1. Microcredit for Inclusion
-An Innovation for Industralized
Countries
Nazrul I Chowdhury
Advisor, Microcredit Project
Foundation ICO

2. General Program of Microcredit in Spain
(2002-2007)
NGO/
European Savings Foundation/
Investment
Fund (EIF)
Bank/ S.A.O
Banks
ICO
NGO
(Instituto de  Lack of mutual trust and Employees/
Crédito human relation Volunteers
Oficial)  Clients were not closely
integrated with the
Program
Clients/
Beneficiaries

3. Loan Disbursement at General
program of Microcredit
Year Total loan Average Average % of
disbursement loan size Investment additional
fund P/B
Per business
2002- 15,119,672 18,782 30,840 64%
2003
2004 4,712,646 20,140 27,927 39%
2005- 4,159,294 19,436 30,897
59%
2006

4. Objectives of the project:
 Provide collateral free financial and non-
financial support to the poorest of the
poor
 Mitigate social and financial exclusions
 Fostering inherent capability of the poor
to generate new entrepreneurs
 Promoting one to one human relations
among and with the beneficiaries in
order to develop mutual trust

5. Exclusivity of the project
 Based on mutual trust and human relation instead of
collateral and legal instruments
 Based on potential of a person instead of material
possessions of a person
 Maximization of welfare is the priority rather than
maximization of profit
 We go to the door steps of excluded poor instead of
their coming to us
 We create entrepreneur rather than look for an
entrepreneur
 We provide Need based social services rather than
merely finance
 Tailor-made “group mechanism” is the panacea for
value creation and strengthening social and financial
inclusion

6. Program Mechanism
 Target People
 Loan product
 Pricing
 Non- financial services
-biweekly counselling meeting
-demand driven social programs
-need based formal and informal training
 Operational mechanism
-collaborating with social assistance organizations
-operations based on “group mechanism”

7. Why Group?
Traditional financial system based on the
following believes:
 The poor and collateral less people are not
their customer.
 The poor are risky and not credit worthy.
 The small loans are expensive to
administrate, so it is not profit worthy.
For those poor, group based microcredit is the
best way to give them access to finance

8. Function of Group:
 Group is a participatory decision making
process
 Group is a social hub
 Group is the vehicle of social and
financial inclusions
 Group is the clue of trust
 Group is the source of social capital

9. Recommendations and lessons learned
Moral aspects of microcredit:
 Microcredit should be collateral free
 Microcredit should focus on poorest of
the poor
 I should have some social mandate
 Microcredit shouldn’t focus on profit
maximization
 Developing mutual trust and human
relation with clients, is the key of success
Financial aspect of microcredit:
 Sustainability

10. Thank you so much
For your kind attention
Contact:
nazrulgb@yahoo.com
microcreditos.fico@ico.es