Table 1 Comparison of targeted...

Table 1

Comparison of targeted microcredit, GB microcredit and AIM microcredit

Program	Targeted microcredit	Targeted microcredit in the new era (after 2020)	GB microcredit (Grameen bank)	AIM microcredit (Amanah Ikhtiar, Malaysia)
Client	Rural poor with register card	Households with register card just lifted out of poverty; marginal vulnerable households	Rural landless poor, particularly women	Rural poor, whose household income is below the poverty-line and are resident in selected districts for at least two years
Loan amount	≤50,000 yuan	50,000 yuan with additional loans support^a	≤100 dollars	≤20,000 RM
Loan term	3 years, can be extended less than 6 months	3 years, can be extended or renewed 1 time	Weekly installments	Weekly installments
Loan interest	Basic interest rate	Loan prime rate (LPR)^b	Slightly above the commercial rate	Free interest rates, a 10% charge for operational and management fees
Discount mode	Full interest discounts	Partial interest discounts^c	–	–
Characters of female inclination	provide the ID cards and marriage certificates of both husband and wife prioritized granting credit to female clients and gave them flexible maturities in specific region plots		Over 90% loan clients are women	Over 90% loan clients are women
Service mode	–	Encourage banking institutions to develop credit models based on the production and operation data of the population lifted out of poverty, through the internet, big data and other fintech approaches and promote the development of new credit models such as supply chain finance, batch credit and rapid approval	–	–
Guarantee mode	No collateral and no guarantee	No collateral and no guarantee	Group collateral	Group collateral
Risk compensation mechanism	Set up risk compensation funds	Continue the risk compensation funds, maintain the stability of the current mechanism and encourage to share loan risks in other appropriate ways	Group fund	Group fund

Program	Targeted microcredit	Targeted microcredit in the new era (after 2020)	GB microcredit (Grameen bank)	AIM microcredit (Amanah Ikhtiar, Malaysia)
Client	Rural poor with register card	Households with register card just lifted out of poverty; marginal vulnerable households	Rural landless poor, particularly women	Rural poor, whose household income is below the poverty-line and are resident in selected districts for at least two years
Loan amount	≤50,000 yuan	50,000 yuan with additional loans support^a	≤100 dollars	≤20,000 RM
Loan term	3 years, can be extended less than 6 months	3 years, can be extended or renewed 1 time	Weekly installments	Weekly installments
Loan interest	Basic interest rate	Loan prime rate (LPR)^b	Slightly above the commercial rate	Free interest rates, a 10% charge for operational and management fees
Discount mode	Full interest discounts	Partial interest discounts^c	–	–
Characters of female inclination	provide the ID cards and marriage certificates of both husband and wifeprioritized granting credit to female clients and gave them flexible maturities in specific region plots		Over 90% loan clients are women	Over 90% loan clients are women
Service mode	–	Encourage banking institutions to develop credit models based on the production and operation data of the population lifted out of poverty, through the internet, big data and other fintech approaches and promote the development of new credit models such as supply chain finance, batch credit and rapid approval	–	–
Guarantee mode	No collateral and no guarantee	No collateral and no guarantee	Group collateral	Group collateral
Risk compensation mechanism	Set up risk compensation funds	Continue the risk compensation funds, maintain the stability of the current mechanism and encourage to share loan risks in other appropriate ways	Group fund	Group fund

Note(s): Resource: The government document of targeted microcredit in 2014, 2021; Yunus (1999), Al-Shami et al. (2016)

^aAdditional loans support (≤ 50,000 yuan for a single household) is for those who really need and have the ability to repay; the part of additional loans support will not be discounted or included in the scope of risk compensation

^bThe interest rate of 1-year loans (inclusive) shall not exceed the 1-year LPR and the interest rate of loans with a term of 1–3 years (inclusive) shall not exceed the LPR of more than 5 years. It can be appropriately floated according to the borrower's credit rating, repayment ability, loan cost and other factors

^cLocal financial departments should be based on the needs and financial situation, reasonably determine the proportion of interest discounts, to maintain the stability of policy intensity during the transition period

Source(s): Table created by authors

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