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the extension to individuals of small loans to be used for income-generating activities that will improve the borrowers' living standards. The borrowers, most of whom usually are poor women, do not qualify for a conventional bank loan, and the loans, which may be as little as $20 for very poor borrowers in some developing countries, typically are for a short term (a year or less), are not secured by collateral, and require repayment in weekly installments.

Because of the high cost, relative to the loan size, of running a microcredit program, interest rates on microcredit loans are high, sometimes as much as 35%; in the case of microcredit loans by commercial institutions, the rates may be even higher. Peer support groups consisting of other borrowers are often a component of microcredit programs, and help ensure that the borrowers repay the loans. Successful microcredit programs typically also focus on improving the education and health care of their borrowers, and do not allow individuals to borrow more than they can afford to repay.

The concept of microcredit was developed in 1976 by Muhammad YunusYunus, Muhammad,
1940–, Bangladeshi economist and banker, b. Chittagong (then in British India), grad. Vanderbilt Univ., Nashville, Tenn. (Ph.D. 1971). Yunus, who taught economics in the United States after receiving his doctorate, returned to his homeland when it won its
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, a Bangladeshi economist, as a means of alleviating the poverty and improving the lives of the very poorest inhabitants of Bangladesh. The Grameen Bank, formally established in 1983 through Yunus's efforts, expanded microcredit with the help of loans and grants, and is now self-supporting. Microcredit programs and institutions have been created in many other nations in Asia, Africa, and Latin America. Similar programs have been established to aid individuals in developed countries who do not qualify for conventional loans.

Although microcredit programs were originally operated by nonprofit organizations, a number of for-profit companies also focus on microcredit lending. The term microfinance, although often used as a synonym for microcredit, is especially used to describe commercial microlending and also may include other financial services offered on a small scale to the poor, such as bank accounts that do not require minimum balances.

Some critics see microcredit misfocused, because it is too limited to alleviate poverty in general, especially in societies where many causes other than restricted access to credit have resulted in pervasive impoverishment, but it has nonetheless improved the lives of millions of individuals and their families. The development of for-profit microlending, on the other hand, disturbs nonprofit microcredit lenders because the need for profits potentially shifts microcredit lending to those who are less poor while diminishing the resources available and the willingness to lend to the very poorest. However, in India, where for-profit microlending grew rapidly in the first decade of the 21st cent., microfinance companies in some cases lent indiscriminantly to borrowers who lacked the means to repay the loans, leading to a sharp rise in defaults in 2010 and a public backlash against the industry. Backlashes against microcredit programs and institutions (including the Grameen Bank) have also occurred in other nations, sometimes for politically motivated reasons.

References in periodicals archive ?
Est egalement prevu, en marge de l'exposition, un forum sous le theme [beaucoup moins que] Micro Finance et Metiers Verts vecteur de developpement du sud tunisien [beaucoup plus grand que] ; la rencontre sera animee par des professionnels et d'eminents experts.
As of November this year, P3 has helped 16,210 micro entrepreneurs with four national micro finance institutions (MFIs) and 90 local conduits assisting in delivering the micro-loans in the countryside.
The rating also takes into account the vast experience of the bank in the micro finance sector and its leading position in the micro finance industry in terms of total gross loan portfolio deposits and asset base.
Having launched its operations in May 2009, Suryoday Micro Finance Private Limited has since expanded its operation across seven states.
Hulme and Mosley (1996) quantified the impact of micro finance on poverty reduction in four countries, namely, Indonesia, India, Bangladesh, and Sri Lanka.
Microfinance ( Guwahati), Suryoday Micro Finance ( Mumbai) and Utkarsh Micro Finance ( Varanasi).
Editors Bhaskar and Narayana present readers with a collection of academic essays devoted to examining the role of micro finance in empowering women, focusing primarily on women living in rural India.
Kongalend Financial Services is a micro finance development focused institution.
Karachi -- Buksh Foundation partners with KIVA Micro Finance for supporting micro entrepreneurs in meeting development sector goals and alleviating poverty in the country.
Micro finance entities borrow from the big banks and lend to the poor.
During the meeting, a presentation on AGFUND development history, focused on orientations in the poverty fighting and AGFUND strategy in the application of the mechanism of micro finance, as well as the definition of the eight micro finance banks which was founded in partnership with the private sector in Jordan, Yemen, Bahrain, Lebanon, Syria, Sierra Leone, Sudan, and Palestine.
5 billion Naira (US$ 17 million) had been paid to depositors of the 103 closed Micro Finance Banks (MFBs) last December.