Micro Finance 5

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    INTRODUCTION'Bangladesh is one of the world s most densely populated

    150 , 49countries with million people percentof whom live below. the national poverty line NGO s in Bangladesh are seeking to

    alleviate all those financial calamities through funding poor to lift

    .up their livelihood from poverty level The government of.Bangladesh faces an enormous challenge in reducing poverty,However the government can not act alone as it can not

    , ,command all the resources personnel administrative outreach.or expertise necessary to maintain progress in povertyalleviation

    The MFIs have taken a key role in poverty alleviation effortsand they have been providing credit to these poor people who

    -lack savings and capital but want jobs in the farm and non farm.sectors The banking sector in Bangladesh is dominated by the

    - ,four state owned commercial banks known as nationalized( ),commercial banks NCBs which control approximately half of the

    . ,assets within the banking system In addition there are five

    , 30 ,governmentowned specialized banks domestic private banks 12 (2004)and foreign banks The specialized agricultural banks

    and NCBs have been lending extensively to the rural area.but most of their lending is not targeted to the poor The

    foreign banks and the private commercial banks have simply,stayed away from rural lending though there are a few cases

    .of token involvement in microfinance in recent years The poorpeople do not get access to formal financial institutions because

    . ,of lack of physical collateral The informalmoneylenders on the, ,other hand charge an exorbitant rate of interest thereby

    inhibiting rural poor households from investing in productiveincome increasing activities Unlike

    ,other countries in the region Bangladesh does not have a

    proper substructure of small banks operating at local level( . 1998).McGuire et al Against the backdrop of a

    ,relativelyundeveloped formal financial system a strong NGO.microfinance system has developed in Bangladesh These MFIs

    -have been able to reach the poor with collateral free loans at-affordable costs and can thus help the poor become self

    .employed The financial system also includes insurance, - .companies stock exchanges and co operative banks

    , , These informal lenders however can only meet the occasionalfinancial services and they are not reliable sources of financial

    . .service provision Bangladeshi MFIs are best known for their, - ,pioneering large scale provisionof microfinance services

    - .principally tiny collateral free loans to poor women

    , ,Among all the non government MFI s Grameen Bank ASA Bracand Proshika playsvitalrolein

    . .povertyalleviationinBangladesh NotonlyhadtheNGOs the Govt , -specializedbanksuchlikethatBKB grassrootorganization suchasburo

    ,bangladesh private commercial bank like that pubali bank.alsoplay vital rolein the poverty alleviation of our country

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    PROSHIKA The name PROSHIKA is a Bengali acronym made of initials of: ( ), ( )three words Proshikhan training Shiksa development and Kaj

    ( ). ,action It has been more than two decades since PROSHIKA , .now one of the largest NGOs in Bangladesh took its first step

    The beneficiaries of PROSHIKA are men and women of the two. .,large sections of the rural population i e the landless laborers

    . . , , ,and some rural professional groups e g fisher folk weavers .potters etc

    objectives Structural poverty alleviation Environmental protection and regeneration

    Improvement in women s status

    ;Increasing people s participation in public institutions and

    Increasing people s capacity to intensify their incomethrough various ways

    ' ;Utilization of groups savings

    Provision of matching credit from the Revolving Loan Fund( );RLF

    Technical assistance through provision of skills and

    , -management development training hands on technical, ;advice and support by technically competent workers and

    Provision of marketing assistance where needed

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    coverageear of Establishment 1976 rea Coverage

    illages 24 ,211 Slums 2,110

    ( )Unions Rural 1,925

    ( )Wards Urban 328

    Upazilas 234

    Thanas 52

    Districts 59 Area Development Centres 220

    rimary group memberWomen 1,768,980 Men 1,042,877

    Total 2,811,857Households 2,152,809

    - 1,236,074Poverty free Households Beneficiaries 11,840,473

    ROSHIKA S RURAL CREDIT RECORD( Tk in

    )croreCalend

    ar Year2003cumul

    ative year2004 2005 2006 200

    72008

    2009

    2010

    Cumulative up

    to june2010

    Disbursement

    2622.35 277.07

    288.13

    316.50

    312 267 222 100 4405

    Recovery 2409.06 350.61

    330.70

    343.09

    298 284 360 122 4497.46

    Beneficiaries6387577 4971

    020076

    15030

    8209

    6723

    847 193 6488365

    APPROACH

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    'PROSHIKA innovated a holistic approach to credit called credit'. , ,plus plus In this system proper training technical assistance

    marketing facilities as well as social and other development.services are provided along with credit

    ther activities of proshika Universal Education

    Financial Services Urban poor development program

    -Employment and Income Generation through Micro credit

    Women s Development Program

    Environmental Protection and Regeneration

    ( )Peoples Cultural Program PCP

    ( )Disaster Management Program DMP

    aving scheme ( ) :ROSHIKA Savings Scheme PSS The PSS has been

    introduced on the basis of certain principles like security of, ,group savings life insurance risk coverage for damages

    , , .caused by natural disasters accessibility etc The life andproperty risk coverage aspects of PSS are unique in

    . 114,864Bangladesh The number of PSS groups presently is

    Products and Services

    Name o f area of activities Sub Products

    1. People building Organization Core Program1. Proshika Micro credit

    2. Skill Development Program3. Small Enterprise Development Program

    4. Livestock Program5. Fisheries Development Program

    6. Apiculture Development P rogram7. Sericulture Development Program

    8. Organic Development Program

    2. Micro Credit Savings

    9. Imigration and Farm Product

    1. Human Development Program2. Extended Social and Human DevelopmentProgram

    3. External Training Development

    3. Social and Natural Resources Program

    4. External Training Division

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    1.81 .while the number of members is million The savings. 1,854.02 .balance stands at Tk million The total compensation

    paid from the PSS so far on account of death and damage is. 58.16 . Tk million

    ( ) :ROSHIKA Fixed Deposit Scheme PFDS PROSHIKA2005,introduced this new savings product in for the group.members who are interested in depositing their savings individually

    This scheme is also very conducive to boosting poor people s.savings and the process of their capital formation

    trength of PROSHIKA .PROSHIKA has quite a large number of strengths The most

    :important ones are

    A cadre of skillful and motivated staff both at the ADCs andthe headquarters who work earnestly and responsibly with a

    ( , ),team spirit MTR PRA Effective and comprehensive training system for both groups

    ( ),and staff PRA

    ( , ),Efficient and liberal RLF credit program PRA MTR

    - ( , ),A strong organization building capacity PRA MTR

    ( ).Good program logistic support PRA

    ONSTRAINT AND CHALLANGES Decline and dysfunctional of a number of primary groups

    ( , ),Group Review PRA

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    -Non availability of loan to a large number of functional( , ),groups PRA PIAS

    ( ),Small average loan size PRA

    - /Inadequate staff group contact due to shortage dropout of( ),staff PRA

    , ,Existence of heterogeneity though in small proportion in( , ).groups MTR PIAS

    Emphasizing more on CREDIT and leaving the social issuesbehind (Following a culture of credit as the only means of

    .)poverty alleviation

    High interest rates in relation to the other commercial.banks

    The credit size is sometimes too small to go for sustainabledevelopment activities

    ,Serious financial irregularities and ambiguous audit report , .which is uncovered buy the Government

    Introducing the projects according to the demand and.expectations of the donors

    2001Engagement in highly sensitive political issue in

    Directing all efforts towards of the reaching the poor visa,credit will exclude considerable numbers of the target group

    - .not least among the hard core poor

    uture direction1. ' . To awaken people s human and ethical values

    2. To ensure the participation of poor villagers and to value.their thoughts and beliefs

    3. To disprove the popular belief that poor villagers cannot use

    sophisticated technology and to create skills among these.target people

    4. To project the viewpoints of the villagers about social issues.and to insure their participation

    5. To point out the reasons why the poor are deprived and.robbed of power

    .6. To uphold the views of people who are alienated by the mass

    .media7. To show that grassroots people are capable of expressing

    .their feelings and their problems8. ' To raise people s consciousness by exchanging video

    .programs among people of various regions9. To