Re:Kiva.org takes on world poverty with its peer-to-peer mic...
by plinkplonk on Saturday October 27, 2007 @12:56PM
(#73198)
fyi, the interest rates on microfinance is about 20 % / year or greater, at least for many microfinance operations here in India.
Microfinance only works because the folks doing the lending do so without collateral. The people who take these loans can't go to a bank and take a normal loan because the banks insist on collateral, which being poor, they don't have. The interest on a microfinance loan is not low in practice.
As a matter of fact, many banks (here in India) are beginning to set up separate divisions/ organizations to work in microfinance because of the increased rate of return on money loaned. Again, this is about what is happening here in India, not necessarily about grameen etc. I have friends who work for such banks and there are many shenanigans that happen there. Nothing strictly illegal but lots of very unethical stuff.
Microfinance only works because the folks doing the lending do so without collateral. The people who take these loans can't go to a bank and take a normal loan because the banks insist on collateral, which being poor, they don't have. The interest on a microfinance loan is not low in practice.
As a matter of fact, many banks (here in India) are beginning to set up separate divisions/ organizations to work in microfinance because of the increased rate of return on money loaned. Again, this is about what is happening here in India, not necessarily about grameen etc. I have friends who work for such banks and there are many shenanigans that happen there. Nothing strictly illegal but lots of very unethical stuff.