Small firms set to boom with microcredit

Moscow city government has teamed up with a major bank to create a company specialising in microcredit – a method for giving small businesses start-up loans. The President of VTB 24 Bank, Mikhail Zadornov, said the new company, called Microfina

Small and medium-sized firms are key to diversifying the economy away from the oil and gas sector, according to the government.

Zadornov added that in the future he may add new categories of loans for citizens ranging from servicemen to young people.

In 2008, VTB 24 is planning to allocate around $US 60 million for micro-loans.

Earlier this month, Zadornov met Professor Muhammad Yunus, the Bangladeshi economist who pioneered microfinancing. He gave his backing to the Moscow-based project, saying he was encouraged that a first-rate bank had got involved.

Yunus is the founder of the Grameen Bank, a world leader in the field of microcredit.