Grameen Bank grants loans (microcredits) to poor and low-income people for a specific purpose (e.g. for purchase of a telephone or a sewing machine) which has to be directly related to the economic activity to be undertaken. The amount of money loaned to a client can oscillate between USD 70 -180.

What are Microcredits?

Microcredits are small amounts of money loaned to clients by banks or other institutions. They can be offered, often without collateral, to an individual or though group lending.

Studies on microfinance (microfinance refers to loans, savings, insurance, transfer services and other financial products targeted at low-income clients) have shown that:

• Microfinance help poor families to meet their basic needs;
• The fact that the poorest and low-income people take advantage of these financial products leads to improvement in socio-economic conditions and guarantees stability and entrepreneurship development.
• Through strengthening of women's involvement in economy, microfinance improves the status of women, promotes gender equality and leads to achieve better conditions for households.
• The efficiency of this kind of financial services depends on the period of their availability to potential clients.

Information based on:

http://www.unic.un.org.pl/rok_mikrokredytu/mikrokredyty_mikrofinanse.php

Give us your opinion: Do you think that microcredits are an effective tool to eradicate poverty? How could they be used in Polish development assistance?