Legal framework necessary for micro credit policy to eliminate poverty in India: Muhammad Yunus

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On the pattern of Grameen Bank of Bangladesh, Maharashtra is all set to launch a micro-credit program in the name of Grameen Trust. Grameen Trust would open its office in Mumbai and would work for the poverty alleviation programs.

Grameen Trust, a non-profit organization, will offer technical and financial support to various start-up programs in India.

Professor Muhammad Yunus, the Nobel laureate and chief architect of the Grameen Bank of Bangladesh, said to the media that

we are already working in states like Tamil Nadu, Karnataka, Uttar Pradesh and Andhra Pradesh. We are planning to start such programs in Assam.

The Reserve Bank of India, inspired by the Grameen model, had allowed banks to open savings bank accounts for self-help groups in 1994.

Later, RBI linked the self-help groups with the commercial banks as per the norms of NABARD. The norms involved nurturing of groups and operating for about six to eight months before they really got linked to the bank.

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Yunus said further that there is a need for a separate stock market for socially oriented companies in country’s financial sector. The stock exchange should primarily list companies that would be doing social work.

With this new idea, investors can easily invest money in the firm that is involved with the kind of social work the investor wants to do. This is the right time in the current free market time to promote businesses to do good to people.
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Yunus suggested further that there should be a social MBA course in MBA institutions. The companies can hire professionals directly who are not interested in making money but attaining social goals.

Later, he also said that

by promoting the cause of social enterprises, authorities should try and set up the social business funds to establish more social business enterprises.

He stressed on the importance of the micro-finance movement to eliminate the poverty from rural parts of the country. He has also suggested to the policy makers to initiate a micro-credit bank law to make micro credit mainstream financial institutions legalized in the country.

Currently, it works as an NGO activity. He stressed on it by saying that Legal framework is important to mobilize deposits for micro-credit.

He repeated at last that the credit should be exercised as a human right. However, the process of micro-credit is going slow in India.


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