Reuters India Thu Oct 2, 2008 8:07pm IST

Micro-lending seen expanding despite credit mess 

GENEVA, Oct 2 (Reuters) - The global credit crisis is not making it harder for poor-country entrepreneurs to access the tiny loans they need to start and grow businesses, banking executives said on Thursday.

Microfinance -- which became famous when Bangladeshi economist Muhammad Yunus and his Grameen Bank shared the Nobel Peace Prize in 2006 -- provides small loans to people who lack access to mainstream banking services.

"We don't see any slowdown in interest in microfinance, on the contrary," said Ivan Pictet, a senior managing partner at one of Switzerland's largest private banks, the Geneva-based Pictet & Cie.

Many of the borrowers are women, and the default rates are only 1 to 2 percent.

"We have a lot of lessons to learn from that," Pictet told journalists during a World Microfinance Forum meeting in Geneva.

He said that while pension funds and other big players were unlikely to pile into microfinance on a large scale, the sector was highly attractive to individual investors and was likely to keep expanding rapidly in the years ahead.

Yunus, who also attended the conference, said lenders and borrowers remained confident in the microfinance business model.

He said investments that help people provide direct services to poor communities should continue to attract investors in spite of global credit pressures.

"You are lending money to poor people in a way that can help them ... You are touching people's lives directly," he said. (Reporting by Laura MacInnis; editing by Philippa Fletcher)