Micro finance program for poor in Bangladesh
In Bangladesh, poor people have traditionally been denied access to
the formal banking system, as they are unable to provide collateral for
loans and typically deal in small amount of money.
BRAC, the largest Non-Governmental Organization (NGO) in Bangladesh,
launched micro finance program in 1974 to encourage the increase of
income for the poor through setting up and expansion of income
While taking a site visit on Tuesday to Manikganj, 63 km southwest of
capital Dhaka, BRAC Senior Communication Officer Fariduzzaman Rana told
Xinhua BRAC provides collateral-free loan to the poor, especially women
in a simple and affordable manner.
Banking facilities for the poor AFP
“Our micro finance program has three scales, the first scale is only
for the medium poor women who are requested to be between 18 to 60 years
old and must have a house. They can take loan between 5,000 taka and
30,000 taka (70-430 U.S. dollars) in one year and return in installments
with a yearly interest rate at 15 percent,” Rana said.
“When the borrowers’ situation become better, they can enter the
second scale and then the third scale which means they can take more
loans,” Rana added.
Shamima, a 35-year-old woman who lives in West Dashora village of
Manikganj district, told Xinhua her life has changed a lot after she
took small loan from BRAC 10 years ago.
“I buy cloth and make bed covers. With the money I make from selling
bed covers, I not only can support the whole family but also can send my
two sons to school as well as afford facilities like TV and other
electronic appliances at home,” she said.
Sukina, an old woman of around 55, said she took a loan of 50, 000
taka from BRAC this year and is running a grocery.
“I can get 500 taka profit per day after returning the loan and
interest. Life is becoming much better for me and my family,” she said.
“I plan to expand my grocery in the future and make more money, “ she
Shamima and Sukina belong to one of the six loan groups in the
village. One group consists of 25 to 45 women borrowers.
If some borrowers from the group can’t return the loan, the group
will take responsibility and manage to sort it out, Rana said.
“Ninety-nine percent of the borrowers have returned the loan,” he
Rana said if someone dies before returning the loan, BRAC will write
off his or her debt and also give the family 5,000 taka.
He said the borrowers use the loan to start new enterprises or expand
existing ones ranging from agricultural activities such as growing rice,
maize or vegetables and livestock rearing to non- farm activities such
as running a restaurant or grocery store.
According to BRAC statistics, up to December 2007, the micro finance
program was serving 7.37 million poor people, mostly women.
BRAC, founded in 1972, has become one of the biggest NGOs in the
world. It employs 120,000 staff. They have offices in countries like
Afghanistan, Tanzania and Uganda.
DHAKA, Wednesday, Xinhua