Essay Of Microcredit

Microfinance is providing the poor access to financial services like credit and savings. Before the revolution of microcredit, the poor are not considered as a practical marketplace by the conventional banks. Due to this, the poor obtained credit mostly through local lenders at very high interest rates. The poor are deemed as not a feasible marketplace by the conventional bank due to some factors. Firstly, they are lacking the resources to invest their borrowings in the productive use. Hence, the money gained is normally used for consumption and not for the purpose of generating income through investment. Secondly, without the histories of credit, it is hard for the conventional banks to assess the creditworthiness of the poor even though they

The establishment of sustainable income for the improvement of socio-economics was required to climb out from poverty trap. The facilities of microcredit have been implemented in many countries around the world especially those categorized as poor and developing countries. Microcredit is also helps to gaining income to cover for living expenses among small business operators. Besides that income plays an important role especially in the aspect of business to determine the rate of profit and loss of a business. In many countries, income also turns out to be the benchmark to measure and evaluate the poverty line of an individual or a community. There are two kinds of measurements known as absolute poverty and relative poverty are determined by poverty in Malaysia. Absolute poverty refers to a minimum standard of living while relative poverty is described as the percentage of population with income of less than the fixed proportion of median income. In order to reduce poverty by generating many Bumiputera entrepreneurs, the Malaysian government has implemented a variety of loan schemes to support the development of small and medium entrepreneurs (10th Malaysian Plan