Changes in Social Lending - Essay Example

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Professor Muhhamad Yunus occupies a special place in many people’s hearts, especially those who deem him a financial messiah after saving them from the choppy sea that is their financial woes. He is the without doubt pioneer of micro-finance. He has a wide-scale following…
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Changes in Social Lending
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Micro-Lending Muhhamad Yunus occupies a special place in many people’s hearts, especially those who deem him afinancial messiah after saving them from the choppy sea that is their financial woes. He is the without doubt pioneer of micro-finance. He has a wide-scale following across the world particularly so for his insight into innovation at the bottom of the pyramid. For starters, microcredit is the growth of small loans to entrepreneurs too poor to qualify for conventional banks loans. In so many third worlds cum developing nations especially; microcredit permits very underprivileged people to insert themselves into projects that are focused on self-employment— with a view of generating some income. Yunus provides loans through his controversial bank, Grameen Bank—which makes him a pioneering single leader. Grameen Bank based in Bangladesh lends money through solitary groups. The bank’s approaches targets solitary groups as its prime building block.
Further, the use of this technique has clearly had a significantly positive effect upon many prospective borrowers. Without Grameen, the financially handicapped wouldn’t have dared borrowing at all. I mean, to many of them, borrowing would figuratively be building castles in the air. Be that as it may, the determination to warranty that all members of solidarity groups are equally poor is inconsistent, and may not always improve the group performance at all. In all, microcredit is mere bunkum—in fact; it won’t succeed without the help of immense grants. In all, this is a reality that dents on the development of this approach. Conversely, this approach lacks clear lucidity. Glancing at it through perspectives, the overall effect of this development approach has not been to reduce poverty, but only to produce a debt gridlock for gullible borrowers—who are incredulously subjected to particularly supercilious rates of interests practical to conventional banks. It is no surprise at all that Yunus used the infused poverty in his country profitably to gain international attention. This approach of bottom of the pyramid has no capability of finally leading to long-term development, because many poor people will feel that they are being defrauded through the obviously feasible project.
Work Cited
Yunus, Muhammad. Banker To The Poor: Micro-Lending and the Battle Against World Poverty. London: Cambridge University Press, 2010. Print. Read More
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