The objective of micro credit in MEDEP has been to support and promote men and women of low-income families to develop micro enterprises through entrepreneurship development to create employment and income generating opportunities to reduce poverty.

Micro-credit activity in MEDEP refers to a process of facilitating micro-entrepreneurs to have easy access of small-scale loans in different cycles to micro-entrepreneurs to fulfil credit capital needs of their enterprises. Micro-credit component of MEDEP is mainly implemented in close collaboration with Agriculture Development Bank where as other institutions such as Local Development Fund/DDC, Commercial Banks, Cooperatives are also linked at district level as per the specific micro-credit need and situation of districts.

As MEDEP encourages micro-entrepreneurs to establish micro-entrepreneurs groups, cooperatives and products associations, regular-saving generation is made compulsory in such groups with an expectation that saving-capital thus generated helps group members in other small cash-needs and also helps to develop group as an institution. Therefore, micro-credit component of MEDEP broadly includes saving generation and mobilization part as well.

The loans, though modest, are within the capacities of the groups to repay as they obtain income from their activities. The groups are small enough,(five to eleven members) and the members are put into a context in which they put social pressure on defaulters. To ensure that micro-finances are optimally used by entrepreneurs the programme ensures that certain basic principles are followed while disbursing loans to entrepreneurs.

• Utilization & Repayment of Micro-credit by Micro-entrepreneurs: Micro-credit is disbursed to entrepreneurs on the basis of business plan. As MEDEP staffs are residential at fields, they take very minute care on the utilization of loan as per the planning. Enterprise Development Facilitators make very close supervision or even they work together with the entrepreneurs to go to market to purchase raw materials and purchase fixed assets to ensure that there is proper utilization of credit.
  
  
• Repayment of Micro-credit: All the loans recommended by MEDEP are to be repaid within one year. Generally, there are 12 monthly instalments for repaying loans. But, in the case of some enterprises that require preparation of more than one month for production to begin, the instalments are less than 12 months. However, the loan needs to be repaid within one year and loan exceeding one year are considered as default-loans and loans exceeding regular instalments period are considered as overdue loans.
  
  
• Monitoring Visit by IPOs: The partner organizations make regular visit to micro-entrepreneurs for monitoring the enterprise development activities initiated due to micro-credit capital.
  
  
• Graduation of Micro-Entrepreneurs: In the second phase of MEDEP, Micro-entrepreneurs meeting with graduation criteria will be awarded with certificate as graduate entrepreneurs having good enterprise development performance. Such micro-entrepreneurs will be taken as the regular client by ADB/N for further collateral or project-financing based lending. Further, coordination will be made with other financial institutions to given better recognition for such entrepreneurs.