types of credit lending       

Village Banking. A group lending or community-based credit and savings association. They can consist of 15 to 50 low-income individuals who are seeking to improve their lives through self-employment activities. Initial loan capital for the village bank may come from an external source, but the members themselves run the bank: they choose their members, elect their own officers, establish their own by-laws, distribute loans to individuals, collect payment and savings. Their loans are typically backed by moral collateral: the promise that the group stands behind each individual loan. The delegation of authority to its members distinguishes village banking from most other forms of microfinance. Usually, loan sizes are allowed to differ among individual members. But all loans carry the same repayment and interest rate terms, and borrowers are generally offered a loan ladder, a sequence of 3 to 5 loan cycles with a maximum loan size specified for each cycle.

Intermediary. Intermediary model of credit lending positions a 'go-between' organization between the lenders and borrowers. The intermediary plays a critical role of generating credit awareness and education among the borrowers (including, in some cases, starting savings programs. These activities are geared towards raising the 'credit worthiness' of the borrowers to a level sufficient enough to make them attractive to the lenders. The links developed by the intermediaries could cover funding, program links, training and education, and research. Such activities can take place at various levels from international and national to regional, local and individual levels.

Rotating Savings and Credit Associations (ROSCAs) are essentially a group of individuals who come together and make regular cyclical contributions to a common fund, which is then given as a lump sum to one member in each cycle. For example, a group of 12 persons may contribute $50USD per month for 12 months. The $600 collected each month is given to one member. Thus, a member will 'lend' money to other members through her regular monthly contributions. After having received the lump sum amount when it is her turn (i.e. 'borrow' from the group), she then pays back the amount in regular/further monthly contributions. Deciding who receives the lump sum is done by consensus, by lottery, by bidding or other agreed methods.