Grameen Bank

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Grameen Bank and Microcredit

Course Instructor
Institutional Affiliation

Introduction It is often contended that the monetary sector in low-income nations has failed to serve the impoverished. Considering the formal sector, financial institutions as well as banks generally necessitate significant collateral, have bureaucratic and lengthy application process and have a preference for high loan and high-income clients. For the informal sector, usurers often charge extremely high-interest rates, often permit sexist or racist attitudes to direct their lending decisions and tend to undervalue collateral (Kuhinur & Rokonuzzaman, 2010). Accordingly, the failure of informal and formal financial sectors to offer affordable credit to the deprived is usually perceived as a factor among others that reinforces the social, demographic and economic structures that eventually cause poverty. Consequently, "micro-credit" was developed to address this failure and decades has seen a significant growth in this sector. Microfinance over the years has received several donor endorsement to be the most viable anti-poverty initiative. This is because it targets and reaches the impoverished, especially women, and also small entrepreneurs and producers who more often than not have a limited formal access to traditional banking systems. Micro-credit is, in essence, the dispersion of diminutive collateral-free loans to equally liable groups so as to foster income creation as well as the reduction of poverty through enhancing self-employment. It provides credit, in addition to insurance, savings, as well as other fundamental financial services to the underserved. Conceivably, the most renowned micro-credit organization is the pioneering Grameen Bank in Bangladesh and has been cited as the most successful institution in this form of business. As such, many other…...

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