Benefits of microcredit

Benefits of Microcredit
What is microcredit? The term micro means small and the microcredit means a small loan. Normally, for applying a loan in a bank we require steady employment, collateral security and a verifiable credit history. The bankers would grant a loan after verifying all the above. But, there are some people who could not satisfy the above conditions due to unemployment and poor living conditions. Microcredit offers financial assistance to the poor persons. In the developing countries, the microcredit is gaining popularity.
Microcredit gives a way for the persons below poverty line to engage in self employment projects which helps them for their livelihood. The microcredit takes parts in the economic growth of the country. Since small amount only granted as loan, the persons who obtained loan repay it sincerely. The second loan may also be granted to those who repay the first loan within the time limit. The over borrowing is not allowed in microcredit.
In village, the women join in group and obtain microcredit. They start a small business and to meet the needs for funds to buy raw materials or tools they avail microcredit. The village women could not do any business individually. If they join in a group they gain confidence and the educated person in the group would manage accounts. The low income group women now show much interest in doing small business to earn their livelihood. They join in a group and start business projects by obtaining microcredit. Since there is commitment for repayment, they work hard to develop the business and repay the loan. When the women work in a group, the group leader would give a guarantee for the loan proposed to commence a new business.
The poor entrepreneurs and low income people are the target for microcredit. The loan is granted for income generation, for health and education purpose and developing business activities in villages. The terms and conditions for microcredit are simple and suited to the local conditions of the villagers. It is a way for driving poverty from the country. As all persons could not approach lending institutions to borrow money at bank rates to start business, the microcredit is really a boon to them.
In villages the poor village people were suffering a lot with village moneylenders. Since microcredit relieved them from the bondage, they are indeed happy. The social and economic conditions have been improved in villages because of the introduction of microcredit. They move out to nearby town for marketing the product and earn money. So, they get an exposure to the outer world. They produce milk products, village crafts, home made snack foods, do trading of groceries and textiles.
The economic development is watched by seeing the number of loans granted, number and amount repayment and the time limit taken by borrowers for repayment. Definitely, there is progress in microcredit activities. Since the fundamental problem of poverty is solved by giving microcredit, the villagers could use this an opportunity to come up in life. The media and social welfare organizations should teach them and help them to get education about the benefits of microcredit. The economic prosperity of the country would improve, if we use microcredit as a ladder of success in the financial growth of the country.