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The constraints of micro credit schemes in extending services to the poorest have been grouped by R.I. Rahman (2000: 54-67) into two sets of factors, those on the client side and those on the lender side.

On the client side, lack of labour, land (a homestead, at least), and capital discourage the poorest to borrow money. A micro credit programme is basically

a banking service, although the scale of each transaction is small transaction is quite different from the ordinary banking system.

and the mode of Thus the money

borrowed has

to be


in a way that

repayment. In


to invest

the borrowed

will produce some profit and ensure money in a viable venture, one must

have labour as members there

input. In is a good

a household with a good number of balance of dependents and labourers,

income-earning while destitute


usually have

houses) is

necessary to

more dependents than labourers. undertake self-employed work

Land (homesteads or like livestock rearing,

paddy husking or providing storage space own capital to use in addition to loans Moreover, the weekly/fortnightly/monthly

for a rickshaw.

Possession of one’s

broadens the scope of repayment instalments,

investment. which start

shortly after the loan disbursement, are difficult capital and flow of income because loan-financed to get off the ground or may not have a high return.

to meet unless there is extra activities may take some time

The constraints on the lender side are concerned with the overriding objectives and terms of services offered by the micro-credit programmes, the group-based credit system and the management procedures. First, the very mission of micro-credit programmes, i.e., poverty alleviation and extension of credit services to the poor, prompts the lender to accept as clients those just below the poverty line, not the hardcore poor, because economic improvement is more easily attained with the former than with the latter. Furthermore, financial sustainability of the programme, about which donors are becoming increasingly vociferous, can be more easily maintained with the ‘better-off’ poor, since they are good borrowers and reduce the operation costs for the micro-credit organisations. Interest rates and repayment schedules are also often criticised for creating entry

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