Nouslife: Micro credit explained

12 June 2007

Micro credit explained

It seemed to me that this was quite a clear explanation of micro credit. So here it is for wider consideration. I was taken by the conclusion.

‘upside down banking’, because the Grameen model has completely reversed priorities to normal banks. A few big loans are much more profitable than thousands of little ones, and you want to lend to educated, reliable people, not the illiterate and destitute. Banks are normally impersonal institutions interested in money, but Grameen bank managers meet the borrowers at their homes, know all their stories, and hold weekly community meetings. And usually you would be turned away from a bank for having a poor credit rating. Grameen turns away people who have too much money. It is a business oriented to the needs of the least.

As Muhammad Yunus says: “It’s not people who aren’t credit-worthy. It’s banks that aren’t people worthy.”