Breaking the Cycle of Poverty: Micro-Loans

3017 WordsJun 23, 201813 Pages
Many countries in the world have a concerning percentage of poverty in which both food and financial sources are disturbingly limited. Most of the world’s poor have suffered from the deficits of using financial services. Because of a bad credit history or a lack of proof of employment, financial services are most often not accessible for the low income client market. In the western and developing countries, people are being eliminated by the traditional financial system based on the deficiency of guarantees of unaffordable costs to process the loan application, and the lack of data related to their credit history. These factors sometimes lead to borrowing illegally, and neglecting the regulation of lending. Micro-loaning is designed to…show more content…
More than 95 per cent are females as mentioned by Yunis in his TEDxTalks in Vienna when explaining the model of the bank. The goal is to empower women as they are often excluded from the traditional banking system, especially in developing countries. Grameen Bank also helps these women create their own business opportunities as they are almost always more likely to be unemployed than men in both industrialized and developing countries. There are many other microfinance institutions that have become popular after the model of microfinance has become more widespread. One of these institutions is BRAC, known as the largest non-governmental development organization in the world, when measured by the amount of people helped. BRAC, like the Grameen Bank, is based in Bangladesh and employs more than 100,000 people, 70% being women. BRAC is unique as they are self funded up to 80% by their dairy and food projects which are sold in their own chain of retail handicraft stores called Aarong. Another unique edge of BRAC is how they pull people out of poverty: They create groups of the poorest people, they teach them how to think critically and run their own businesses and bring together and share their own resources. Association for Social Advance (ASA) is another micro-finance institution based in Bangladesh founded in 1978. They are a non-governmental organization who try to
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