Globalisation (Microfinance and Economic Development) Essay

Globalisation (Microfinance and Economic Development) - Essay Example In 1983, the Bangladesh government gave authorization to an independent bank came to be known as the Grameen Bank project. The rural poor borrowers own 90 percent of the shares of Grameen bank while the rest is owned by the government. The bank has 1084 branches currently with more than 12,000 staffs. The bank serves 2.1 million owners and operates in 37,000 villages. The bank considers credit as the right of human. The poor are regarded as the potential entrepreneurs. Women are entitled with most of the loans as they are the ones who struggle not only against poverty but also against social and economic conditions. The bank has the objective of reversing the vicious circle of poverty. Loans were provided to income generating activities in the first place with the belief that they will help the poor to overcome poverty. Loans are provided on the basis of trust and not on any collateral. Microfinance institutions fund the microenterprises. They explain how the standard of living can be raised effectively through incentives for individual initiative. Profits accrue only to those who work. Some microfinance institutions are involved in channelizing the government funding through their systems although the decision making procedures can function without government intervention. The success of the microfinance can be explained by the free market system which points that profits are diverted only to those who are eager or have worked efficiently. Demand conditions may induce the business to expand and recruit more employees. They are of the view that in spite of million successes microfinance has not been able to meet the goals and contribute in economic development. So industrialization in large scale is the only alternative to break the vicious circle of poverty. It highlights the fact that microenterprises produce and market at the local level. They can avoid the operating economic systems which seem to widen the gap between the