Tuesday, March 12, 2019

Impact of Micro Enterprise Loan of Developments of Micro Enterprises in Bangladesh

remit of Contents 1Introduction6 1. 1Objectives6 1. 2Scope of the interpret7 1. 3method actingology and selective discipline Collection8 1. 4Limitations11 2Institute of sm every(prenominal) pay (InM)13 2. 1Vision13 2. 2Mission13 2. 3 political sympathies14 2. 4G everywherening consistency14 2. 5Current G everywherening corpse of InM14 2. 6General Body15 2. 7 routineivities of the asylum16 2. 8Research16 2. 9 readinesss17 3Evaluation and victimization of humiliatedfinance celestial sphere20 4The smallfinance firmament In Bangladesh25 4. 1The littlefinance fashion modelula26 4. 2The Microfinance Institutions28 4. 3Microfinance Delivery Mechanism29 4. 4Microfinance Products30 Tr finales and crop of Microfinance computer syllabus of MFIs35 5. 1 role and Gender35 5. 2 rank and file in MFI-nongovernmental organizations37 5. 3Trends in loaning port39 5. 4 glitz in enactment of addwords41 5. 5 lends Disbursement41 5. 6Aver eon Size of lendwords Disbursed41 5. 7Recover y Rate42 5. 8Loans Outstanding44 5. 9Trends in nest egg Mobilization46 5. 10Net savings per section46 5. 11 nest egg withdrawal Rate49 5. 12Financing of Loans Loan Revolving Fund50 6Micro enterprise in Bangladesh54 6. 1Definition of Microenterprise54 6. 2Role of Microenterprise in the Present Context of Economy55 Microenterprise Loan essential view Analysis59 7. 1Education59 7. 2Sources of Finances59 7. 3Number of Employees or Labor60 7. 4 descent scheme61 7. 5 authoritiesal Aids and Regulations61 7. 6Financial Institutions61 8Microenterprise Loan Supply berth Analysis64 8. 1Major Providers of Microenterprise Loan69 8. 1. 1Bangladesh Extensions Education Services69 8. 1. 2Objectives69 8. 1. 3Achievement70 8. 2BURO Bangladesh72 8. 3Grameen lodge73 8. 3. 1Eligibility74 8. 3. 2Terms and conditions74 8. 3. 3Sectors covered74 8. 3. 4Overview of smallenterprise bring of Grameen Bank74 8. ASA Bangladesh76 8. 4. 1Small crease Loan computer program76 8. 4. 2Small Entreprenuer Lend ing76 9 push of Microenterprise give on Income gene dimensionn78 9. 1 jar of Micro opinion contri exclusivelyewording on the r heretoforeue of the littleenterprises78 9. 1. 1Hypothesis78 9. 1. 2Model78 9. 1. 3Analysis78 9. 1. 4Findings79 9. 2Impact of Loan Amount on the Microenterprise Revenue80 9. 2. 1Hypothesis80 9. 2. 2Model80 9. 2. 3Analysis80 9. 2. 4Findings81 9. 3Impact of prep atomic physical body 18dness on the revenue of the microenterprises82 9. 3. 1Hypothesis82 9. 3. 2Model82 9. 3. 3Analysis82 9. 3. 4Findings84 10Case learning86 0. 1Success Story86 10. 2Failure Story91 11Conclusion and Recommendations97 List of dining tables and frame of references circuit board 1 module Strength and Growth of MFI-NGOs35 Table 2 Growth of Membership38 Table 3 Borrower and Member Ratio (%)39 Table 4 Average Loan Size (Tk)41 Table 5 Loan Portfolio reference finished and by means of recovery Rate41 Table 6 Loan Portfolio Quality Over collectable in Loans Outstanding42 Table 7 L oan Performance through Outstanding Loan Size (Tk. )43 Table 8 Net Savings Performance46 Table 9 Savings Withdrawal Rate (%)48 Table 10 scattering of additive Loan Fund by Sources50Table 11 Sources of Finance of Microenterprises58 Table 12 Distri neverthe littleion of Loan by give tongue to Purpose63 Table 13 Change in the dispersion of Loan by Stated Purpose64 Table 14 Micro Enterprise Loan in Various Sectors (July 2008-June 2009) by BEES71 Table 15 Loan Disbursements by BURO72 Table 16 Microenterprise Loan by GB73 Table 17 Loan Disbursed to Male Borrower by GB74 Table 18 Loan Disbursed to Fe manful Borrower by GB74 Figure 1 Percent statistical scattering of ply of MFI-NGOs by gender 200935 Figure 2 Percent statistical distribution of provide of MFI-NGOs by gender 200835Figure 3 Trend in citation Staff of MFI-NGOs36 Figure 4 Percent Distribution of Membership in MFI-NGOs by country-bred and urban Areas in 200936 Figure 5 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 200836 Figure 6 Trend in Membership by placement of MFI-NGOs37 Figure 7 Distribution of Growth of Membership37 Figure 8 Loan Outstanding43 Figure 9 Loans Outstanding Per Borrower by Gender44 Figure 10 Loans Outstanding Per Borrower by Location45 Figure 11 Trends in Net Savings per Member by Gender46 Figure 12 Trends in Net Savings per Member by Location47Figure 13 Percent Distribution of Loans by Stated Purposes in 200965 Figure 14 Percent Distribution of Loans by Stated Purposes in 200865 Figure 15 Percent Distribution of Loans by Stated Purposes in 200766 Figure 16 Percent Distribution of Loans by Stated Purposes in 200666 Figure 17 Trend of Microenterprise Loan on with conglomeration Loan67 Figure 18 Microenterprise Loan as Percentage of Total Loan68 Introduction The magnitude of micro-entrepreneurial activities plays a decisive affair in the economic phylogenesis of the hobnailed livelihoods, posticularly in third world countries.Micro-entreprene urship has al ways been considered as a looseness extinct instrument to fight pauperism in an exitive manner. As a consequence, penury alleviation through hoidenish centric microentrepreneurship begeting has been think for more than the last thirty five days in Bangladesh. This cultivation of micro- deferred stipend programs and micro-enterprise in Bangladesh has emerged as a study(ip) st sendgy for the alleviation of need and un concern that continue to pose problems to the economic and friendly gentility in the country.Government and non-governmental organizations (NGOs) construct adopted several addresses and strategies to scale these issues. Relying on peer nip from borrower concourse members rather than on positive for quittance, micro- citation operation in Bangladesh has been a sustained advantage story, efficiently recycling lending resources with change magnitude disbursements, soaring recovery and a low rate of late payment, making a signifi gro undworkt contribution to micro-enterprises with income and manipulation generation, and private heavens enterprise information.The physical object of the bailiwick is to examine the impact of micro- doctrine on micro enterprises and provide an general depth psychology of the micro faith program in Bangladesh and their place in developing microenterprises in Bangladesh. The micro- reference book programs soak up been developed with the aims of the grooming of extension to the low and the out crop of micro-enterprises through country-bred women, with the ultimate goal of the alleviation of poverty in the country. Objectives The main concern of the study is to develop a undefended understanding astir(predicate) the role of microfinance institutions in developing microenterprises in Bangladesh.So, the study generally accentes on the microenterprises & microfinance institutions of Bangladesh and how the MFIs atomic add 18 functioning to develop the microenterprise of Bangladesh. To picture out this the paper leave behind look into the unhomogeneous aspects of the microenterprise and microenterprise imparts and the providers of such(prenominal) loan. This study ordain try to fulfill the pursual physical objects. 1. To have an overview of the history of microfinance in Bangladesh low this objective I exit try to gain understanding about different development patterns through which the microfinance field of Bangladesh has reached to trustworthy position. . To develop a clear insight about the microfinance argona of the Bangladesh In this actuate I volition focus on dissimilar institutional frameworks of microfinance sector, its rules and ordinance, microfinance mechanism and various institutions working in this sector. 3. To analyze the recent development of the microfinance sector of Bangladesh This secern of the study give focus on the recent development of microfinance sector base on info from 2007-2009. The subtract le ave try to scupper recent status of microfinance sector by evaluating various aspects. 4.To study the grocery and reveal the actual pauperization scenario for microenterprise loan. An overview of the aim scenario of the microenterprise loan pass on be presented in this fragment, this give focus on the sources of microenterprise capital to have guide scenario of microenterprise loan. 5. To investigate the current supply scenario of the microenterprise loan By analyzing previous and current data a brief scenario of the supply condition of microenterprise loan bequeath be do in this element. A study on the study(ip) providers of microenterprise loan depart in whatsoever boldness e d oneness. 6. To exhibit the impact of microenterprise loan on the income of the borrower A statistical analysis will be make to find out the impact of microenterprise loan on the borrowers income and habit. Scope of the shoot As the title of the study suggests, the study will evolve al cl ose to the microfinance sector of the Bangladesh as whole roughly as their role in providing finance to microenterprises. So, it sewer be said that it will cover the whole microfinance sector of Bangladesh with emphasis on microenterprise loan.A thorough analysis will elementaryally cover * The emergence and development of microfinance sector in Bangladesh * Its various aspect, rules & regulation * Procedure and mechanism for providing microfinance * Recent development, present scenario and turn off in microfinance * Sector wise comparisons on various aspects * Opportunities for development * Major providers of microfinance and their role in providing microenterprises loan, * Demand side and supply side analysis of microenterprise loan * Impact of microenterprise loan on the income and consumption of the microenterprise possessors. * Case studyMethodology and Data Collection Both the qualitative and quantitative analysis will be done in the study. For selecting methodology I divided the whole plow into six major parts. Each part will grow depending on different methodology. In the following part I will let out the methodology for each part independently. Part 1 Analysis of the Microfinance sector of Bangladesh This part will integralityly done by analyzing secondary data. In the first segment of the part the history of microfinance will be depict and a brief overview of the development of microfinance sector from the beginning to the 21st carbon will be make.In this segment I will mainly focus on the quadruple development phase of microfinance sector namely accomplish interrogation phase in the 1970s, micro credit development phase in the 1980s, consolidation phase in the 1990s and involution phase from 2000 onwards. In the next segment I will signalise the microfinance sector with an overall description about the microfinance regulation, the microfinance Institutions, microfinance legal transfer mechanism and microfinance intersections. In t he last and final segment of this part I will showing the effort analysis of the microfinance sector for the last three yrs.I will use extensive table, charts and graphs to explain the trends that were prevailing in the sector. I will cover the following aras in the trend analysis part employment and gender, membership in MFI-NGOs, trends in lending behavior, trends in savings militarization, backing of loans, loan revolving computer storage etc. Part 2 Microenterprises in Bangladesh This part is alike depended broad(a)ly on secondary sources of data. The central point of this part is microenterprises in Bangladesh. Here I will provide the definition of microenterprise in Bangladesh and the role of microenterprises in present economic context.Part 3 Demand Side Analysis This part will use primary data to collect nourish about the adopt side of the microenterprise loan that is owner of microenterprises. For the analysis data are collected from the primary sources. For th e study long hundred owner of micro enterprises are selected from different areas of Bangladesh. Out of these 120 business fellowship 30 are collected from Dhaka urban summation, 30 from Chandpur and Comilla District, 30 from Chittagong City and 30 from Sylhet city. The businesses which have capital up to $10,000 are selected for this study.For better analysis of true picture of micro enterprises, businesses that are actuateed within 5 divisions are selected. Most of the selected businesses are grosser shop (50), readymade garments shop (30), big poultry shops (10), libraries and gentilityal shops (30). Data are collected by two ways questionnaire and personal interview. Part 4 Supply Side Analysis cut-ranking information from various printed materials i. e. publications and websites are used to collect data for this part. In this part I will provide segment wise microfinance distribution by the MFIs of Bangladesh for the last three years.I will also provide the trend of microenterprise loan and changes in the sum up of loan disbursed by the MFIs from year to year. In this part I will also provide information about the big four institute of microenterprise loan providers with a descriptive analysis of their microenterprise loan scheme. Part 5 Impact Analysis of Microenterprise Loan These parts will analysis the impact of microenterprise loan on the income and consumption of the borrower. For the analysis I will use Ordinary Leas Square Method for analyzing impact.The data will be collected from the survey data provided by Institute of Microfinance to me for this purpose. In the data set I have information about both the borrower and non borrower of microenterprise loan. So I have decided to delineate pretenses for impact appreciatement. offspring of Borrowing In the first model I want to use Income from the microenterprise as a dependent variable and get-go assets of the microenterprise (i. e. land, build etc. & borrower or non-borrower as de pendent variable to find out whether the borrower has more capacity to generate more income. HypothesisH1= Borrower of microenterprise loan are able to generate more income than non-borrower H0= Borrower of microenterprise loan are non able to generate more income than non-borrower Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5bri Here, I= Income from the Microenterprise l = Land e = Equipment b = Buildings o = archaean(a)s assets br = Borrower or Non-borrower (dummy variable) Effect of Loan Amount On the some other(a)(a) hand I also want to find out is the occur of microenterprise loan effect the income of the borrowers. For this I want to use income from microenterprise as dependent variable and starting assets and amount of loan s independent variable. Hypothesis H1 = Loan amount has a positive effect on borrowers income H0 = Loan amount has a negative effect on borrowers income Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5 lni Here, I= Income from the Microenterpr ise l = Land e = Equipment b = Buildings o = oppositewise assets ln =Borrowed amount Effect of facts of life To find out if prep has any impact on the earnings of the microenterprise owners I here develop a model where I tried to figure out the relationship amidst teaching and income of the microenterprises.In this purpose I used the same model used for loan amount but I include one more independent variable that is teach (dummy yes or no). Hypothesis H1 = Training has positive effect on borrowers income H0 = Training has negative effect on borrowers income Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5 lni + ? 6 ti Here, I= Income from the Microenterprise l = Land e = Equipment b = Buildings o = other assets ln =Borrowed amount t = Training (dummy) Part 6 Case Study In this part I will describe two winning and two unsuccessful case of microenterprise loan.I will provide will brief description of the project and reasons for success or failure will be provided. Limitatio ns Paucity of resources and lack of capacity were the main limitations for the study. However, easingricted by these limitations I have tried to give my best effort to congeal the report. Overview of the Organization - Institute of Microfinance (InM) Institute of Microfinance (InM) is a non-profit organization open principally for meeting look into and reproduction contains of depicted object as swell up as global microcredit programs.It endeavors to enhance and repair the microfinance-related research and development modality crabbyly in Bangladesh. The Institute is contemplating a transition to a a good deal cadences broader center of virtuousness in the area of microfinance, enterprise development, poverty decrement and allied areas at the national and international aims through collaborative approach to research, k straight offledge management, grooming and education, and participation of reputed institutions and scholars in its programs.The Institutes main fo cus is on developing itself as a center of excellence with emphasis on research, training, academic and knowledge management. However, research is the most declamatory among all the activities and its research activity centers round microfinance, poverty and development issues. InM was initiated and promoted by the Palli Karma-Sahayak Foundation (PKSF), and is now registered as an independent non-profit institution under the Societies fitting Act 1860.InM is currently funded mainly by UKs Department for supranational festering (DFID) through its Promoting Financial Services for Poverty Reduction broadcast (PROSPER). InM is answerable for(p) for developing overall capacity in the microfinance sector and to acquire knowledge creation, management and airing in the area of microfinance and poverty. In improver to ballooning the research, training and consultancy serve for microfinance practitioners, PROSPER has been providing service to modify microfinance institutions to gate demanded training and consultancy go from accredited providers.InM is also committed to backup man interested institutions to adduce long-term microfinance courses. Vision Towards establishing a poverty free world, InM sees itself as a frontline center of excellence in knowledge creation and management. Mission Firstly, InM will contribute to the capacity building of the microfinance sector in Bangladesh through training and academic programs for human resource development, conducting research studies and dissemination of findings, regular dissemination of new knowledge and technology, for the benefits of the sector.Secondly, the institute should emerge as a center of excellence in microfinance, poverty, enterprise development, and other allied areas at the national and international levels through building network with microfinance institutions, sector stakeholders, reputed researchers, thinkers and professionals, and exchange of ideas and experiences. Governance Institute is governed by a two-tierGoverning Body and General Bodygovernance system. The basic governance lies with the Governing Body. It comprises of seven members, including the Executive manager of the Institute as an ex-officio member.The General Body is the Institutes high gearest authority. It is responsible for the overall policy guidance and direction for efficient functioning of the Institute. Total number of members of the General Body is 8, including 7 (seven) members of the Governing Body. Governing Body The Institute is governed by a two-tiergovernance amicable organisation-Governing Body and General Body. The basic governance lies with the Governing Body. It comprises of seven (7) members, including the Executive conductor of the Institute as an ex-officio member. Current Governing Body of InM Chairmanprof Wahiduddin Mahmud Former adviser to the Caretaker Government of Bangladesh, and Member of the United Nations Committee for Development Policy (UN CDP) Members Dr. Iqbal Mahmud professor Emeritus Chemical Engineering Department Bangladesh University of Engineering & Technology (BUET) Dr. Quazi Mesbahuddin Ahmed Managing coach Palli Karma-Sahayak Foundation (PKSF) Ms. Rasheda K. Choudhury Former Advisor to the Caretaker Government of Bangladesh, and Executive Director carry for Popular Education (CAMPE) Dr. Pratima Paul-Majumder Senior Research FellowBangladesh Institute of Development Studies (BIDS) Dr. Toufic Ahmad Choudhury Director General Bangladesh Institute of Bank Management (BIBM) Dr. Md. Mosleh Uddin Sadeque Executive Director (Interim) Institute of Microfinance (InM) General Body The General Body is the Institutes highest authority. It is responsible for the overall policy guidance and direction for efficient functioning of the Institute. Total members of the General Body is thirteen (13) including seven (7) members of the Governing Body. Other members of the General Body are as follows Mr. Khondkar Ibrahim KhaledChairman Bangladesh Kr ishi Bank (BKB) Professor A. K. M. Nurun Nabi Department of Population Sciences University of Dhaka Dr. Jadab Chandra Saha Former Managing Director Bangladesh Krishi Bank Ms. Parveen Mahmud prexy Institute of Chartered Accountants of Bangladesh (ICAB) Dr. M. A. Hakim Professor & Chairman Department of Business Administration University of Development Alternative (UODA) Dr. Jashim Uddin General Manager (Administration) Palli Karma-Sahayak Foundation (PKSF) Activities of the Institution The Institute has a plan to work with three divisions Research and intimacy Management * Education and Training * Administration and Accounts Research Research is the most prominent among the InM activities. The major focus of its research is on microfinance, poverty, and development issues. InM conducts research studies independently and/or jointly with distinguished researchers and institutions from home and abroad. The underlying objective of the research agenda is to get insights into the problem s of poverty and development and also to assess the impact of different hitchs. On-going Research Projects Multiple Memberships ( co-occur) in Microcredit Program. * Strategic Behavior of NGOs/MFIs in Bangladesh * Health and Nutrition among the Beneficiaries of Microfinance Institutions (MFI) in Rural Bangladesh. * Microinsurance, Poverty and exposure in Bangladesh (Phase-I) * Searching for an Explanation of Differences in Poverty Levels and Trends at Sub-National Levels. * collar the Poverty and Resource Dichotomy- An Inquiry into the Livelihood of any Backward friendship in Resource-Rich Areas of Bangladesh. * Access to Financial Services (Phase -1) Poverty botheviation through Enhanced Usage of Mi reach Remittance * Assessment of the Impact of PKSF Interventions on Sustainability of Partner Organizations (POs) * Impact of Microcredit on hoidenish Farm Performance and victuals security in Bangladesh. * Internal Female Migration in Rural Bangladesh An in effect(p) Household Coping Strategy. * Differentiated Corporate Governance and MFI Performance in Bangladesh. * Poverty Dynamics in Rural Areas of Bangladesh Phase-I * Designing Appropriate Microinsurance Products for the crushed Income Households Completed Research Projects Baseline Study of Food Security for penetrable Group Development and Ultra Poor Beneficiaries Project (Sponsored by PKSF) * appointment of Appropriate Micro Insurance Approach for Ultra Poor of Bangladesh. (Sponsored by UNDP) * Urban Microfinance in Bangladesh * Monga in Greater Rangpur Intensity, Coping, Vulnerability, and the Impact of Mitigating Strategies. * Impact of Cash for Work Program under PRIME in Lalmonirhat Districtct. (PKSF & InM) * Overlapping in Microcredit Programs in Patrail Union, Tangail. PKSF & InM) * Impact of PRIME Interventions on Monga Mitigation in Greater Rangpur Region PhaseI Trainings at that place is a growing demand to expand the InMs activities to set up training programs to build the capacity of the MFIs so that practitioners empennage make tangible efforts towards building a sustainable microfinance sector. The institute intends to venture upon providing training to the development practitioners, journalists, editors, senior executives of different MFIs, policymakers, regulators, government officials and international agencies.In addendum, it will act as a facilitator in capacity building of the existing training institutions. InM has a future plan to organize training programs for the participants even from outside Bangladesh. InM wants to put superfluous thrust on-need-based training that requires customized, threadbare and integrated training modules for the training programs. Furthermore, the institute is mandated to play fighting(a) role to capacity building of the institutions in the microfinance sector in Bangladesh. Module DevelopmentInM has interpreted initiative to prepare standardized training module for the MFIs as per suggestions of the training exper t committee. InM wants to put special thrust on training rather than prototype training which needs customized, standard and integrated training module for the training courses. Initially the following modules are developed by InM. * Microfinance Operations and Management. * Basic rule book Keeping and chronicle Management for MFIs. * ameliorate Participatory Managerial Skills and Management Style. * Monitoring and Evaluation of Microfinance Program. Legal regulatory System and Governance. Training Conducted by InM * March 27-31, 2011 pilot lamp Training Program on Microfinance Operations and Management with PMUK * February 07-11, 2011 Participatory Monitoring and Evaluation training at ELD, Thailand * December 5-15, 2010 Training of Master Trainers with AIT, Thailand * July 25-29, 2010 Participatory Rural appraisal (PRA) * May 9-20, 2010 Training program for officials of Microcredit restrictive Authority (MRA) * March 8, 2010 Training on Effective Time Management March 7-11, 2 010 Basic parole Keeping and Accounting Management at UDDIPAN, Dhaka * February 8, 2010 Pilot Training on Microfinance Operations and Management (MOM) at CDF * January 24-28, 2010 Pilot Training Program on Basic volume Keeping and Accounting Management for MFIs with BRAC * January 17-21, 2010 Pilot Training Program on Basic Book Keeping and Accounting Management for MFIs with YPSA * January 10-14, 2010 Pilot Training Program on Basic Book Keeping and Accounting Management for MFIs with CDF * October 25-29, 2009 tot up on Basic Book Keeping and Accounting Management for MFIs * October 11-15, 2009 PRA Training for Dhaka City tum (DCC) / JICA Participants * August 16-20, 2009 TOT for Dhaka City Corporation (DCC) / JICA Participants * July 19 29, 2009 TOT on Microfinance Operation and Management for Service Providers * December 26-28, 2006 Training program titled Poverty, Microfinance and Development for Journalists of both Newspapers and Electronic Media. Evaluation and Developmen t of the Microfinance Sector in Bangladesh -Evaluation and Development of Microfinance Sector The development of MFIs took place in several distinct phases over the last four decades. Micro credit was developed in the 1970s as a response to the succour and rehabilitation needs of post- independent Bangladesh when the government and private initiatives were pore on restoring livelihoods through income generating activities. The development of the microfinance sector has undergone four distinct phases in the ancient four decades I. Action research phase in the 1970s II. Micro credit development phase in the 1980s III. Consolidation phase in the 1990s IV. blowup phase from 2000 onwardsIn the 1970s, development organizations including local and international NGOs were involved in relief and rehabilitation. In addition to confederacy development, health, literacy, agricultural sector development programs and viands relief programs, few initiated income generation activities to he lp the landless(prenominal) unretentive, particularly women earn supplemental income. A major constraint faced by the existence was the lack of access to capital for investment in income generating activities, so few could actually start enterprises. In the mid 70s, Grameen Bank initiated its Jobra experiment using the solidarity pigeonholing-based credit delivery system using peer pressure and root check to hold back timely refund.The project achieved a high rate of success and it was lumpised as Grameen Bank, with a special authorize obtained from the Bangladesh Bank. Grameen Bank abides the besides savings bank with a poverty alleviation bank license. The license is of particular none as it allows Grameen as a licensed and regulated bank to mobilize savings legally, from members and non-members. Also in the 1970s, the Bangladesh Bank initiated the Dheki Rin Prokolpa in collaborationism iwth an NGO Swanirvar Bangladesh. Several other NGOs were also trying out vario us micro credit mechanisms and soon micro credit programs became a part of every loving development NGO, even if it was not a major part of the program. The 1980s is known as the finale of microfinance program development.The success of Grameen Bank began to motivate social development NGOs to expand their economic development programs, with a particular emphasis on microcredit. The availability of bestower grants resulted in the creation of revolving loan notes to make loans to NGO members for various income generating activities. NGOs began to expand their micro credit programs and some like ASA took a decision to substitute focus from social and familiarity development work to minimalist micro credit intermediation. In the 1990s, the Palli Karma-Sahayak Foundation (PKSF) was set up as the promoted apex contact financed with government capital and the World Bank.As a result, NGOs providing monetary services had the benefit of relatively low cost refinancing along with practiced avail to enhance their institutional infrastructure and management information systems to expand outreach, improve efficiency and increase self- sufficiency to reduce dependence on grant funds. The first NGO to achieve full operational self- sufficiency and fiscal self-sufficiency was ASA. In the late 1990s, ASA was able to move away from bestower grants and operate its microcredit portfolio through earned income, savings, and paleness converted from the grants received previously. ASA became the widest borrower of PKSF funds and was eligible for loans from commercial banks. Soon other NGOs like BRAC and Proshika began to crustal plate up their micro credit programs, although their continued focus in their social and community development programs delayed their poses for monetary self-sufficiency.Towards the end of 1990, the microfinance sector was well established with the Big quad namely, Grameen Bank, ASA, BRAC and Proshika who in turn promoted smaller NGOs prov iding refinancing as well as technical support in their respective development methodology and microfinance practices. Although the vast volume of NGOs adopted the Grameen style of group lending and focused on agricultural areas, at that place were some new initiatives. For instance, in the early 90s, an NGO named Shakti Foundation took on the challenge of providing microfinance services to urban women living(a) in the Dhaka passs who had limited literacy and numeracy skills and no permanent address, as slum evictions were common. The NGO Asharai promoted a savings based self-help group model of microfinance feature with community development services for tribal communities in the northwest part of Bangladesh.RDRS, an integrated service provider focused on micro credit initiatives along with agricultural interventions to increase the food sustainability of the drought affected population in the northern villages of Rangpur and Dinajpur districts. BURO Tangail, with its centre in the highly originative town of Tangail, started with a modified Grameen type methodology, but used carry out research and piloting of products to develop a range of credit and savings products, including flexible savings and term deposits. TMSS based in Bogra started with an integrated community development approach, using micro credit as a heart and soul to ensure sustainable development of the inelegant economy with a focus on social forestry, water resource management, agricultural and livestock management, fisheries and health, and now has grown into one of the top 10 MFIs in the country.Safe Save, a pilot project that took on the legal framework of a savings and credit cooperative started as a Lilliputian provider amongst the giants however, has win international fame for its success in innovating a savings based respective(prenominal) lending model in urban Dhaka, in contrast to the prevailing East Pakistani model of a credit-led group- based lending model for sylv an thickenings. The fourth phase was one of professionalization and expansion of microfinance portfolios, and moving towards exploit funds to enhance sustainability. In the late 1990s, with the increasing threat of declining donor funds NGOs began to experience the need to enhance management capacity and develop action plans to access loans in identify to expand outreach to attain carapace and sustainability. In the last decade a number of NGOs have experient tremendous expansion, with at least a dozen succeeding in reaching over one million leaf nodes.Bilateral donors and international development agencies have contributed significantly to this maturement in the sector by providing technical assistance support, financing technical support and institutional development and sponsoring training within and outside the country to introduce the sector to international experiences. PKSF and a number of commercial banks have contributed to the expansion and outreach by refinancing m icrofinance portfolios to respond to increasing need for loan funds from existing and new customers. The support of action research and pilot testing of new products has added rigor and vitality to the sector. Expansion of microfinance portfolios has continued to the end of the 1990s and many MFIs are s savings bank experiencing high grade of growth with continued availability of commercial funds, increasing income from the loan portfolio, and member savings. The current phase is formalization and transformation.The bigger and medium size NGOs will prepare to transform into formal pecuniary institutions in pact with the newly established Microfinance Regulatory Authority Act, with the objective of integrating into the formal pecuniary sector to gain access to additional sources of capital and equity as well as mobilize savings from the public. Smaller NGOs that are unable to transform due to low levels of equity and in decorous scale or performance whitethorn consider mergers t o consolidate portfolios and combine their strengths to overcome weaknesses. Many of the smaller MFIs that have not been able to attain the adequate levels of sustainability and retain a committed customer base in belligerent markets whitethorn be forced out of business.The sector will be faced with some new challenges, including intensified competition in some of the rural and urban markets where market saturation is already evident, and innovating mechanisms to service the markets that pillow unbanked, including the extreme unworthy or hard core poor and the populations in remote areas that remain beyond the reach of either the formal banks or NGO MFIs. The Microfinance Sector of Bangladesh - The Microfinance Sector In Bangladesh The microfinance sector in Bangladesh consists of the following stakeholders who are categorized as the micro, micro and macro levels.The micro level consists of the existing clientele and the potential target client group who remain unserved or unders erved. The micro level also consists of the different kinds of providers, including the formal, semi-formal and inner providers such as moneylenders, pawnbrokers and rotating credit and savings associations. The micro-level consists of the financing partners, including donors, refinancing partners, development finance institutions, multilateral and bilateral aid agencies, commercial banks, specialize banks, development banks, as well as government agencies. Private investors are new comers in the micro-level providing equity and capital to MFIs.The micro level also includes technical support providers including training institutions, networking institutions, microfinance associations, rating agencies, audit firms, consulting firms, independent consultants and academic or research institutions. The macro level consists of the regulatory bodies including the Central Bank or Bangladesh Bank and the Ministry of Finance. A principal player within the macro level is the NGO Affairs Bure au (NGOAB) which governs and handles the NGO microfinance providers, including local and international NGOs with programs in Bangladesh. slightly 62 per centumage of the borrowers live below the poverty line. The vast absolute majority of these clients do not have physical collateral to secure loans and need alternative collateral mechanisms. The 2005 World Bank report states that a fundamental of 9. 6 million classs are being served by MFIs.The marrow number of clients served by microfinance sector is approximately 24. 25 million with effective insurance coverage to about 17. 32 million clients showing a substantial intermission in the midst of demand and supply. Microfinance institutions, including Grameen Bank, collectively service more than 60 per centumage of the demand, with Grameen serving about 20 share of the count. Women constitute 90 percent of the clientele. Average loan sizes are nigh Tk. 4000 (US$60). In 2006, micro credit loans constituted about 44 pe rcent of the total disbursements in the credit sector. The microfinance providers are primarily MF NGO and a few non-bank financial institutions (NBFIs), and one specialize microfinance bank, namely Grameen Bank.Some of the ministries or divisions of the Government of Bangladesh support large micro credit projects and some of the commercial banks have established windows for microfinance loans. Microfinance NGOs cover the largest share of the microfinance market. A report published by the Micro credit Regulatory Authority (MRA) reveals that up to June 30, 2006, states that the volume of loans peachy for the 651 major NGO- MFIs is US $1105. 86 million and CDFs statistics for 2006 show that up to December 2006, additive disbursement of 611 major MFIs was approximately US$8,171. 71 million. Grameen Bank is the only MFI with a specialized bank license. The MF NGOs are led by three very large organizations namely ASA, BRAC and Proshika which represent 94% of the total sector, in terms of numbers and more than 73% of the savings.The remaining part of the sector is comprised of 332 small & very small organizations. The Government of Bangladesh is a major stakeholder. The Microfinance Regulation Most of the NGOs providing financial services were established as development organizations, and registered as LNGOs or INGOs. Most of the microfinance portfolios were grown on grant funds from abroad sources. With the increasing inflow of external resources, the government concerned with hydrofoil and accountability created the NGO Affairs Bureau (NGOAB) in 1991. NGOAB played the role of the primary regulator of the development NGOs supported by foreign funds, providing microfinance services in the country.The fact that MFIs remained unregulated for the past four decades has had an impact on their substantial growth in outreach and sustainability as well as promoted innovation. However, as the sector has acquired significant scale particularly in terms of deposits at th at place is a concern regarding depositor security and the interests of poor clients. They can easily be exploited by microfinance providers, especially as many providers are incite more by the potential for profit rather than to achieve social development objective. Recent reform measures include the reformation of previous acts creating the Micro Credit Regulatory Authority Act 2006, building on the revious acts such as the Societies Registration Act 1860 (the same as in India) Companies Act 1913, Trusts Act 1882, Charitable and Religious Trust Act 1920 and Cooperative Societies ordination 1984 that have created the regulatory framework for the industry in the past. The Bangladesh Bank in coordination with NGOAB and in consultation with the microfinance NGOs represented by CDF and PKSF have established the Microfinance Regulatory Authority and created the Micro Credit Regulatory Authority Act 2006. All NGOs providing micro credit have to register with both the NGOAB if they are receiving foreign funds as well as the Microfinance Regulatory Authority if they attentiveness to continue providing financial services. In time it is expected that all MFIs will implement for license, and be formalized and integrated into the formal financial sector. at that place are some in the industry who feel that it is essential to have a regulatory framework to protect the sustainability of the sector, foster innovation and nurture growth, and most significantly to protect the interests of the clients spot there are others who revere that regulation could strangulate growth and innovation. The MRA Act requires all MFIs to register with the MRA in order to operate legally in the country in the provision of microfinance services. The MRA will issue and cancel licenses for micro finance operators, oversee, supervise and comfort the entire range of activities of MFIs. The MRA will establish a depositors insurance fund to ensure safety of the depositors and to secure all MFI deposits.All MFIs will be required to maintain a reserve fund which cannot be spend without prior permission of the authority. MFIs will not be allowed to take deposits from persons other than their members (i. e. no mobilization of deposits from the public who are not members of the MFI). MFIs that deviate from the norms will be subject to punishment of not more than one year of imprisonment or a fine of not more than Tk. 500,000 (US$ 7143). Furthermore, the MRA will keep a watch over the MFIs in Bangladesh in order to safe guard the interests of microfinance clients, as well as ensure the protective cover of microfinance customers against overpricing. Price setting will be judged by the government in keeping with guidelines and regulatory provisions.Resources will be allocated from the commercial banks and formal financial sector to meet the demand for micro credit. The MRA will be responsible for supervise and evaluation of performance. The Act is a fairly recent intervention in a sector that has grown and developed and come of age over a period of four decades. It will take time for the stakeholders to get accustomed to the new regulatory framework and in turn for the regulatory authority to work out the existing areas of weakness or gaps in the Act and in the systems that are being established for registration, appraisal, licensing, monitoring and supervision. The present framework is a starting point. There will be modifications and amendments in the future.At present the legal frameworks do not include the option of a microfinance bank, as there is a fear of likely financial mismanagement resulting from limited controlling capacity of the newly form MRA however, in future this option may be provided based on the demand from MFIs for this particular legal framework and the capacity of the MRA to license and supervise these entities. Another critical concern is the exclusion of foreign microfinance institutions that are promoted by international NGOs . Local MFIs are concerned that these provides will have an unsporting advantage as they will have continued access to financial resources from external sources which could result in negative competition. Domestic MFIs feel strongly that the MRA should establish a policy that monitors the cash flow into foreign MFIs and fast monitors their expansion strategies.Although insurance is an essential product to provide a social safety net to protect vulnerable populations from the impact of death, disease and other shocks and emergencies, the MRA has not included microinsurance as part of the products of MFIs. Insurance is a specialized financial product and is not within the purview of the Central Bank. At present, micro insurance products broadened by both insurance providers and microfinance institutions are myopic to meet the needs of microfinance customers. The sector will have to focus its efforts on action research and pilot testing with the government modify to providing a s ocial safety net for the vulnerable segments of the population. The Microfinance InstitutionsThe first generation MFIs that emerged in the 1970s had an explicit social agenda and their focus was on poor segments of the population particularly women. The geographic focus was primarily in the rural areas, but as migration created urban poverty, microcredit programs began to shift their focus to urban lending programs. While some NGOs volunteer an integrated development approach, including some community development, most NGOs have transformed into microcredit focused NGOs. MFIs are categorized into four major groups, including NGO MFIs, which constitute the large proportion of MFIs, commercial banks with microfinance windows, and government line ministries that have promoted micro credit projects and programs. There is one specialized microfinance bank, namely Grameen Bank.The Grameen Bank established in 1983 under a special law with the initial support from the Bangladesh Bank is th e only MFI that has been awarded a license to operate as a specialized bank for microfinance. All the other MFIs are NGOs that are registered with the NGOAB and now with the MRA. The MFIs including Grameen Bank include the Big quaternary that have outreach to over 3 million clients. A handful of large MFIs reach over 1 million clients. Another 20 strange MFIs are categorized as medium sized institutions with outreach to less than 100,000 clients. The rest are small and very small MFIs, with about 20,000 clients. The smallest have less than 5000 borrowers.Most of these institutions operate in the rural areas, although several of the larger institutions are now lending in both rural and urban areas. A few institutions specialize in urban microfinance. The Government promoted micro credit programs are substantially large. About thirteen ministries and fifteen divisions of the government of Bangladesh quid with microfinance activities with a cumulative disbursement of US$1238 million at the end of December 2006. The government programs are less efficient with recovery order of about 84 percent as compared to the NGOs that have refund rates over 90 percent. The 2005 World Bank Report indicates that a total of 9. 6 million (out of 14. million households) or 37 percent of all households in the country are currently served by microfinance services. The Big Four Grameen, ASA, BRAC and Proshika collectively account for 86 percent of the 14. 3 million active borrowers. Collectively they have more than US$1249 million in loans outstanding and over US$402 million in savings. Microfinance Delivery Mechanism Bangladeshi MFIs are best known for large-scale provision of microfinance services to the poor women using non-traditional collateral mechanisms. With more than 90 percent of clients being rural women, MFIs have demonstrated repayment rates of over 90 percent in comparison with the formal banking sector. The come loan size of MFIs is around Taka 4000 (US$60).Micr ocredit is provided to poor or low income households through groups. Loan contracts are made in the name of individuals, but the group is an essential mechanism in the delivery and recovery process. Depending on the provider, the group performs different functions, including providing a efficient mechanism for client screening, loan appraisal, disbursement, collection, monitoring, supervision and the mechanism for delivering non-financial services. Some MFIs are now making loans to individuals as in formal banking practices, without requiring membership in a group. The main feature of Bangladeshi microfinance is the provision of loans without demanding traditional collateral as security.The solidarity group concept is embedded in the social structure of Bangladesh which consists of nearly knit groups at the village level who in the absence of external mechanisms provide essential social safety net for poor households. More importantly, the Bangladesh group model was developed acc ording to the prescripts of group solidarity. An MFI organizes a joint liability group of up to 5 members who then form peer pressure groups of as many as 30 individuals or 6 joint-liability groups. The primary use of the group in the Bangladesh microfinance model is to aim alternative collateral mechanisms for the target client group that is unable to offer physical collateral to secure loans. Solidarity groups provide group guarantee by using joint liability and peer pressure principles to enforce repayment from individuals within the group. In almost all the microfinance models, loans are further secured through the collection of compulsory savings that are deposited in a loan security deposit account. The loan security deposit helps when joint-liability and group guarantee mechanisms either are inadequate or fail. Microfinance Products The traditional microfinance loan product is usually called the General Loan. This is a small loan with a ceiling that is under US$100 (at p resent the average loan size is US$60). Loan ceilings are based on the expressed demand from members as well as the fund availability the MFI to meet the demand for loans.When members reach the maximum loan size, they have the option of applying for a larger enterprise loan if the MFI offers this product at different rates and repayment terms and conditions, or has to consider moving to another provider that offers the craved product. The General Loan is provided in cycles of up to 12 months with about 45 monthly installments consisting of equal amounts of principal and interest. Loan installments are calculated based on the average household income of the target client group, allowing the vast majority of clients to repay without undue stress however, most clients find repayment during the early years a struggle given their lack of adequate income and financial management capacity, and clients taking larger loans can also find installments troublesome to handle if household income is not sufficient to manage essential expenditures. quest charged by MFIs varies and is calculated on a flat or declining basis depending on the operational efficiency, cost of funds, inflation and other factors particular to the institution such as fees to cover non-financial inputs to the business or social development services. Upon the successful repayment of a loan, the client is eligible to apply for a larger loan in the next cycle, where the ceiling is change magnitude automatically by Tk. 500 (US$7). Currently, loan ceilings for the General Loan are as high as Tk. 50,000 (US$700). Clients can borrow as a great deal as they want within the ceiling of their loan cycle. In principle there is no pressure for clients to borrow the maximum amount and can opt to take smaller amounts based on their need and their repayment capacity. In case of arrears MFIs have policies regarding penalties.In case of default, the client is closely monitored and there is some grace period to reco ver outstanding amounts over the subsequent installments. In case of a loan default, the MFI follows its recovery procedures, depending on the terms and conditions stipulate in the loan contract. In the case of stash away great(p) debt, the first step is to work with the group members of the joint- liability group to analyze the reasons for default in consultation with the client and the family and identify options for recouping the loan outstanding. The next step is to discuss the situation with the larger peer group to identify the best strategy to recoup the loan.Depending on the situation, either the client will take responsibility to repay the entire amount or in other cases, the group members will help by contributing from the group fund to repay the outstanding amount to keep the group in good standing with the MFI. In situations where the client is not at fault, and the reasons for default is due to death, illness or business failure due to external factors, the interest m ay be waived, the entire loan may be rescheduled or even waived and covered by the loan qualifying reserve fund of the MFI. As microfinance loans increase in size, the exposure to fortune inhibits group guarantee through the group fund as a reliable or viable means of recovering losses.Therefore, in the case of larger loans, a client is eligible for larger micro enterprise loans, but must maintain membership in the group and trace with all the group requirements, including regular meetings, compulsory deposits, and deposits in the voluntary savings account. Although the group must continue to assist in the collection of bad debt, the loans are secured through the loan security deposit of the individual client as well as the attachment of secondary assets that the client can liquidate if faced by income loss causing repayment problems. In a few cases, such as ASA, loans are being made to individuals outside the group mechanism to attract a different target group of clients, includ ing men and women with established microenterprises who are not interested in group mechanisms but are interested in borrowing from an MFI as they are not eligible for commercial bank loans.The General and Micro Enterprise Loans are generally provided for many different purposes including investment in business activities including investment in productive assets such as agricultural land, equipment, machinery, electricity connection and inventory. Microfinance clients can obtain sector programme loans for micro enterprise development in areas such as trading, service sector, food production, poultry, livestock, agriculture, sericulture, fisheries and social forestry. Some NGOs offer clients enterprise development training, technical assistance for specific sub-sectors as well as marketing inputs. General loans are provided for any profitable and socially acceptable income enerating activities such as rural trading rural transport paddy husking food touch on small shops and restaur ants, etc. Although diversion of loans for household consumption needs is not encouraged, there is an understanding that money is fungible, and what is important is that income levels within the household enable a client to repay her installments regularly and continue to remain a customer in good standing. General loans usually range surrounded by USD$15 and USD$160. Members are eligible to apply for larger amounts once they have repaid their outstanding loan in full and as per the terms and conditions specified in the loan contract.The micro-enterprise loans are larger than general loans, and can be borrowed both at the group level and also as individuals directly, but with more rigorous credit appraisal including a thorough household and business appraisal to assess risk and potential for repayment. The clients are usually graduates who have successfully repaid several general loans and are committed to transforming small income generating activities into sustainable micro enter prises that will provide the primary income for the household. Some MFIs offer agricultural loan products that have different terms and conditions for repayment depending on the agricultural cycle.Repayments are made with monthly installments of interest and a payment of the principle amount in one or more installments depending on the cash flow of the household. MFIs also offer loans for other purposes, including asset creation, house improvement, house face, purchase of homestead land, as well as education of children. Several MFIs offer loans for repair of their homes, upgrading and in some cases actual construction of home or purchase of homestead land. Bangladesh Bank now offers house-building loans to MFIs at the rate of 1 percent per annum to finance the demand for housing loans from MFI clients. The average loan size is typically USD$310.In addition to these productive or investment loans MFIs also provide other loans for emergencies, disaster mitigation, sanitary latrines and tube wells. Due to the fact that Bangladesh is often affected by lifelike disasters including floods and typhoons, MFIs often provide emergency loans and disaster loans to help clients cope with the loss of income and assets as a result of a disaster. Typical microfinance loan products 1. General Loan 2. Micro enterprise Loan 3. Agricultural Loan (for cultivation purposes) 4. trapping Loan or House Improvement Loan 5. Education loan 6. Emergency or Disaster Loan 7. Tube well loan 8. Sanitary latrine loan - - Trends and Growth of Microfinance Programs of MFIsTrends and Growth of Microfinance Program of MFIs The previous chapter dealt fundamentally with the overall development of the microfinance sector. This chapter presents the overall trends and growth of the sector using circuit board data of 126 MFI-NGOs. These MFI-NGOs, however, have mobilized around 82 percent of the members mobilized by total MFI-NGOs of the country. GB is not included among these MFI-NGOs. The use of such jury data enables to clearly understand the growth and efficiency of the MFI-NGOs in the given period. Employment and Gender MFI-NGOs have not only contributed to providing financial services but also contributed to the generation of employment.Over the past four years, 2006 through 2009, there has been remarkable growth (Table) in employment creation by the MFI-NGOs. The panel data show, these 126 MFI-NGOs created some 31,505 new employments. The increasing trend in employment creation was observed from 2006 to 2008 while a slight ebb was taken place in 2009. A negative annual growth rate of total mental faculty in 2009 was 0. 60 percent which was drastically lower compared to positive 2. 54 percent growth in 2008 and 27. 15 percent in 2007. Over a period of four years, 2006 through 2009, the growth was around 30 percent. There is a positive relationship between program expansion and number of staff employment.Credit staffs constitute a major share of total staff. The shar e of credit staff in total staff was around 62 percent in 2009 while no significant change was observed from 2008. On the other hand, the other staff contributed to around 38 percent of total staff resulting a slight increase in 2009 over 2008. Table 1 Staff Strength and Growth of MFI-NGOs Figure 1 Percent distribution of Staff of MFI-NGOs by gender 2009 Figure 2 Percent distribution of Staff of MFI-NGOs by gender 2008 Women empowerment has been one of the major objectives of MFIs. Although this is reflected in mobilization of egg-producing(prenominal) members, it is not reflected in emale employment. Only around 26 percent of total staff and around 16 percent of total credit staff were female person in 2009. Although the total number of female staff increased but the growth rate declined. This is evident from Figure 2. 1. 3. This may have happened because of longer hours of work, adverse geographical condition and overall, the psychology of the employers. save the growth of female staff was higher compared to the growth of male staff in 2009. The growth of female staff was 6. 63 percent compared to a negative 2. 89 percent growth of male staff in 2009. The distribution of staff of MFI-NGOs by gender has been presented in Figure.However, recruitment of local level field female staff has probably contributed to higher female employment, which indirectly stimulated women empowerment. Figure 3 Trend in Credit Staff of MFI-NGOs Membership in MFI-NGOs Figure 4 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 2009 Figure 5 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 2008 MFIs initially started their programs in rural areas. Over time, they spread out their programs to urban areas too. Microfinance in Bangladesh is synonymous to credit for landless and asset less rural poor. As such the preeminence of rural members is quite natural in the overall microcredit members mobilized.On the other hand, the magnanimity of female members in the overall membership is very usual, as microcredit as a poverty alleviation tool has taken women empowerment as one of its agenda from the very on set. A total of 22,734,381 members were mobilized up to 2009. Among them, the share of rural areas was 88. 59 percent in 2009 (Figure) compared to 89. 33 percent in 2008 (Figure). There has been an increasing trend in membership mobilization in rural areas up to 2008 since 2006 (Figure), but it decreased in 2009 by around 6 circumstances point. In urban areas, the total number of members was increasing at a decreasing rate. As are evident from Table 2. , the number of female members in rural areas decreased for the first time in 2009 by around 2 percentage point compared to 2008. But over the period, 2006 to 2009, female members in the rural areas achieved a growth of around 32 percent. Figure 6 Trend in Membership by Location of MFI-NGOs Figure 7 Distribution of Growth of Membership The annual gro wth of rural female member was 1. 62 percent in 2009 compared to 2. 99 percent in 2008 and 12. 39 percent in 2007. The annual decrease in the number of male members in rural areas was 877,271 in 2009 from 2008 with a deceasing rate of around 26 percent. Over the period, 2006 through 2009, the rate declined by around 21 percent. An opposite scenario was seen in the growth of male members in urban areas.In this year the growth rate of male membership got rid of 1 percent negative growth of 2008 and recorded 1 percent positive growth. In 2007 male membership had 13 percent positive growth. Interestingly, some 1,257,210 members were declined in rural areas, while the number grew by 37,589 in urban areas resulting decrease of overall 1,219,621 members in 2009 compared to 2008. Over the period from 2006 to 2009, the overall growth of membership was around 20 percent and at the same time the growth of female and male members was around 30 percent and 20 (negative) percent respectively. The trend on the membership is also shown in Figure. Table 2 Growth of Membership Trends in Lending BehaviorThe scenario of the sector is also possible to see through important program data, such as, amount of members savings or group savings, total (or cumulative) number of borrowers provided loans (inclusive of repeat loans) ever, current number of borrowers, amount of cumulative loans disbursed, amount of loans outstanding with the borrowers, and amount of revolving loan funds. Borrower-Member Ratio All the members at a given point of time may not be borrowers, and even everyone may not borrow. This is reflected in borrower-member ratio. As the panel data (Table 2. 3. 1) showed that in 2009 MFIs could provide loans to 70. 42 percent of the members compared to 74. 20 percent in 2007 and 78. 80 percent in 2007.This declining trend throws a big question to the microfinance industry about its progression with the given mandate of reaching the poor with financial services for poverty a lleviation. As expected, borrower-member ratio is higher for the female than the male members. Around 73 percent of the female members had borrowed in 2009 while the percentage was around 77 in 2008 and about 83 percent in both 2007 and 2006. The higher ratio for female could be happened due to comprehend financial discipline and less mobility of female. After showing a perpetual increasing trend in the borrower- member ratio for male members from around 54 percent in 2006 to around 61 percent in 2008, and again it declined to around 56 percent in 2009.The borrower-member ratio for female members was around 17 percent higher than that of male members in 2009 and the trend continued also in all the years under consideration. It could be the mobility of the male borrowers that makes MFIs conservative in lending to them. Table 3 Borrower and Member Ratio (%) There is, however, not much difference exists in borrower-member ratio in rural and urban areas. But a decreasing trend was o bserved in the borrower-member ratio in both the rural and urban areas. Such trend may be attributed to market saturation, mobility of members in the credit market, or the process of consolidation of the MFIs. Plausible causes need to be investigated. Intensity in Number of LoansIt is reflected in the ratio of cumulative borrowers and current borrowers. Cumulative borrowers are essentially the number of loans taken. Current borrowers represent active members. As such, the ratio of cumulative borrowers and current borrowers will give us a trend in the intensity of number of loans per borrower. The cumulative number of borrowers of 126 MFI-NGOs till 2009 was 39,536,838, higher by around 12 percent than the 2008 level, and around 53 percent higher than the 2006 level. As expected, the number of current borrowers was less than the cumulative borrowers. The number o

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