...Case study Bangladesh: Financial Linkages in Bangladesh Abdul Awal, Director, CDF Abstract: Microfinance in Bangladesh has almost reached the stage of a matured market. However, there are still substantial segments of potential clientele who are not serviced by any microfinance organization (MFI). Inadequate finance is one of the most important reasons MFIs have not reach these clients. Fund shortage is more prevalent among the smaller MFIs. Moreover, due to the scaling up of microenterprises of the existing clients, they are requiring larger loan amounts. On the other hand, though the formal financial organizations are burdened with significant amounts of excess liquidity, they are not in a position to directly provide services to microcredit clients - it is not viable. Even funding operations of smaller MFIs directly, are out of their reach. In such a situation, an effective linkage between the MFIs with financial constraint and banks with excess liquidity is a simple but highly effective solution. Introduction Poverty has always been on the development agenda in Bangladesh. In the history of this country, poverty has been rampant and presently Bangladesh is third in terms of number of poor following India and China. It is a densely populated country of only 150,000 square kilometers and a population of around 140 million. The country consists mainly of a flat delta plain. In addition to its very high population density, the country has a limited natural resource base and is...
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...Success of Microfinance in Bangladesh: Its Determinants, Impacts & Challenges Chapter- One Introduction 1.1 Introduction: In recent years, microcredit, in its wider dimension known as microfinance, has become a much favored intervention for poverty alleviation in the developing countries and least development countries. There is scarcely a poor country and development oriented donor agency (multilateral, bilateral and private) not involved in the promotion (in one form or other) of a microfinance program. Microfinance programs claim many achievements as its impact and an outside observer cannot but wonder at the range of diversity of the benefits claimed. Although Bangladesh has huge potential for development, it is, for various socio-economic reasons, among the poorest countries in the world. About half of the country's population lives below the poverty line with 80% in the rural areas. The burden of poverty falls disproportionately on women, who constitute half of the total population. Logically, therefore, poverty alleviation and creation of rural employment are top priorities in the development agenda of the government of Bangladesh (GOB) which has adopted a broad based approach to poverty alleviation, emphasizing macroeconomic stability, economic liberalization, and support for a number of government agencies and non-government organizations (NGOs). Substantial progress has been made in implementing the microcredit program (MCP), and the scope for its efficient...
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...Economic Development of Bangladesh Submitted To: Mahmood Hasan Course Instructor BUS 251 Section - 7 BBA Program School of Business North South University Submitted By: Page No. 1. Executive Summary 4 2. Introduction 5 3. Micro credit 6 4. Three C’s of microcredit 7 5. History 8 6. Micro credit delivery models 9 7. Clients of microcredit 12 8. Microcredit in economic development 13 9. Impact of microcredit on poor people 15 10. Economic condition of Bangladesh 17 11. Microcredit in Bangladesh 19 12. Challenges of microcredit 22 13. Conclusion 23 14. Reference 24 15. Appendices 25 The most important finding in the last two decades in the world of finance did not come from the world of the rich or the relatively well-off. More important than the hedge fund or the liquid-yield option note was the finding that the poor can save, can borrow (can indeed decide on loans to fellow poor), and will certainly repay loans. This is the world of microfinance. The interest in microcredit or microfinance has burgeoned during the last two decades: multilateral lending agencies, bilateral donor agencies, developing and developed country governments, and non-government organizations (NGOs) all support the development of microcredit. A variety of private banking institutions has also joined this group...
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...State of Microfinance in Bangladesh Prepared for Institute of Microfinance (InM) As part of the project on State of Microfinance in SAARC Countries By Dewan A. H. Alamgir 2009 Disclaimer Any opinions expressed and policy suggestions proposed in the document are the author’s own and do not necessarily reflect the views of Institute of Microfinance (InM). The report also does not represent the official stand of the Government of the countries studied. 2 | State of Microfinance in Bangladesh List of Acronyms ADB ASA BBS BDT BEES BIDS BKB BMDA BRAC BRDB BSBL CARB CBO CBN CDF CFPR CIDA COSOP CPD DANIDA DFID DOL DOF EC FSP FSS FY GB GDP GOB HCP HIES IBBL IFAD IGA IGVGD InM JC LGED ME MFMSP Asian Development Bank Bangladeshi NGO (formerly Association for Social Advancement) Bangladesh Bureau of Statistics Bangladesh Taka Bangladesh Extension Education Services Bangladesh Institute of Development Studies Bangladesh Krishi Bank Barind Multi-Purpose Development Authority Building Resources Across Communities (Largest NGO) [Formerly Bangladesh Rural Advancement Committee] Bangladesh Rural Development Board Bangladesh Sanchya Bank Limited Center for Agricultural Research-Barind (a Bangladeshi MFI) Community Based Organization Cost-of-basic-needs Credit and Development Forum Challenging the Frontiers of Poverty Reduction Programme Canadian International Development Agency Country Strategic Opportunities Paper (of IFAD) Centre for Policy Dialogue Danish International...
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...OF MICRO FINANCE INSTITUTIONS Annesha Zeheen Introduction This paper attempts to graphically present a simplified version of the activities of a microfinance institution (MFI) with a view to facilitating our understanding of its activities and role in economic development, creating an enabling environment for MFIs to work, promoting and fostering sustainable development of microfinance institutions and comprehending the need and ways to regulate them. The main function of a microfinance institution is to provide sustainable financial services mainly to the small borrowers and clients. Intially 5 to 6 like-minded persons mostly women organize a Group, several groups make a Center. Usually memebrs have to attend the weekly meetings and deposit weekly savings. The loans are mostly provided against little or no collateral, but repayment rate is generally commendable because of the peer pressure originated from members of groups. MFIs’ services are not limited to credit, but include savings, insurance, money transfers and others. The credit-deposit methods include group-lending and -liability, short repayment period with frequent installments, pre-loan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly[1]. (Microfinance Gateway 2009). Borrowers take micro-loans for starting or expanding small busenesses, fro the profit of which they repay the loan, meet their basic...
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...Affecting Non- participation in Microfinance Institution: A Case Study in Bangladesh” [pic] Principles of Banking & Insurance Sec - D Submitted to: Mohammad A. Ashraf Assistant Professor Submitted by: Name: ID# Khaled Md. Masum 111081125 Jesika Haque 111081042 Ismat Jerin Chetona 111083068 Date of Submission: 27/12/2010 Letter of Transmittal 27th December, 2010 Mohammad A. Ashraf Assistant Professor School Of Business, United International University Dhanmondi, Road # 8/A (Old 15) Dhaka 1209, Bangladesh. Subject: Request to accept the report on “Factors Affecting Non- participation in Microfinance Institution” Dear Sir, With due respect and humble submission, we are the student of BBA and we are submitting the report on “Factors Affecting Non- participation in Microfinance Institution: A Case Study in Bangladesh”. It gives us immense pleasure to inform you that we have completed our report under your kind hearted direct supervision. Now, we have placed the report before you for your approval. We hope our report will satisfy you. Sincerely yours, Khalad Md. Masum 111081125 Jesika Haque 111081042 Ismat Jerin Chetona 111083068 Student Declaration This is to inform that the term on “Factors Affecting Non- participation in Microfinance Institution: A Case Study in Bangladesh” has been prepared in the fulfillment...
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...Term paper On Microcredit ECO -242 Principles of Macroeconomics Prepared for Janifar Alam Lecturer School of business Prepared By Group 1 Sec: B Semester: Summer-2013 31th July 2013 To Janifar Alam Lecturer School of business University of Information Technology and Science (UITS) Subject: Submitted the Term paper of ECO-242 Dear Madam It is indeed a great pleasure for us to be able to hand over the result of our hardship of the group Term paper on Microcredit.This report is the result of the knowledge. This has been acquired from the respective course. We tried our level best for preparing this report. The information of this report is mainly based on our knowledge and Internet information. We fervently hope that you will find this plan worth reading. Please feel free for any query or clarification that you would like us explain. Hope you will appreciate our hard work and excuse the minor errors. Thanking you for your cooperation. Sincerely Group 1 Name&ID Signetures Rahat a jan 12310577 Jinia Afrin 12410291 Abdia Sultana 12310290 Jahidul Islam 12310377 Obaidur Rahman 123210572 Acknowledgement First of all we want to give thanks to almighty Allah for giving us the opportunity to complete...
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...columbia.edu). Executive Summary In the early 1970s, Professor Muhammad Yunus envisioned a means of alleviating poverty by circumventing the major impediment to lending to the poorest in society—the need for collateral. He tested this instinct in an experiment in 1976, when he lent about $27 to 42 women in an ordinary Bangladeshi village. Just 30 years later, Grameen Bank has more than 3.2 million borrowers (95 percent of whom are women), 1,178 branches, services in 41,000 villages and assets of more than $3 billion. This paper explores Grameen Bank’s origins, structure, culture, performance and efforts to expand and broaden the microfinance agenda. The authors evaluate Grameen’s success in implementing Yunus’s vision in the light of various challenges and conclude that the short-run effects of microcredit have been positive and that microfinance will continue to make important contributions to poverty reduction. Admittedly, an assessment of Grameen solely in terms of financial viability—that is, without also taking into account the social benefits in terms of the empowerment of women and its positive...
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...Profile of current Microfinance Programs: Microfinance is an innovative tool targeted for developing appropriate financial products for targeted population to activate poverty alleviation, through broad-based, inclusive growth. In a developing country like Bangladesh, the vast majority of the poor have no access to a banking system, which deprives many extremely hard working people to realize fully their income earning potential. The microcredit program, pioneered by the Grameen Bank started as a project in 1976 and became a formal independent financial institute under the Grameen Bank Ordinance in 1983. Although the practice of borrowing small amount of money for investment and consumption purposes has been common in Bangladesh but the modern organized, systematic, group-based and institutionalized microcredit operation in Bangladeshi innovation and replicated all over the world with local modifications and adaptations. The Grameen experienced by 1983 had proven that with right kind of savings and loan products, policies and management system and human resources, i.e. an appropriate institution with a mission to serve the poor could not only reach them but also make a viable financial institution. The simplicity methodology developed by the Grameen Bank has inspired many non-government organizations to replicate the model and offer similar financial services to the poor. The microfinance sector (in both rural and urban sectors) is now dominated by NGOs collectively known as...
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...study 5 1.2 Necessity of Microfinance to people 6 1.3 Statement of the Problem 7 1.4 Rationale of the Study 7 1.5 Objectives 8 1.6 Methodology 8 1.7 Limitation of the study 9 chapter two: Literature Review 10 2.1 Micro-Finance 10 2.2 Microfinance and microcredit 10 2.3 The History of Microfinance 11 2.4 Providers and models of microfinance interventions 11 2.5 Microfinance and its impact in development 14 2.6 The impact of microfinance on poverty 16 2.7 Current debates on the impact of microfinance in development 18 2.8 Empowering Women 23 2.9 Impacts beyond the household 26 2.10 The use of the Sustainable Livelihoods Framework in impact measurement 27 2.11 Current debates about MFIs and their role in development 29 Chapter Three: A Glimpse of The Microfinance Sector in Bangladesh 33 3.1 Micro-Finance’s History and Development 33 3.2 Evolution of MFIs financing sources 34 Chapter four: Data Analysis and Interpretation 37 4.1 Hypothesis & Model 37 4.2 Respondents Information (Frequencies & Cross-Tabs) 38 4.3 Results of the Regression Analysis for Hypothesis One 43 4.4 Results of the Regression Analysis for Hypothesis Two 45 Chapter five: Findings And Conclusions 47 5.1 Findings 47 5.2 Scope for Further Research 48 5.3 Conclusion 48 References 50 Appendix - A 52 Appendix - B 55 List of Figures Figure 1:Conceptual Model of the Study 37 Figure 2: Loan reserve of NGO-MFIs in the...
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...Could Microfinance Be the End of Poverty? Lending money to a small business or individual that may or may not be able to repay the debt can be complex and lead to banks having to make difficult decisions. Lenders are known for acting with caution and avoiding a risky investment, yet millions of people worldwide are gaining access to capital. These small corporations or family owned start-ups are using microfinance institutions to supply them with the necessary loans they need for various business or personal expenses. The ability of these applicants, who otherwise would have never been approved, to gain the funding through microcredit loans has had a remarkable impact globally. Heads are turned, and many ask the question “Could microfinance be the solution to help end poverty?” Historically, many businesses have faced difficulty with applying for a loan. Bankers are renowned for requiring a huge amount of paperwork and proof of income, insurance, etc. This can be a time consuming and stressful process. Some investors expect that the company asking for the loan will be unable to provide the documents that are required and therefore will be denied. While lenders are able to adjust such details as interest rates and length terms for their own benefit, they are hesitant to take an applicant that will put the repayment at risk. The economic shifts have had an impact on the lives of people worldwide. Small companies are unable to support the cost of staying open and many eventually...
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...Microfinance From Wikipedia, the free encyclopedia Jump to: navigation, search This article may be too technical for most readers to understand. Please help improve this article to make it understandable to non-experts, without removing the technical details. The talk page may contain suggestions. (January 2010) Community-based savings bank in Cambodia. There are a rich variety of financial institutions which serve the poor. Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers."[1] Those who promote microfinance generally believe that such access will help poor people out of poverty. Microfinance is a broad category of services, which includes microcredit. Microcredit is provision of credit services to poor clients. Although microcredit is one of the aspects of microfinance, conflation of the two terms is endemic in public discourse. Critics often attack microcredit while referring to it indiscriminately as either 'microcredit' or 'microfinance'. Due to the broad range of microfinance services, it is difficult to assess impact, and very few...
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...Introduction The Small and Medium scale Enterprise (SME) are recognized worldwide as engines of economic growth. The commonly perceived merits often emphasized for their promotion especially in the developing countries like Bangladesh include their relatively high labor intensity, dependence on indigenous skills and technology, contributions to entrepreneurship development and innovativeness and growth of industrial linkages. The case for fostering SME growth in Bangladesh is irrefutable as these industries offer bright prospects for creating large-scale employment and income earning opportunities at relatively low cost for the unemployed especially in the rural areas strengthening the efforts towards achieving high and sustained economic growth which are critically important prerequisites for triggering an exit from endemic poverty and socio-economic deprivation. These promotional arguments for the SMEs, while universally emphasized are often put forward by their ardent advocates in a small versus large context and thus arouse serious debates concerning their economic viability. Much of such controversies may, however breakdown if the intrinsic virtues specific to SMEs and unavailable to large-scale industries are correctly identified and carefully exploited. A combined interaction of the forces of product-mix, location factors, technological advantages and market advantages create opportunities for SMEs to grow and prosper at all levels of development which are often ignored...
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...October 8, 2015 “Professor Muhammad Yunus, founder and managing director of Grameen Bank, said that if an institution could make financial resources available to the poorest people in Bangladesh, then ‘these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.’" Grameen Foundation Muhammad Yunus: banker, economist, professor, author, founder of the Grameen Bank, founding member of Global Elders, World Food Prize winner (1994), Nobel Peace Prize Laureate (2006), recipient of the Presidential Medal of Freedom (2009), and the recipient of 26 honorary doctorate degrees and more than sixty other special awards. There is little to no doubt that the man is accomplished, hailed as the father of microcredit and a pioneer of microfinance. However, his success lies in something seemingly marginal and that much more brilliant, which distinguishes him as an intellectual and a thinker worthy of a place on the thinkers.com top 50 list. The idea of microcredit was first brought to light by Dr. Akhtar Hameed Khan (founder of the Pakistan (now Bangladesh) Academy for Rural Development). Yunus, a follower of Dr. Khan’s work, sought to implement the concept as a unique social business model aiming to eradicate poverty, starting with Bangladesh. With banks refusing to provide loans to ‘high-risk’ markets, Yunus felt that the poor were left at a disadvantage, unable to escape the grip of poverty. “To Muhammad Yunus, micro-credit...
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...Why are some Microfinance Institutions not sustainable Ghana Christian University College SDM 201222101014 Introduction to Microfinance Mr. Sam Quin Word Count: 1273 Nov. 11, 2014 Table of Content Pg Introduction 3 Definition of Terms 3 Sustainability of Microfinance Institutions 4 Why some Microfinance are not sustainable Solution Evaluation Conclusion References Introduction Microfinance has existed in various forms for centuries, and even longer in Asia, where informal lending and borrowing stretches back for several thousand years. However, the birth of ‘modern’ microfinance is said to have occurred in the mid 1970s in rural Bangladesh. There, in the midst of a famine, Dr. Muhammad Yunus, professor of economics at the University of Chittagong, was becoming disillusioned with the abstract theories of economics that failed to explain why so many poor people were starving in Bangladesh (Jacques, 2010). Dr. Muhammad Yunus saw this challenge, determined to find a practical solution he lend money with zero interest, and Grameen Bank Project was born, it grew rapidly with more than six million borrowers as at 2006. Inspired by the success of the Grameen Bank, the 1970s and 80s saw rapid growth in the number of new micro-finance institutions appearing around the world, many of them started by NGOs and funded by grants...
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