020, Vol 13, Issue 2, p74
- ISSN
0974-5874
- Publication type
Article