Structuring Loan Products for Financial Inclusion-Do Larger Loans Benefit the Poor Better?

Abstract

Loan products for the financially excluded population have traditionally been state led initiatives. Most of the loans are granted as part of a scheme. and are handed out to a select section of beneficiaries. These "directed credit"' programs assumed that the rural poor were unable to save or to afford market rates of interest, and therefore need loans at subsidized rates to build capital(Hannig and Jansen,2010).