What do you want to know to be specific sir? @ Emmanuel Vijayanand Murray

Microfinance can not be a good tool for poverty alleviation I think. The microfinance is a good tool when the bankers were not willing to give credit to the poor families and do not consider them as a creditworthy. But now the situation has changed, in the era of the SHGs where banks are also willing to pay SHG in a very low interest in such case microfinance is nothing but a parasite for the poor with a high-interest charge, where through the SHG model the economy becomes sustainable through an excellent balance of savings habit and increasing repayment capacity there microfinance do a spoon-feeding which actually destroy the habit of the community. SHS help the community for moving out of poverty whereas the microfinance can be a cause of moving towards poverty. Both are different model where microfinance is a delivery model the SHG is an enabling and sustainable model and best tool for poverty alleviation.

Saswatik Tripathy Please can you elaborate what «SHG» and «SHS» stands for?

Respected sir, SHG is the self-help groups. This is a group which is made with 12-20women from the same neighborhood who must be poor. Among them 3members are elected as president, secretary and treasurer. They usually do savings either in a weekly or monthly basis according to their capacity. And from the accumulated savings amount they can start the internal lending. One fecilitator used to come for te maintenance of the books of accounts. By observing this habit and their regular repayment rate banks got a assurance that this people are creditedworthy. It's started like that, but now Indian government take it as a great model and support each group with a grant of INR 15000 as a capital for internal lending. There are written byelaws in all group what the generated and maintain. This group later satrt the livelihood interventions for moving out of poverty. If you want to know more about it please contact me. I have a rich experience of working with it from last one and half years.

SHG is like a small bank. Savings, credit, pension, Insurance and remittance these five are the main elements of SHG called Self Help group. Whether poor people are not getting facility of bank, SHG play a big role.

Dear Colleagues and Friends from RG, Microfinance and micro-loans can significantly complement the classic systems of financing the activities of business entities of the SME sector and the consumption of citizens, and can significantly reduce the scale of poverty of citizens. It is important, however, that companies offering micro loans offer their citizens in accordance with the principles of corporate social responsibility and business ethics, i.e. that interest rates are not high, that they are not usury, and that they do not constitute significant competition for the traditional external financing system, i.e. not constituted serious direct competition for banks only to complement the banking system. It is important that companies offering microfinance and micro-loans comply with credit risk management standards, that credit risk assessment is carried out reliably, that the creditworthiness assessment principles of potential borrowers are applied, that the credit risk management process is reliably carried out for both individual loans and entire loan portfolios in specific company granting these micro loans. It is important that microfinance and microcredit are granted to citizens and enterprises in the SME sector who have creditworthiness, i.e. to avoid an increase in systemic credit risk and not to lead to a financial crisis. It is also important that micro loans play an important macroeconomic role in supporting small, innovative business entities, and to significantly support economic growth. Thanks to micro-loans, many new jobs can be created in the sector of micro-enterprises and companies in the SME sector, entrepreneurship and innovation can be activated. It is important for the state to effectively improve legal norms on the basis of which the micro-loan market can function. In connection with the forecasted slowdown in economic growth in 2020, caused by the development of the Covid-19 Coronavirus pandemic, the importance of microfinance and micro-loans is increasing significantly.

I conduct research in the field of effectively conducted, reliable credit and loan procedures, research on the creditworthiness of potential borrowers, processes of identifying and analyzing credit risk levels, processes of improving credit risk management, etc. I have published the conclusions from the research in scientific publications that are available on the Research portal Gate.

Best wishes.

Dariusz Prokopowicz