Microcredit Slide Arcane

7/31/2019 Microcredit Slide Arcane

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Welcome

Mohammad Fayez Uddin, ID: 07882684


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Succession of Learners

Name ID No.

Mohammad Fayez Uddin 07882684Mohammad Alamgir Hossain 07882742

Md. Rashel Miah 07882746Asma Akter 06651335

Naznin Fatama 07882729Md. Maruf Hasan 07882758



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TopicThe contribution of microfinance for the

development of urban poor people in Bangladesh



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The word is literally comprised of two words: micro and

finance which literally mean small credit; the concept of

microfinance goes beyond the provision of small credit to

the poor. However many microfinance practices today stillfocus on microcredit: providing the poor with small credit

with the hope of improving their labor productivity and

thereby lead to increment in household incomes. The main

interest of the study is to understand how households usedthe credit, and to measure the impact of that credit on

household income and their development.



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Microfinance is a form of financial development that has primarily focused on

alleviating poverty through providing financial services to the poor.

The Canadian International Development Agency (CIDA) defines microfinanceas, the provision of a broad range of financial services to poor, low incomehouseholds and micro-enterprises usually lacking access to formal financialinstitutions.



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Little amounts of loans and savings

Short- terms loan

Payment schedules attribute frequentinstallments

Installments made up from both principal andinterest

Higher interest rates on credit

Easy entrance to the microfinance

Application procedures are simple

The clients who pay on time become eligiblefor repeat loans

Mohammad Alamgir Hossain, ID: 07882742


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The principal microfinance service providers are usuallycategorized into four major groups viz. MF-NGOs, specializedinstitutions, banks and administrative ministries.

MF-NGOs hold the largest share of the market, while GB accountsfor about 29 percent (till December 2011) of total disbursement.

The large majority of borrowers (86%) are clients of the handful oflarge organizations: BRAC, the Grameen Bank, ASA and Proshika.

The four institutions combined have over $800 million in

outstanding loans and around $380 million in savings.

After the bigfour, the next largest NGO (Swarnivar Bangladesh)has 0.7 million clients and there are only ten NGOs who have morethan 100,000 borrowers.

Mohammad Alamgir Hossain, ID: 07882742


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Simplify services

Offer small initial loans

Offer short term loans

Localize services, focus on scale

Shorten turnaround time

Motivate repayment

Recognize that the poor do save

Charge full-cost interest rates

Md. Rashel Miah, ID: 07882746


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There are 4 Loan Officers per branch, each with a 500 client targetachieving a total of 2,000 clients within a year for the branch

Each client receives BDT 10,000 (USD 147) as their initial loan

Loan loss Provisioning is at 0.5% on disbursement

Service Charge (interest rate) is 15% flat, calculated for a 46 installmentloan spread over 12 months

Service Charge (interest rate) is 15% flat, calculated for a 46 installmentloan spread over 12 months

Each member deposits BDT 20 per week as savings and pays BDT 20 asmembership fees when joining ASA

ASA provides 15% loan to the urban poor people.

The key assumptions of this model

Md. Rashel Miah, ID: 07882746


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Who uses loans - women or men?

Women borrowers, in most cases, are usedas a facade by men for extracting loanmoney.Our impact assessment study has indicatedthat 45% of the women are themselvesinvolved in income generating activities.What is important here is to examine thetype of control a woman has in investing theloan money and using the profit earned.A woman is the part of her family. With

microfinance, not only a woman borrowerbut the whole family can be benefited if shehas control over decision making in certainareas of family affairs and in spending thereturns.

Naznin Fatama, ID: 07882729


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Microfinance has attained rapid growth in Bangladesh

Both private and public sector organizations are involved in microfinance

The constituents of the sector include Grameen Bank, NGOs, BangladeshRural Development Board (BRDB) which is a public sector organisation

The Grameen Bank and NGOs are however, the leading actors in this field

Total participants in the microfinance programs in Bangladesh stand above13 million

Around 9 million of them are enrolled in NGO programs

There are around 15,000 NGOs registered in Bangladesh.

Naznin Fatama, ID: 07882729


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The liquidity constraint is the most removed

Creating the productivity of household labor

Microfinance promises to break the viciouschain of poverty from urban area

Self enforcing economic empowerment..

Household resource becomes

Asma Akter, ID: 06651335


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Broad

Category IndicatorsTypes of

change Cause of change

Economic

Impact

Income + Self employment activities

Food Security +Greater access to involvement inemployment through the rental

market

Wage +Transport and other non-agri

activities support by microcredit

Employment +wage employment in non-agri

sector

Asma Akter, ID: 06651335


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Most of the clients of MFIs are women and most of them just had little education.

Most of the clients started their business by taking loan from MFIs.

These poor brought about a positive change to their financial condition.

Obtaining loans from MFIs is easier than conventional banking.

It is not required of collateral to take the loan from MFIs.

The loan taking procedure is less complex than that of commercial banks.

They cannot compare the interest rates with CB because of lack of education.

Microcredit establishes the economic empowerment among the poor.

Another impact of MFIs is the creation of employment opportunity.

Microfinance contributes to overall financial system.

Md. Maruf Hasan, ID: 07882758


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In conclusion it is argued that there is a contribution of

microfinance for the development of urban poor people. More

importantly the ability of households to begin informal sole

micro entrepreneurships should not be assumed to be adequate

for the improvement of household income. There is need tocreate a policy framework to encourage growth in the enterprises

as well as the rural economy as a whole through the creation of

employment opportunities and an increment in the income

output. To achieve such objectives more than one policyintervention may be required.



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Microcredit Slide Arcane

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