ABSTRACT
Micro-loans have a number of advantages over loans provided by the rural credit cooperatives. First, the programs provide rural households with access to finance without the need for collateral or a guarantee. Second, credit risk is controlled through the use of group guarantees, frequent repayments, compulsory savings and the provision of technical support. Finally, interest rates are high enough to cover operational costs within three to five years. The interest rates charged by these programs are still lower than those charged by informal lenders.
