Micro credit operations to be uses friendly

The poor or extreme poor who take micro credit should be also allowed to do so at bearable or nominal rate of interest. But even the interest rates charged on publicly run micro credit programmers continue to be rather oppressive for their poor receives. No great difficulty is see in the way of the government lending to the poor at much lower rates of interest because the government should not be in the business of squeezing out under interest from the poor.

Disbursing credit to the poor to make big financial gains out of the same cannot be the aim of government which claims  to be on the side of reducing poverty.

The recommended lower rates of interest on micro credit should meet both the need of viably running the official micro credit operation while also meeting the intended objectives of there programmers. The NGO’s in many cases also charge high interest on micro credits provided by them.

They also need to be persuade to significantly decrease the interest they charge and ought to base their credit operations truly for the benefit and advantage of the poor and not for only making good profits out of such operations. Not with standing the increase in opportunities for the poor to be the beneficiary of small credits from institutional sources, the remain still the victims of private money lenders of “mahajans”(money lenders) also in many cases. Studies on micro credit showed that mahajan continue to be a big factor in the micro credit scene exploiting  the gaps in institutional Availability of credits. this indicates the importance of increasing the networks of institutional credit both by the government and NGO’s .

But such expansion of networks by them needs to be accompanied also by adequate lowering of the interest charged on the credits. It is also imperative to introduce laws and enforce them strictly to curb the activities of mahajans

who in many cases take interest as high as 300% or something near that figure.