Importance of productive loans in poor lives
Importance of productive loans in poor lives
I strongly believe that we can create a poverty-free world, if we want to.... In that kind of world, [the] only place you can see poverty is in the museum. When school children will be on a tour of the poverty museum, they will be horrified to see the misery and indignity of human beings. They will blame their forefathers for tolerating this inhuman condition to continue in a massive way.... (Dr. Muhammad Yunus)
It is observe through field survey that people use money for their personal uses not for business. They borrow the money from MFI's and pay their loans and other liabilities. When people use this money for their personal substances, infect, they use MFI money in non-productive means. The importance of productive loans can be show from the following point of views;
Living Standard
Life standard always play dynamic role to judge the productivity of microloan in any community. Life standard has direct relationship with loan productivity. If standard of living is showing positively impact its means that customer is utilizing his loan in productive way. On the other hand, if living standard is not increasing its means utilization of loan is non-productive.
Optimistic reputation
Optimistic reputation is the major cause of any person's respect in any society. If anybody is utilizing the MFI's loan for his/her business expansion, repayment will be also timely and result will be in the shape of good or respective reputation in community.
Development of Positive Credit History
If loan utilizing in productive manners, automatically repayment will be timely and credit history of the client will be satisfactory. Satisfactory credit history shows positive impact for any MFI.
Encouraging Awards by MFI
Most of MFI's arrange the rewards in the form of cash money, relaxation in the loan tenor, relaxation in mark-up, certifications etc. if clients use their loans in productive purposes. MFI's also offer big loans for their businesses if customer not utilizing loans in non-productive purposes.
MFI can train for different MF product like saving etc.
For the clients who are using their loans in productive purposes, MFI's also arrange different training workshops, seminars and get-togethers etc. for their basic educational needs and their business related fields for their betterments.
MFI can give Interest Rebate
If loans showing optimistic impact for any client business, MFI's also offer interest rebates on their loans.
Poverty Mitigation
A productive loan shows very positive impact in the field of poverty mitigation. Due to productive utilization, client income increase as well as his / her business also expands. When any business move to expansion, people gets jobs and also production increase. When people income increases, their purchasing power also increases, they purchase goods & services for fulfillment their living needs and producers increase their production. Result of all these above processes becomes in the form of poverty alleviation.
Accomplish the Non-Productive Needs
Clients can satisfy their non-productive needs if they use loan in productive field. The amount that clients earns through investment in productive manners, can use for satisfaction of their non-productive needs.
Safety from Local Moneylenders & Activist
Clients will be save himself and his / her families from local moneylenders and activists if he/she will use the loans in productive or constrictive works. No one can exploit anybody rights etc.
Educational and Health Improvements
Through productive loan, clients can take advantages and benefit in the shape of his/her kids educational and health betterments and improvements.
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