Role of Microcredit in Sustainable Rural Development

Abstract

Around 1.7 billion adults have no access to transaction accounts in the world. The majority of those are poor and women in rural areas of two developing regions of the world (South Asia and Sub-Saharan Africa). Rural areas of these regions are home to the poor and poverty, hunger, unemployment/underemployment is widespread phenomenon. Access to financial services is crucial for economic development. However, poor and smallholder have been neglected by traditional banks for a long time. Microcredit a development model to provide loans to the poor who have no, or little collateral emerged in Bangladesh and has been adopted in many countries of the world. In this chapter, microcredit as a solution to much of the problems of the rural areas has been discussed. Over time there has been a shift in objectives of rural development. Rural development nowadays is about an overall improvement of the human quality of life in terms of economic, social, political, and environmental, issues. Access to microcredit has a positive impact on three dimensions of sustainable rural development; social, economic, and environmental. Microcredit helps in the alleviation of poverty, employment, entrepreneurship, higher productivity from agriculture, women empowerment, gender equality, reduced rural outmigration, better health and education, green entrepreneurship, and adoption of modern technology/inputs in agriculture.