Self Help Groups or SGH's
After Bangladesh's successes with Grameen Bank, some of India's micro-credit has been structured around Self Help Groups or SGH's.
Many SGH's were primarily started by poor women getting together and starting to pool meager savings together. By pooling meager funds together individuals were able to help each other out in times of crises or need or afford more costly items as and investment in a micro business or home industry.
As individual benefited they were required to pay back to the pool the funds they had borrowed and each party gets a turn to benefit from the pool.
India has formalized this process by supporting SGH's that have demonstrated that they are capable of accumulating savings, within the group, above a stipulated threshold. This was, in many ways, accomplished by encouraging the poor to save a rupee a day.
In spite of government backing, by providing of capital to small local banks, to on-lend to these, the poorest of the poor, in these SHG's many may end up paying as high as 30% -70% interest rates.
Isn't it appalling that the world poorest people generally pay the most for financial services?
Most of these high interest rates are justified on the basis of very high administrative costs associated with extending and handling such small loans.
Micro finance is really good for the rural area, specially where modern banking services are not available. Microfinance help local women to deposit a small amount of money and collectively do something creative using their free time.
Home industry is training for later business.
SGH is really a great initiative to help the poor in need. It really helps indians to grow in right direction. Thanks for sharing.
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Here is my introduction post. Have a look on it.
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I agree with your final point that blockchain can definitely help to slask administrative overheads. However, one tends to over look that there are other reasons behind the high interest rate charged on these small micro-loans, and one of it is the risk of default of the 'poorest of the poor' as you mentioned.
That is an element, but there are other creative ways to mitigate that risk as I will discuss in further articles.
Team effort has always been resourceful.... It will be of great importance to educate the people on Blockchain and its revolutionary applications to end poverty and hunger....
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What happen to the financial system anywhere in the world. The poor become poorer while the rich become more richer. And the distribution of wealth is limited only to the rich! Do you think this micro-finance really help them or the opposite! I hope one day the true fairness and equality rule the world.
Hope springs eternal
its really great work appreciated
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upvoted
Great work
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