Poverty Alleviation and Micro-credit Institutions Essay

Poverty Alleviation and Micro-credit Institutions - Essay Example rse credit and loans to people and institutions who have repayment capability and at the same time, ensure that loans are against securities that can be used to compensate them in case of default in repayment. These criteria become irrelevant for informal sector where people are living below poverty line and have neither job security nor any other kind of financial backing. To improve the living conditions and raise their living standard, non formal mechanisms of micro-credit become essential in the rural areas. The micro credit is designed to promote empowerment through income generating activities. The institutions facilitate easy credit to poor and ensure repayment through innovative schemes and incentives. The problems due to asymmetry in information, screening and enforcement are often overcome through integrated approach and providing inter-linkages to the credit and the commodities. The institutions also promote formation of self help groups and compulsory contribution to the emergency fund that can be utilized by the members in times of emergencies. The micro-financing is one of the key factors of poverty alleviation programs as it helps to provide the poor with the necessary credit to start income generating activity and thereby raise the living standard of the people in the developing countries. The innovative mechanisms and integrated approach help facilitate minimum standard of living and access to medical facilities, food and housing for every human being, irrespective of race, religion, political belief and socio-economic conditions. To encourage more funding through other international aid agencies and private donors, World Bank must facilitate requisite information and updated database of beneficiaries and poverty alleviation programs of under-developed and developing economies. The bank should encourage more proactive participation from the non government agencies and corporate houses to contribute to the socio-economic development and