MFIs manna for the very poor

Micro credit has become a wheel of change for Nepal as it has not only empowered women financially but also brought about social change.
Releasing a microcredit report 'State of the Microcredit Summit Campaign Report 2009,' here today, Shankar Man Shrestha, chief executive officer (CEO) of Rural Microfinance Development Centre (RMDC) -- a development bank operating as an apex microfinance organisation --- said that Micro Finance Institutions (MFIs) in Nepal have served around 1.1 million people. It had a target of serving 1.2 million poor. "However, the RMDC-affiliated 72 institutions have so far served 7,00,000 families and within this year 2,00,000 more families will get our services to improve their living standards," he said.
During the conflict era also repayment was at 99 per cent as the poor people are more honest, Shrestha said adding that microcredit has created immediate employment in the rural areas.
Micro-loans are given to help extremely poor people start or expand a range of tiny businesses. It became a buzz word after Professor Mohammed Yunus from Bangladesh won the Nobel peace Prize in 2006 for his microcredit campaign in his country. It could be a bridge to bridge the rich-poor gap as it only lends to the landless and poorest of the poor. Microcredit has also increased accessibility of the poor to banks. "It's like a bank -- at your doorstep -- that lends you without collateral for starting a small business," Shrestha said.
Though some of the hilly and remote areas have not yet benefitted from MFIs, Shrestha said that microcredit has helped increase general household income.
More than 100 million poorest families in the world received micro-loans in 2007, exceeding a goal set 10 years ago, according to the report released today by the Microfinance Summit Campaign.