Sunday, 30 January 2011

Let's bring microcredit back on track - Muhammad Yunus

"Commercialization has been a terrible wrong turn for microfinance, and it indicates a worrying “mission drift” in the motivation of those lending to the poor. Poverty should be eradicated, not seen as a money-making opportunity."
This little excerpt from the article written by Muhammad Yunus 
 "Sacrificing microcredit for megaprofit", on the New York Times, summarizes the problems suffered by the sector in the last years. 
Many borrowers found themselves struggling with high interest rates, dealing with aggressive marketing and loan collection practices.
To go back to its origin and mission, microcredit needs to be more strictly regulated. The creation of an ad hoc regulatory authority would better ensure transparency in the sector, prevents the application of excessive interest rates and distorted loan collection practices.

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