Loan Sharks Prey on Microcredit, Proponents Alarmed

    The development community has raised the red flag on a new breed of loan sharks emerging from the largely successful microcredit system, a lending scheme credited for helping alleviate poverty in the world’s poorest villages, The New York Times reports.

    Economist Muhammad Yunus noted that the success of this small capital lending scheme spurred the rise of banks replicating the system for profit, slowly turning microcredit from blessing to burden.

    “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people,” Yunus said recently before financial officials gathered at the United Nations.

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      Tarra Quismundo

      Tarra Quismundo joined Devex Manila as a staff writer in October 2009 after more than six years of working as a reporter for the Philippine Daily Inquirer, a nationwide daily, for which she covered major breaking news in politics, military, police and international affairs. Tarra's Devex News coverage focuses on key Asian donors and top aid officials around the globe.