The total credit routed through these SHGs increased from Rs.33.2 million to Rs.1.9 billion. However, there are still certain bottlenecks in the policy which need to be addressed urgently. Compared to the Grameen Bank, the Indian Banking sector that undertakes statutory micro-credit activities is under heavy regulation. The cap in the interest has been fixed at 7%. Some economists see this as a disincentive for the banks to take risks. Though Grameen Bank did not seek any collateral in return for advances made to the borrower, the reasonable rate of interest (which varied accordingly), and woman being the major recipients, served as cushions against possible defaults. The Indian model seems to completely miss these factors. As a result, benefits fail to reach the bottom half of the pyramid.
For Complete IIPM - Article, Click on IIPM-Editorial Link
Source:- IIPM-Business and Economy, Initiative:- Prof. Arindam Chaudhuri - 2006
For Complete IIPM - Article, Click on IIPM-Editorial Link
Source:- IIPM-Business and Economy, Initiative:- Prof. Arindam Chaudhuri - 2006
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