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7/31/2019 Microcredit Slide Arcane
1/18
Welcome
Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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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
Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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TopicThe contribution of microfinance for the
development of urban poor people in Bangladesh
Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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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.
Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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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.
Mohammad Fayez Uddin, ID: 07882684
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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
7/31/2019 Microcredit Slide Arcane
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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.
Md. Maruf Hasan, ID: 07882758
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Md. Maruf Hasan, ID: 07882758
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Md. Maruf Hasan, ID: 07882758