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Transcript of M.phil Thesis (Gazipur)
Certificate
I have the pleasure to certify that the thesis entitled “The Role of
Micro-credit in Socio-Economic Development of Bangladesh: A
Case Study on BRAC” in fulfillment of the requirements for the
award of the degree of MASTER OF PHILOSOPHY(M.Phil) in
Management Discipline ,National University ,Gazipur ,has been
prepared by Mr. Md. Kamruzzaman. It is an original work and an
addition to the existing field of knowledge. He has completed this
thesis under my direct supervision.
I certify that, I have gone through the final version of the thesis and
found it satisfactory.
I wish him all success in future.
Date: December ,2010 Professor Dr. M. Ataur RahmanDepartment of Management Studies
University of Dhaka
&
Supervisor of the Thesis
Declaration
I hereby declare that the thesis entitled “The Role of Micro-credit
in Socio-Economic Development of Bangladesh: A Case Study
on BRAC” prepared by me to National University, Gazipur,
Bangladesh for the award of Master of Philosophy(M.Phil) in
Management Discipline is an original work. The contents of the thesis
have neither in part nor in full been submitted to any other University
or institution for any academic degree or for other similar purposes.
Date: December ,2010Md. Kamruzzaman
Session: 2007
Roll No: 790059
Reg. # No. 507078
Management Discipline
M.Phil Program
National University, Gazipur,
Bangladesh
2
Acknowledgement
All the praises, gratitude and thanks are due to almighty Allah, as without His
special help and blessing, it would not be possible to complete the dissertation
in time.
Then acknowledge to my respected teacher and supervisor Dr. M. Ataur
Rahman, Professor, Department of Management Studies, Dhaka University, for
his valuable advice, encouragement, co-operation and guidance provided to me
in preparing and finalizing the thesis. I must say that without his inspired
cooperation, my work would not have seen the light of the day. It is really a
matter of rare luck to work with such an excellent man like him.
I owe a special kind of debt to my father AL-Hajj Md. Bashir Uddin Molla, who
was all sources of eagerness of my study. I also put the endless owe to my
mother Mrs. Momotaz Begum, who brought me in the planet and provided
heavenly love in childhood. I am grateful to my respected elder brother Md.
Moshiur Rahman and sister in law Tarjina Imami (Tisha) and their sweet
daughters Tipti and Tithly and my immediate younger brother Md.
Moniruzzaman and Sister in law Rehana Pervin (Shiuli) and their daughter
Samia and my younger brother Md. Kamrul Hasan and his wife Sabina. My
special gratefulness is to my Father-in-law Golam Rasul, Mother-in-law Mrs.
Rebaeka Khatun and sister-in-law Redwana Karin (Rira) who also encouraged
me in several times.
Special thanks are due to my wife Romana Afrin (Rima) and my son
Mohammad Rokonuzzaman (Romy). Without their inspiration and hurtful
cooperation, it would not be possible to provide continuous efforts in conducting
the research work successfully.
My special gratefulness and thanks are due to Mrs. Nurun Nahar, Professor,
English Department, T & T College, Motijheel, Dhaka and her daughter
Rizwana Mahbub (Liana), Faculty, English Department, American International
University of Bangladesh (AIUB), and Nasrin Sultana, Lecturer, English
Department,Habibullah Bahar University College ,Dhaka for their affectionate
encouragement and co-operative editorial supports.
3
My special gratefulness and thanks are due to Dr. M Joinul Abedin,
Professor,Department of Economics, Dr. A.N.M Jahangir Kabir,Professor and
Chairman ,Md. Mahbubul Kabir, Associate Professor,Management Department
and Shahana Sharmin ,Assistant Professor, IBA, Rajshahi University,
Rajshahi.
I am highly indebted to my Principal Md. Shah Alam and Vice Principal Amir
Mohammad Zakaria and teachers and Madam of T & T College, Motijheel,
Dhaka who have always been a source of inspiration and encouragement.
I am greatly indebted to the Management and employees of all categories of
BRAC specially Sir Fazla Hasan Abed, Chairman, BRAC, Shabbir Ahmed,
Director, Microfinance Department, Mr. Zaman and Salauddin Ahmed, BRAC
Development Program, Md. Anwar Hossain ,Anisur Rahman for giving me the
opportunity to complete my research in such a reputed organization.
Also, I would like to express my heartiest gratitude to the teaching staff, faculty
members and employees of Department of Management Studies, National
University, Gazipur.
I express my gratefulness to Md. Abdus Salam & Md.Kudrot-E-Khoda,
Research Officer, American World University, USA, (Bangladesh Study
Center), 27, Kakrail, Dhaka, for their heartfull cooperation in compose tasks.
Librarians of Dhaka University, PKSF, BIDS, and BRAC University have helped
me cordially in all time and supplied necessary books, journals, article,
research papers and reports.
My special gratefulness and thanks are due to Md. Toibur Rahman, Mr.
Saiduzzaman, Md. Aminul Islam, Sagor, Dabasis, Bahar, Rabiul, Mahadi,
Faisal, Muid, Noor Mohammad, Sha Alam, Shafiqur Rahaman Khan, Manik,
Lokman Hakim, Srimoti Rina who also help me in several times. I am ever
grateful to them.
Md. Kamruzzaman
Reg. # No. 507078
Management Discipline
M.Phil Program
National University,
Gazipur,Bangladesh.
4
Glossary of Term
1. ADB Asian Development Bank
2. AI Artificial Insemination
3. AIDS Acquired Immune Deficiency Syndrome
4. ANC Antenatal Care
5. ARI Acute Respiratory Infection
6. BDT Bangladeshi Taka
7. BRAC Bangladesh Rural Advancement Committee
8. BIDS Bangladesh Institute of Development Studies
9. CSR Corporate Social Responsibility
10. EHC Essential Health Care
11. ELA Employment and Livelihood Adolescents
12. EPI Expanded Programme for Immunization
13. FAO Food and Agriculture Organization
14. GDP Gross Domestic Product
15. GS Gram Shebok
16. HIV Human Immune Virus
17. IDCOL Infrastructure Development Company Limited
18 IFC International Finance Corporation
19. IGS Institute of Governance Organization
20 MDG Millennium Development Goal
21. NGO Non Government Organization
22. NWEP North-West Microfinance Expansion Project
23. OAQPS Office of Air Quality Planning and Standards
24. PKSF Polli Kormo Songsta Foundation
25. PNC Post Natal Care
26. PO Program Organizer
27. RCP Rural Credit Project
28. REP Rural Enterprise Project
29. SCI Share Cap International
30. SME Small and Medium Enterprise
31. SSC School Secondary Certificate
32. UNDP United Nations Development Program
33. USD United State Dollar
6
Abstract
Micro-credit was born in 1970. After the birth; it is performing the role of socio-
economic development. The income, expenditure and savings of the borrowers have
been increased through micro-credit. It also makes them aware of using tube well
water, sanitary latrine etc. In this way, micro-credit plays a very important role in the
overall socio-economic development of Bangladesh. There are other sectors in the
rural areas, infrastructure development, cottage and small industries, secondary and
tertiary sectors like processing and marketing of produce etc, which play an important
role in the socio-economic development in Bangladesh. This research is an attempt to
evaluate the role of micro-credit program in socio economic development of
Bangladesh. The case of the study is Bangladesh Rural Advancement Committee
(BRAC).Both primary and secondary data have been analyzed in carrying out this
research. Primary data were collected in 2009 by interviewing the borrowers of BRAC
in 35 districts of Bangladesh. A structured questionnaire has been administrated to
collect primary data. The sample size is 200 micro credit borrowers of BRAC.
Purposive sampling method has been applied for this selection. Secondary data were
collected from BRAC Bulletin. The research has been found that poverty is being
decreased. Women's contributions to family income in improving their over all
conditions are increasing. The borrowers are found to send their children to schools
for education. Health and sanitation condition improved. All borrowers are found
drinking tube-well water. Maximum borrowers can attend qualified doctor. Housing
and overall changes in socio-economic conditions have been found improving.
7
Table of contents
Page No
Certificate 1Declaration 2Acknowledgement 3 Dedications 5Glossary of Term 6Abstract 7Table of Contents 8List of Tables 10List of graphs 11List of figures 12
Chapter-01 Introduction
1.1 History of the BRAC 151.2 Mission and Vision of BRAC 161.3 Organogram of BRAC 171.4 Existing programs of BRAC 181.5 Future Functions of BRAC 231.6 BRAC at a glance 23
Chapter-02 Literature Review
Review of related literature 29
Chapter-03 Research Methodology
3.1 Rationale of the study 343.2 Objectives of the study 343.3 Methods of data collection 343.4 Sample Size 363.5 Sampling Design 363.6 Data Tabulation and Analysis 363.7 Data Presentation 363.8 Chapterization 373.9 Limitation of the study 38
Chapter-04 BRAC Microfinance Program
4.1 Introduction 404.2 Definition of Micro Credit 404.3 Definition of Socio- economic Development 42 4.4 Vision of BRAC Microfinance 444.5 Objectives of BRAC Microfinance 444.6 Products and Services of BRAC Microfinance 444.7 Components of BRAC’s Microfinance Program 454.8Approach of BRAC’s Micro credit 494.9 The Rural Credit Project (RCP) 53
8
4.10 Information of BRAC Microfinance program 544.11 Microfinance program at a Glance 554.12 Principles of BRAC Credit 55
Chapter-05 Findings and Analysis
5.1 Impact of micro-credit program of BRAC borrowers 595.2 Ways of making Micro-credit program effective 89
5.3Table showing the socio-economic condition of BRAC borrowers after and before joining 97
Chapter-06 Model Development
6.1 Definition of Model 1006.2 Objectives of a model 1016.3 Types of Model 1016.4 Model Development Process 1016.5 Family Based Credit Model: Proposed Model 102
Chapter-07 Conclusions and Recommandations
7.1 Conclusions 1107.2 Recommandations 111
AnnexureAnnex 1-References
113Annex 2-BRAC program areas
114Annex 3-Codes of BRAC micro credit programs
115Annex 4-Features of BRAC credit program
116 Annex 5 – Some pictures of performances of BRAC micro- credit
117Annex 6-Questionnaire
124
9
List of Tables
SL No Table No Particulars Page No-
1 3.4 Number of respondents from the selected district 36
2 4.10 Information no BRAC micro finance programme 54
3 4.11 Micro finance program at a glance 55
4 5.1.1 Educational background of BRAC borrowers 59
5 5.1.2 Occupational patterns of BRAC borrowers 61
6 5.1.3 Age structure of BRAC borrowers 62
7 5.1.4 Distribution of the earning members in the family 63
8 5.1.5 Distribution of children the family 64
9 5.1.6 Distribution number of times taken loan of BRAC borrowers 65
10 5.1.7 Purposes for taking the credit from BRAC 67
11 5.1.8 Distribution the period of receiving the credit 68
12 5.1.9 Distribution numbers of family members take credit from BRAC
70
13 5.1.10 Distribution of borrowers taking loan from NGO'S 71
14 5.1.11 Land ownership pattern of BRAC borrowers before and after joining BRAC
72
15 5.1.12 Ownership of non-land assets of BRAC borrowers 74
16 5.1.13 Distribution of level and distribution of income of borrowers before and after joining BRAC
75
17 5.1.14 Level of monthly expenditure of BRAC borrowers 77
18 5.1.15 Distribution of level in housing of BRAC borrowers 78
19 5.1.16 Sources of drinking water of BRAC borrowers 80
20 5.1.17 Toilet facilities of BRAC borrowers 81
21 5.1.18 Source of power of BRAC borrowers 83
22 5.1.19 Attendance to qualified physicians of BRAC borrowers 84
23 5.1.20 Opinion about the socio-economic conditions of BRAC borrowers
85
24 5.1.21 Opinion of improvement of monthly income of BRAC borrowers
87
25 5.1.22 Distribution the principal amount used for paying installment 88
26 5.1.23 Changes of solvency 89
27 5.2.1 Amount of credit taken by borrowers from BRAC 90
28 5.2.2 Payment to installment 91
29 5.2.3 Distribution the amount of weekly installment 92
30 5..2.4 Distribution of monthly deposit of BRAC borrowers 94
31 5.2.5 Opinion about the credit of BRAC borrowers 95
32 5.2.6 Training of BRAC borrowers 96
10
List of Graphs
SL No
Graph No Particulars Page No
01 4.7(a) Yearly DABI loan disbursement 46
02 4.7(a) Number of borrowers DABI 46
03 4.7(b) Yearly PROGOTI loan disbursement 47
04 4.7(b) Number of borrowers : PROGOTI 47
05 4.7(c) Yearly UNNOTI loan disbursement 48
06 4.7(c) Number of borrowers: UNNOTI 49
07 5.1.1 Educational background of BRAC borrower 60
08 5.1.2 Occupational Pattern of BRAC Borrower 61
09 5.1.3 Age structure of BRAC Borrower 62
10 5.1.4 Distribution of the earning members in the family 63
11 5.1.5 Distribution of children in the family. 67
12 5.1.6 Distribution number of times taken loan 66
13 5.1.7 Purposes for taking the credit from BRAC 65
14 5.1.8 Distribution the period of receiving the credit 69
15 5.1.9 Distribution numbers of family members take credit from BRAC 70
16 5.1.10 Distribution of the number of NGO taken the loan 71
17 5.1.11 Land ownership pattern of BRAC borrowers 73
18 5.1.12 Ownership of non-land assets for BRCA borrowers 74
19 5.1.13 Level and distribution of income of borrowers before and after joining.
75
20 5.1.14 Level of monthly expenditure 77
21 5.1.15 Distribution of level of status in housing of BRAC borrowers 79
22 5.1.16 Sources of drinking water 80
23 5.1.17 Toilet Facilities of BRAC borrowers 82
24 5.1.18 Electricity connection in the house 83
25 5.1.19 Attendance to qualified physician 84
26 5.1.20 Opinion about the Socio-economic condition of respondents 86
27 5.1.21 Opinion of respondent about improvement of monthly income 87
28 5.1.22 Distribution the principle amount used for paying installment 88
29 5.1.23 Changes of solvency 89
30 5.2.1 Credit taken by BRAC respondent members 90
31 5.2.2 Payment to installment 91
32 5.2.3 Distribution of the amount of weekly installment 93
33 5.2.4 BRAC Distribution of monthly deposit 94
34 5.2.5 Opinion about the loan 95
35 5.2.6 Training of BRAC borrowers 96
List of Figures12
SL. NO
Figure No Particulars Page No
1 Figure 1.3 Organogram of BRAC 17
2 Figure 4.3 Organogram of the Rural Credit Project 53
3 Figure 6.5 Component of Family Based Credit Model 105
Chapter-One13
Chapter Contents
1.1 History of the BRAC
1.2 Mission and Vision of BRAC
1.3 Organogram of BRAC
1.4 Existing Programmes of BRAC
1.5 Future Functions of BRAC
1.6 BRAC at a glance
15
Chapter-One
Introduction
1.1 History of the BRAC
Bangladesh Rural Advancement Committee (BRAC) is started as almost entirely a
donor-funded, small-scale relief and rehabilitation project initiated by Fazle Hasan
Abed to help Bangladesh overcome the devastation and trauma resulted from the
Liberation war and focused on resetting refuges returning from India in February 1972.
With its innovative approach to development and with no rigid model but continuously
expanding and growing through experimental learning, BRAC today provides and
protects livelihoods of an estimated 110 million of the 147 million people of
Bangladesh. BRAC approaches poverty alleviation and empowerment of the poor
through a holistic way. This method combines microfinance under its economic
development program with health, education, social development, human rights, and
legal services.
Various support programs provide the necessary physical and technical support for
other programs to run smoothly and effectively. Such programs include the Training
Division, Research and Evaluation Division, Advocacy and Human Rights Unit,
Finance and Accounting, Internal Audit and Monitoring, Human Resources,
Administration and Special projects, Public affairs and Communications and
Publications.
BRAC coverage extends to 110 million of the 147 million inhabitants of Bangladesh
and 69,421 villages in the country’s 64 districts. BRAC continues to maintain a strong
commitment to development at the grassroots level and stands by its belief that
community partnerships and institution building go a long way in sustainable
development and the spreading and transferring of knowledge to future generations.
16
The organization has been a symbol of innovation and dynamism, ever ready to
experiment with innovative ideas and has been called upon to assist a number of
countries in crisis including Afghanistan, Srilanka, Pakistan, Indonesia, Tanzania,
Uganda, and Southern Sudan.
BRAC has established itself as a pioneer in recognizing and tackling the different
dimensions of poverty. Its unique, holistic approach to poverty alleviation and
empowerment of the poor encompasses a range of core programmes in economic and
social development, health, education and human rights and legal services.
Source: BRAC Annual Report (2007)
1.2 Mission and Vision of BRACVision
BRAC,s vision is to create a just, enlightened, healthy and democratic world free from
hunger, poverty, environmental degradation and all forms of exploitation based on age,
sex and ethnicity.
Mission
The mission of BRAC is to work with people whose lives are dominated by extreme
poverty, illiteracy, disease and other disadvantages. With a holistic approach, BRAC
strives to bring about positive changes in the quality of the life of the poor people.
BRAC achieve mission by:
1. Working with the poor, especially women and children;
2 Engaging in multifaceted development interventions;
3. Striving to promote positive changes in quality of life;
4. Working towards attaining socially, financially and environmentally sustainable
programmes;
5. Actively promoting human rights, human dignity and gender equity;
6. Helping to shape national and global policies on poverty reduction and social
progress;
7 .Fostering the development of human potentially;
8. Offering professional development opportunities to our staff;
17
9. Encouraging commitment to the goals and values of the organization.
Source: BRAC Annual Report (2007)
1.3 Organogram of BRAC
18
Sou
rce:
BR
AC
Ann
ual R
epor
t, 20
08:8
9, D
haka
1.4 Existing Programmes of BRAC
1.4.1 Retail Trade
Arong is one of the most unique heritage brands for retail clothing, linen, shoes,
accessories and home décor products. Set up in 1978 as a fair trade organization by
BRAC, Arong plays a crucial role in promoting local crafts. It employs 65,000 artisans,
of which 80 percent are women.
1.4.2 Livestock and Fisheries
BRAC Dairy, initiated in 1998, was established to provide a fair price for milk to the
members of BRAC’s village organizations who invested micro loans received from
BRAC for cows. BRAC has designed a particular model for cattle development
comprising of technical training, vaccination, fodder cultivation, and credit facilities to
the rural poor. As a result of these activities, milk production has increased
substantially in the BRAC operational areas. BRAC Dairy was set up to create a
linkage to the market and to protect framers from price volatility from over-supply.
BRAC Dairy collects milk from 92 collection and chilling stations located in 25
districts, including 10 located in ultra-poor areas.
1.4.3 Artificial Insemination Programme
Artificial Insemination Programme was set up to create synergies with the BRAC Dairy
enterprise as livestock which is considered an important tool in poverty alleviation. The
BRAC Bull and Buck Station production centre at Mymensingh started producing
frozen semen in 2000. It provides training and employment to 1,500 artificial
inseminators who are working under the supervision of BRAC veterinary experts and
provides door to door service to the farmers. The programme aims to improve the breed
of livestock to increase milk production and also to increase the cattle population in
Bangladesh.
19
1.4.4 BRAC Poultry
BRAC Poultry is a pioneering venture in this field. Set up in 1996, it has contributed to
the overall growth of the poultry industry in the country and created income-generating
activities for millions of rural poor. It produces day-old chicks, runs a diagnostic lab,
and provides support to poultry farmers.
1.4.5 BRAC Feed Mills
BRAC Feed Mills were established in 1999 with the objective to produce quality feed
for poultry. It has diversified its products to include cattle and fish feed.
1.4.6 BRAC Broiler Processing Plant
BRAC Broiler Processing Plant, initiated in 2001, is the largest and the sole automated
plant in Bangladesh.
1.4.7 BRAC Fisheries
BRAC Fisheries, initiated in 1998, supplies fish spawn, prawn PL, fish fry, fingerling
juvenile in response to the needs of commercial fish farms that have emerged due to the
decline in wild stocks. BRAC operates eight prawn hatcheries, four carp hatcheries, one
tilapia hatchery, one marine fish breeding centre and one cage aquaculture unit.
1.4.8 Health
BRAC Salt Industries was initiated in 2004 to respond to a public health need the lack
of iodized salt in the country.
1.4.9 Sanitary Napkin & Delivery Kit
The Sanitary Napkin and Sterilized Delivery Kit production centre were set up in 1999
to public health need of rural women in Bangladesh. The aim is to increase hygienic
20
behavior among women with the help of BRAC health volunteers and adolescent
members.
1.4.10 Agriculture
BRAC Cold Storage was initiated in 1980 with UNDP assistance. It operates a cold
storage facility in Comilla district which has a capacity of 4,000 metric tons for short-
term storage. The unit facilitates the storage of potatoes for farmers in the mid-eastern
region of the country as the area yields a good harvest of potatoes but lacks adequate
storage facilities. To aid farmers financially, BRAC offers them loans equal to 40
percent of the total value of the potatoes they have stored.
1.4.11 BRAC Tea Estates
BRAC Tea Estates were acquired in 2003 and established as an income-generating
concern. The surplus income is diverted to the development programmes. The tea
estates cover four tea gardens in the Chittagong district.
1.4.12 Sericulture
BRAC played a pioneering role in the development of sericulture in the country. Its
main thrust is to organize women to undertake mulberry cultivation, silkworm and seed
production, reeling and spinning of silk yarn, and weaving and marketing silk. The
programme is currently involved in introducing high yielding varieties of mulberry
trees to areas in the north, which annually suffer from monga or seasonal famine.
1.4.13 BRAC Horticulture
Horticulture: The objective of BRAC Horticulture is to produce good quality
seedlings and make it available throughout the country. It also aims to increase the
number of good quality trees in the country. BRAC has established 15 large horticulture
nurseries spreading all over the country to produce and distribute quality seedlings and
develop technology for different species.
1.4.14 BRAC Printers & Packaging
21
Printers: The printing enterprise, initiated 1977 is a full-service, desk-top publishing
facility. Eighty percent of its materials production is for BRAC's education programme
and office requirements. It also produces calendars, diaries, security printings and
university publications.
1.4.15 Packaging
The BRAC Printing Pack, established in 2005, produces around 1,500 metric tons of
finished flexible packaging materials per year and provides employment to over 1011
workers.
1.4.16 Alternate Energy & Renewable
Bio-Gas: The project is in its planning stage. An MOU has been signed with EBI which
is a US-based alternative energy company.
1.4.17 Recycled Handmade Paper
BRAC Recycled Handmade Paper project started in February 2000. This project which
employees mostly female workers, synthesizes paper from materials gathered from
several projects and branch offices under BRAC. They manufacture thin paper sheets,
thick paper sheets, boards, art paper, jeweler boxes of different sizes, exercise books,
pencil boxes, note pads, photo frames, visiting cards etc.
1.4.18 Solar
The project was launched in 1998 under BRAC's Rural Enterprise Project (REP) and in
2002 went into collaboration with the Infrastructure Development Company limited
(government-owned and World Bank-supported). It has paved the way to subsidies and
installs solar panels in rural remote and off-grid areas.
1.4.19 Investments
The stakeholders of BRAC consist mainly of millions of deprived and disenfranchised
poor of Bangladesh. BRAC investments act as 'hedges' to protect these stakeholders
from any future 'liquidity crunch' in the financial industry. BRAC investments are
independently run organizations that are fully or partly owned by BRAC.
22
1.4.20 Financial Institutions
BRAC Bank Limited, which was initiated in 2001, has institutional shareholding by
BRAC, the International Finance Corporation (IFC) and Shore Cap International (SCI).
As a fully commercial operation the bank focuses on small and medium enterprises,
which are overlooked by commercial banks.
1.4.21 Delta-BRAC Housing Finance Corporation Limited
Delta-BRAC Housing Finance Corporation Limited was founded in 1997 and it is
presently the largest specialized housing finance institution in the country. It is a
pioneer in financing low-cost housing and the only financial institution in Bangladesh
to receive an "AAA" credit rating. BRAC owns 20.37% shareholdings in Delta-BRAC
Housing Corporation.
1.4.22 BRAC Afghanistan Bank
BRAC Afghanistan Bank is jointly owned by BRAC, IFC, Shore Cap International and
Triodes Bank. BRAC maintains one branch and three sub-branches in Kabul. It is a full
service commercial bank. Though main focus is small business, it also provides other
credit and savings packages.
1.4.23 Information Technology
brac Net, in partnership with gNet and Marubeni Corporation of Japan, has its mission
to bring affordable internet and data connectivity to the general population of the
country. BRAC has 39.7% shareholdings in bracNet.
1.4.24 Document Ltd.
Document Ltd. is a leading software development house in Bangladesh. In addition to
supplying the entire software needs of BRAC, the company provides commercial
services in business application software development, digital archiving, and database
23
driven interactive website development. BRAC has 80% shareholdings in Document
Ltd.
These are the existing programmes (Still 2009) of BRAC.
1.5 Future Functions of BRAC
When the world will be free from hunger and poverty, BRAC’s work will be done.
Until then, we will strive to find practical and scalable approaches to eradicate poverty
wherever we find it.
Still today one billion people in the world are suffering from poverty. Obviously it is a
mammoth task BRAC has to go a long way. Even in countries which are making good
progress on economic growth and many of the MDG goals, there are second generation
development challenges that remain unsolved. These include: the need to provide
quality education for all; to reduce maternal and neonatal mortality; to expand the
frontiers of sustainable agriculture production; to adapt to climate change; and sustain
and expand the gains made by the poor in a globalize economy. BRAC will be working
actively and in close alliance with civil society, private sector, government and
knowledge institutions to face these challenges.
1.6 BRAC at a glance (2010)
1.6.1 Development Programme
Economic Development
Health
Education
Social Development
Human Rights & Legal Services
Disaster Management, Environment & Climate Change
1.6.2 Governance, Management & Capacity Building
Training
Advocacy
Research & Evaluation
24
Human Resources
Public Affairs & Communications
Branding
Administration & Risk Management
Finance & Accounts
Procurement, Estates & Management Services
Publications
Monitoring
Internal Audit
Construction & Maintenance
1.6.3 Social Enterprises
Arong
Ayesha Abed Foundation
BRAC Dairy & Food Project
BRAC Agriculture & Livestock Enterprises
BRAC Printers
BRAC Print Pack
BRAC Solar & Biogas
BRAC Tea Estates
1.6.4 Investments & Related Institutions
BRAC University
BRAC Bank Ltd.
bracNet
Document Ltd.
Delta BRAC Housing Finance Corporation Ltd.
1.6.5 Program Coverage
Population 110 million out of 147 millionDistricts 64 out of 64Staff Distribution 3.69% (head office) 96.31% (field)
1.6.6 Human Resources
Category Male Female Total
25
Full Time volunteers 37,725 9,249 46,974BEP Teachers 374 43,479 43,853Health workers - 7,679 7,679Total 38,099 60,407 98,506
1.6.7 Volunteer Workforce
Health volunteers 80,000Human rights legal education volunteers
5,743
Artificial insemination workers 1,853Panel lawyers 402Panel doctors 93
1.6.8 Annual Expenditure
Year Amount (In millions USD) Donor contribution
1980 0.78 100%1985 2.3 97%1990 21.25 68.2%1995 63.73 54%2000 152 21%2005 259 24%2009 460 30%2010 495 29%
1.6.9 Microfinance
Village organizations (VOs)
303,616
Vo members 8.05mBorrowers 5.45mCumulative disbursement BDT 504,466m (USD 8,051.04m)Disbursement 2010 BDT 73,759m (USD 1,068.97m)Outstanding BDT 43,841M (USD 635.38M)Repayment rate 98%Average loan size BDT 13,133 (USD 190.33)Savings of Vo members BDT 19,966m (USD 289.36m)Cost per unit of money lent 6.95%
26
1.6.10 Ultra Poor
Number of women who received asset grant 326,500Number of women who received soft loan 971,675
1.6.11 Education
Primary SchoolsCurrently running 31,670Current students 1.0mGraduates 4.38mCost per child per year USD 27
Pre-primary schoolsCurrently running 11,765Current students 0.33mCost per child per year USD 27
Secondary School Teacher TrainingTotal teachers training 28,653
Continuing Education Adolescent centers 8,600Adolescent members 222,654Community libraries 2,3051.6.12 Health
Pregnant women received ante-natal care 5.02 mManoshi population coverage 17 mMalaria cases tested (BSE/RDT) 185,462Tuberculosis population coverage 88.5 mTuberculosis patients treated
369,763
People detected with presbyopia 162,399Reading glasses sold 65,818
1.6.13 Water, Sanitation and Hygiene
27
Total latrine installed / repaired 4.1 mTotal participants in cluster meetings 60.4 m
1.6.14 Human Right & Legal Aid Services
Human Rights & Legal Education classes held 155,699Graduates 3.6 mComplaints resolved by ADR 80,865Cases sent to court 24,962
1.6.15 Community Empowerment
Polli Somaj formed 12,295Capacity development of local govt. members 7,186 (female)Popular theatre shows staged
130,222
Human rights violation reported 10,406
1.6.16 BRAC Enterprise
Total assets BDT 5,908 m (USD 85.63 m)Gross revenue BDT 9,233 m (USD 133.80 m)Net revenue BDT 989 m (USD 14.34 m)
(Source: BRAC Annual Report 2010, P-94)
28
Chapter-Two
Literature Survey
Review of Related literature
Review of the existing literature is very important for any research work. The
researcher has also reviewed various literary works done by different researcher related
to the present topic. Many literary works have been completed about NGO sector but
no research work was done on the issue the role of socio economic development of
Bangladesh. So it will be a unique in the field of research study.
The researcher reviewed some literatures. These are following:
Sudy-1: The M. Phil dissertation conducted by A.K.M. Saifullah (1999) (Changing
Dimension of NGO Activities in Bangladesh: A Study of BRAC) his primary
objectives of the study were to conceptualize the poverty situation in Bangladesh and
the achievement of poverty alleviation programs in Bangladesh so for, especially in the
sector. Now-a- days, there are mounting debates that who’s no more voluntary or not
for profit organizations. They are now gradually working for profit. An organization
which will make profit or not depends on the very nacre of the organization operation
for minimizing profits than nobody has the legal or other right to make any obstacle in
its way. But NGO,s in Bangladesh is trying to make profit in a way or other sacrificing
their voluntary character, for which these are really created. It is a new dimension of
NGO activities in Bangladesh. The study aims at adding some facts about this
dimension in the concurrent debate and thereby contributes to the development of the
persons who study in Bangladesh. The research work was in the BRAC approach, the
mission derailed of BRAC and dimension of BRAC activities. However, researcher did
not discuss the role of socio economic development of Bangladesh.
Study-2: Abdul Wadud (1998) discussed in his M. Phil thesis (The Role of NGO'S in
Rural Development: A Case Study on BRAC'S Rural Development Program) about
concept of development, rural development, elements of rural development, past and
present activities of rural development, activities of BRAC on rural development etc.
30
But his research was limited at a village of Manikgonj district. He did not discuss the
role of micro-credit in socio economic development of Bangladesh.
31
Study 3: Shanaz Arefin, (1996) in her M .Phil paper entitled "Role of NGO's in
Development a Study of Poverty Alleviation Programs in Bangladesh”. In this thesis
the researcher did the M. Phil work. Her study's objectives are:
1. To briefly review of efforts made by the government and the NGO's towards poverty
alleviation in Bangladesh and
2. To analysis the role of NGO's in poverty alleviation through various programmers in
terms of their impact and beneficiaries as well as a sustainable development of the
country .
The researcher was selected three leading NGO's such as 1. Bangladesh Rural
Advancement Committee (BRAC) 2. Proshika Manobik Unnayan Kendra (Proshika) 3.
Association of Social Advancement (ASA). The research was mainly work in meaning
of poverty, the emergence of NGO's in Bangladesh, poverty alleviation programs of
three leading NGO's, role of NGO's in development: an analytical overview etc. she
compared three leading NGO's (BRAC), Proshika, ASA. This thesis was not field
work. However, researcher did not discuss the role of socio-economic development of
Bangladesh.
Study-4: The M. Phil dissertation conducted by Salma Mobarak (2009) "Micro-Credit:
A Strategy for Empowering Women in Bangladesh." The following specific objectives
were also there:
1. Assess micro-credit recipient’s empowerment at the family as a decision maker
after involving in the micro-credit program.
2. Reveal their community or political empowerment in community and union
porishod meetings.
3. Examine their economic empowerment considering ability to make small and
big purchases for herself, children and family
4. Identify the family and social problems faced by them as a result of micro-credit
operation.
This research contents is overview on Grameen Bank and BRAC, role of micro-credit
in empowering women in Bangladesh. It shows some positive impact on empowerment
of women in terms of freedom of decision making movement, outside home and
expending self earned money. In this study, Rajshahi district has been selected. This
study has focused to assess the impact of micro-credit recipients of Grammeen Bank
and BRAC in one particular rural sector of Bangladesh.
So ,this study was not focused on socio-economic development of Banaladesh.
32
Study-5: Catherine H. Lovell (1992) discussed in his book ("Breaking the Cycle of
Poverty the BRAC Strategy") that, what is BRAC? What does BRAC do? How does
BRAC do? What are the sources of finance for operating BRAC's activities of BRAC in
details? But he did not evaluate rural activities of BRAC by collecting data and
information from the borrower's. There is no discussion in the book about the role of
micro-credit in socio-economic development of Bangladesh by BRAC.
However, the foregoing review shows that there has been no research of the role of
micro -credit in socio economic development of Bangladesh.
33
35
Research Methodology
3.1 Rationale of the Study
3.2 Objectives of the Study
3.3 Methods of Data Collection
3.4 Sample Size
3.5 Sampling Design
3.6 Data Tabulation and Analysis
3.7 Data Presentation
3.8 Chapterization
3.9 Limitation of the Study
3.8
3.8 Chapterization
Chapter-Three
Research Methodology
3.1 Rationale of the Study
The beauty of Bangladesh is boundless but its economy is yet to reach a considerable
state. Most of the people in Bangladesh are in dire need of money and need to be
provided with more avenues to earn capital, and that is one way to let.
Bangladesh prospers in socio–economic field with the private and government
enterprises. Many non-governmental organizations such as Grameen Bank, ASA,
BRAC, SETU, Proshika etc emerged with the mission to facilitate the economic
development of the country. Among them BRAC is one of the most prominent one.
Live stock and Fisheries, Poultry, Health, Agriculture; Sericulture, Solar power etc. are
some of the programs designed for the poor people of the country. Microfinance
program of BRAC is contributing to the socio-economic development of the poor
sections. But how BRAC is contributing the socio–economic development needs to be
researched. The present study has been undertaken for the purpose.
3.2 Objectives of the Study
The main objective of the study is to examine the current state of affairs of micro-
credit and its impact on the socio-economic development of Bangladesh. The present
study will look into the following specific objectives:
1. To identify the impact of micro-credit program of BRAC on socio-economic
development of Bangladesh.
2. To identify the ways of making the micro-credit program more effective.
3.3 Methods of Data Collection
Data are classified facts representing the condition of the people in a state especially
those facts which can be stated in numbers or in any other tabular or classified
arrangement. There are many types of methods of collecting data for preparing report.
36
The researcher has tried to analyze and represent his experiences about micro-credit of
BRAC using both primary data and secondary data. The researcher used survey
method, content analysis method and observation method.
(a) Primary data: Primary data are measurements observed and recorded as
part of an original study. When the data required for a particular study can be
found neither in the internal records of the enterprise, nor in published sources, it
may become necessary to collect original data, i.e., necessary first hand
investigation. Primary data are prime source of any study. That is why, the researcher
resorted this source of data.
The researcher has collected primary data from the following sources:
1. Through structured questionnaire
2. Informal discussion
3. BRAC Official Records
(a) Secondary data:
When an investigator uses the data which has already been collected by others, such
data are called secondary data. Secondary data can be obtained from journals, reports,
government publications, publications of research organizations, trade and professional
bodies, etc. (Gupta&Gupta, 2010)
For collecting data from the secondary sources for this study, the following materials were consulted:
1. BRAC Bulletin
2. BRAC Annual Report
3. The Reading Materials
4. Books
5. Journals
6. Different studies conducted on the same area
7. Wording.com
8. www.wikipedia.com
9. www.businessedictionary.com
10. www.brac.net
37
3.4 Sample size
The researcher selected 35 districts for getting response of 200 respondents. All is under the category of BRAC borrowers. The nature and characteristics of BRAC borrowers are same. So, the researcher selected 200 borrowers from 35 districts of Bangladesh.
Table-3.4: Number of respondents from the selected district
SL. No.
District No. of respondent
SL. No.
District No. of respondent
1. Barishal 5 19. Kuregram 52. Barguna 5 20. Lalmonirhat 53. Bogra 5 21. Mymensingh 54. Comilla 5 22. Manikgonj 55. Chandpur 5 23. Meherpur 56. Chuadanga 5 24. Munshigonj 57. Chapinababgonj 5 25. Norail 58. Dhaka 20 26. Natore 59. Dinajpur 5 27. Narshingdi 510. Faridpur 5 28. Patuakhali 511. Gazipur 5 29. Pabna 612. Jenaidha 5 30. Rangpur 413. Jhalokhati 5 31. Rajsahi 514. Jamalpur 5 32. Shathkhira 515. Jessore 5 33. Sylhet 516. Kushtia 20 34. Shariathpur 517. Khulna 5 35. Vola 518. Kishorgonj 5
Total 200
3.5 Sampling Design
The study has been conducted by using purposive sampling method. Literate and knowledgeable people have been selected for the study. If the researcher would select illiterate people they could not understand the question and the respondent could not reply the answers to these questions. From purposive sampling, the researcher could collect relevant data and information according to the objectives set. So, the researcher selected purposive sampling.
3.6 Data tabulation and analysis
For analyzing data and preparing the dissertation MS Word, Graphics, MS Excel etc
were been used. Data were analyzed by using appropriate statistical tools.
3.7 Data presentation For presenting the collected data in table, graph, pie-chart, bar diagram and histogram
form did all the analysis and then percentiles were used. For data processing and to
38
create the tables from the MS Excel used. Also MS Word used to generate the report.
For presenting data table, graphs, pie-charts, bar diagram and histogram analysis have
been used.
3.8 Chapterization
The dissertation is divided into seven chapters. The summary of the chapters is given
below:
Chapter1: Introduction
This chapter will give an understanding of the background of the BRAC history,
mission and vision existing programs and future functions.
Chapter 2: Literature of survey
Second chapter of this paper is titled as literature of survey .It will describe some
literature study.
Chapter 3: Research Methodology
The third chapter will focus the research methodology of this dissertation. It will be
desirable the rational, and objectives of the study, method of data collection, sampling
size, sampling design, data tabulation and analysis, data presentation, chapterization
and limitation of the study.
Chapter 4: BRAC Microfinance Program
The following chapter (four chapter) describes the about BRAC microfinance program.
It will desirable the definition of micro-credit, vision and objectives of BRAC
microfinance, products and services of BRAC microfinance components of BRAC's
microfinance, program, approach of BRAC'S micro credit, the rural credit project and
principles of BRAC credit etc.
Chapter 5: Findings and analysis
Following chapter is a very important chapter which is article as findings and analysis.
This chapter contains the important thing provided by the respondents.
Chapter 6: Model development: Chapter six of this study is tilled as model
development. It will describe the proposed model of micro -credit program for BRAC.
39
Chapter 7: Conclusions and Recommendations:
The final chapter of this study gives the conclusions of this study. Then it provides a
number of recommendations based on the findings and analysis for BRAC.
3.9 Limitations of the study
The research is constrained with some limitations. Some of these limitations:
1. Very few researchers have conducted about micro-credit program of BRAC.
Therefore, the researcher could not make a comparative study.
2. There are many branches of BRAC all over Bangladesh. All branches cannot be
taken into consideration in this research.
3. Lack of reading materials.
40
Chapter Contents
4.1 Introduction
4.2 Definition of Micro Credit
4.3 Vision of BRAC Microfinance
4.4 Objectives of BRAC Microfinance
4.5 Products and Services of BRAC Microfinance
4.6 Components of BRAC’s Microfinance Programme
4.7 Approach of BRAC’s Micro credit
4.8 The Rural Credit Project (RCP)
4.9 Information of BRAC Micro finance program
4.10 Microfinance programme at a Glance
4.11 Principles of BRAC Credit
42
Chapter-Four
BRAC Microfinance Program
4.1 Introduction
Microfinance is a powerful tool that the poor can use to find their way out of poverty by
taking advantage of new opportunities and better management of risks and
vulnerabilities. Designed well, it can also pay for itself and reach millions. The social
intermediation embedded in microfinance in the form of group functions can build
social capital among the poor which, combined with, financial capital has the potential
to be a powerful mix in the fight against poverty. The formation of such social capital
through the process of microfinance provision can also be used as an entry point to
challenging other structures that reproduce poverty possibilities that defines BRAC.
There are two different microfinance products: Micro-loans (group-based, exclusively
for women), and Micro-enterprise loans (individual loans for both men and women)
under six different programs which are DABI, UNNOTI, PROGOTI and CFPR. Group-
based small loans are particularly designed for OTUP, WEDP the lower-end poor to
assist them to undertake income-generating activities. Micro-enterprise loans are
available for small entrepreneurs to offer scope for expanding their businesses and
capital base.
The BRAC microfinance program is operating along with other development
interventions like health and education with support program like agriculture, poultry
and livestock; monitoring, research and evaluation. This integrated approach directly
affects the general well-being of the microfinance members and their families. Social
awareness, moral boosting, improved health conditions and better sanitation have
proved to have a positive impact on the repayment behavior of the borrowers.
4.2 Definition of Micro Credit
The word credit comes from the Latin word ‘credo’ meaning, I believe; it is a lender’s
trust in a person’s/firm’s and intention to repay. In other words credit is the ability to
43
command the goods or services of another in return for a promise to pay such goods or
services in at some specified time in the future.
According to Micro Credit Summit “Micro Credit is a program that extends small
loans to very poor people for self-employment projects that generate income allowing
them to care for themselves and their families”.
According to Columbia Encyclopedia “Micro-credit the extension to poor individuals
of small loans to be used for income-generating activities that will improve the
borrowers' living standards. The loans, which may be as little as $20 for very poor
borrowers in some developing countries, typically are for a short term (a year or less)
are not secured by collateral and require repayment in weekly installments. The
borrowers, most of whom usually are women, would not qualify for a conventional
bank loan”.
According to Wikipedia “Micro credit is the extension of very small loans (micro
loans) to those in poverty designed to spur entrepreneurship. These individuals lack
collateral, steady employment and a verifiable credit history and therefore cannot meet
even the most minimal qualifications to gain access to traditional credit. Micro- credit is
a part of microfinance, which is the provision of a wider range of financial services to
the very poor”.
According to Business Dictionary “A small financial loan made to poverty-stricken
individuals seeking to start their own business. This type of loan typically does not
exceed a couple hundred dollars, so an impoverished individual can not solely depend
on this type of loan to fund their business”.
Characteristics in Micro Credit of definition
1. Size: Loans are micro or very small in size.
2. Target users: Micro entrepreneurs and low-income households.
3. Utilization: The use of funds for income generation and enterprise development but
also for community use (health/education) etc.
4. Terms and conditions: Most terms and conditions for micro credit loans are flexible
and easy to understand and suited to the local conditions of the community.44
5. Mission: Its mission is to help the poor families to help themselves to overcome
poverty.
6. Methodology: In order to obtain loans a borrower must join a group of borrowers
and make payments in weekly. Compulsory and voluntary savings products are offered
wherever possible.
7. No Collateral is needed
8. Low interest rate
9. Easy process of disbursements
10. Less paper work
11. Credit for pursuing in come generating activities
12. Small size savings
In conclusion, the micro credit that is given to the people of low-income group and to
the small entrepreneur in order to develop human resources and socio-economic
condition is called micro credit. It can be said that Micro Credit Program may be called
Socio-economic development loan.
4.3 Definition of Socio-Economic Development
Socio-economic
Socio-economics is the study of the social and economic impacts of any product or
service offering, market intervention or other activity on an economy as a whole and on
the companies, organization and individuals who are its main economic actors. These
effects can usually be measured in economic and statistical terms, such as growth in the
size of the economy, the number of jobs created (or destroyed), or levels of home
ownership or Internet penetration; and in measurable social terms such as life
expectancy or levels of education. The combination of economic and social factors that
influence how an intervention is likely to change a society will be unique to each
situation, but generally may include, for example:
45
Prevailing economic conditions
The level of economic development and the extent of disparities within a
society
Political stability and the relationship between government and judiciary
Levels of education, literacy and familiarity with technology
Maturity and openness of markets
Propensity for entrepreneurial activity
Strength of tradition in terms of beliefs and behaviors
Examples of causes of socio-economic impacts include new technologies (such as cars
or mobile phones), changes in laws (such as the legal right to abortion), changes in the
physical environment (such as increasing crowding within cities), and ecological
changes (such as prolonged drought or declining fish stocks). These may affect patterns
of consumption, the distribution of incomes and wealth, the way in which people
behave (both in terms of purchase decisions and the way in which they choose to spend
their time), and the overall quality of life. These can further have indirect effects on
social attitudes and norms.
In specific cases, socio-economics studies will necessitate identifying the specific
relevant factors, and understanding their status before and then as a consequence of the
intervention.
The goal of socioeconomic study is generally to bring about socio-economic
development, usually in terms of improvements in metrics such as GDP, life
expectancy, literacy, levels of employment etc.
Although harder to measure, changes in less tangible soft factors should also be
considered. These include issues such as personal dignity, freedom of association,
personal safety and freedom from fear of physical harm, and the extent of participation
in civil society.
Socio-economics is itself not an economic theory (though it may use economic theories
to understand impacts); neither should it be confused with socialist economics. .
(Source: wording.com)
Socio-economic Development
Socio-economic development is the process of social and economic development in a
society.
Socio-economic development is measured with indicators, such as GDP, life
expectancy, literacy and levels of employment. Changes in less-tangible factors are also
considered, such as personal dignity, freedom of association, personal safety and
freedom from fear of physical harm, and the extent of participation in civil society. (Source: www.wikipedia.org)
46
4.4 Vision of BRAC Microfinance
Since its inception in 1974, BRAC’s Microfinance program has been working with and
for the disadvantaged rural population, especially women, BRAC Microfinance has a
very compelling vision of a society where:
The poor and the disadvantaged will be able to achieve sustainable improvement
in their livelihoods.
Attain a high degree of self-reliance and manage their affairs independently with
dignity and freedom.
4.5 Objectives of BRAC Microfinance
The objectives of the credit programme include:
1) Building viable people’s organizations capable of bringing desired changes in
their own conditions.
2) Improving the economic and social status of the rural poor by extending credit
facilities to undertake profitable income and employment generation activities.
3) Improving managerial and entrepreneurial capabilities of the poor.
4) Extricating them from the exploitative money lenders.
4.6 Products and Services of BRAC Microfinance
By recognizing the heterogeneity among poor and adapting to their diverse needs
BRAC Microfinance program has differentiated financial services designed for people
living at different levels of poverty. These are:
Micro Loans: Aimed at the very poor, micro loans were first introduced in 1974
and targeted exclusively at very poor landless women. Because of the economic
fragility of such women, micro loans are group-based, i.e., repayment is guaranteed
by the VO sponsoring a woman's application for credit. The main purpose of such
loans is to assist the very poor to increase their options for self-employment or
income-generation.
47
Micro Enterprise Loans: These are individual loans granted to both male and
female entrepreneurs. First offered in 1996, the immediate function of such loans is
to enable small entrepreneurs to expand their business or capital base for operating
costs. The ultimate goal is to strengthen capabilities for employment creation.
Remittance Delivery Service: The globalization of labor and the annual departure
of the large numbers of Bangladeshi workers for overseas employment create a need
for another kind of financial service: the safe transfer of remittances to hard-to-reach
areas. Migrant workers whose families live in isolated rural areas where there are no
banking facilities most acutely feel the need. In partnership with BRAC Bank,
BRAC Microfinance Programme initiated its remittance program in 2003.The new
service processed a total of 1,183,404 transactions. Covering BDT 34,430 million
(USD 504.5 mill.), between 2003 and 2008.
(Source: BRAC Microfinance Program (2008)
4.7 Components of BRAC’s Microfinance Programme
(A). DABI
The goal of DABI (short for Daridro Bimochon, which means poverty alleviation) is to
cater to the moderate poor in both rural areas and urban slums. This program organizes
landless groups and provides them with financial services and self-employment
opportunities. DABI provides different schemes of financial services including
collateral-free loans and savings facilities to low income earners so that they can begin
their own income generating businesses.
Key features of DABI
Loan range – TK. 5,000 to TK. 30,000
Service charge: 12.5%
Repayment period: 1 year
Repayment mechanism: Equal weekly installments
Loan products: General, day-to-day retail selling
Weekly personal deposit
Security deposit: 5% of loan amount
Death benefit: Tk.5,000
48
Figure: Yearly DABI loan disbursement
Figure: Number of Borrowers of DABI
(B). PROGOTI
The PROGOTI /MELA program (meaning progress) was launched in 1996 in order to
generate income and create new employment opportunities through enterprise
development in the rural and semi-urban areas of Bangladesh. The target of the
program is to provide credit facilities and technical assistance to new and existing small
businesses and BRAC microfinance graduates whose access to formal financial
institutions is limited in rural and semi-urban areas of Bangladesh.
49
Key Features of PROGOTI / MELA loans
Loan range: TK. 50,000 to TK. 3,00,000 (US $460 - US $4,600)
Service charge: 12.5 %,
Repayment: Equal monthly installments
Loan products: 12 months, 18 months
Collateral needed: Mortgage and title deeds
Figure: Yearly PROGOTI loan disbursement
Figure: Number of Borrowers of PROGOTI
50
(C). UNNOTI
Considering the existing situation of the farmers, where lack of capital results in
unsatisfactory outcome level, BRAC has taken initiatives for agro-based production
enterprises which in turn benefit small and marginal farmers. This initiative is known as
UNNOTI (meaning development).
The goal of UNNOTI is to provide financial services to meet specific needs of small
and marginal farmers.
Key Features of UNNOTI
Loan range: Tk.10,000 toTk.50,000
Service charge: 12.5%
Repayment period: 1 year
Repayment mechanism: Equal weekly installments
Loan products: Agriculture and small enterprise development
Figure: Yearly UNNOTI loan disbursement
51
Figure: Number of Borrowers of UNNOTI
4.8 Approach of BRAC’s Micro-credit
(a) Beneficiaries and formation of Village Organization
1. Criteria of Beneficiary
An adult person belonging to a family which owns maximum 0.50 acre of land
and depending mainly on manual labor is eligible to be a member of village
organization. Preference is given to the lowest strata of the poor people.
2. Formation of Village Organization
The process starts with the identification of target population through a non-
formal survey. After identification target population, formation of village
organization takes place through personal contacts and group discussions initiated
by BRAC's program organizers. Each member is required to fill in an admission
form before enrollment.40-50 eligible persons can form a Village Organization
(VO). Each Village Organization (VO) is sub-divided into small groups of 5
members. There is a secretary in each group who is elected by the group members
for a period of 2 years. Then a managing committee for Village Organization
(VO) is formed from the secretaries of the small groups with one chairperson, one
secretary and cashier.
52
(b) Eligibility for membership
Must be a member of the BRAC Village Organization (VO).
Must not belong to any other similar organization.
Aged between 18-54 years.
Have regular attendance in the weekly Village Organization (VO) meetings.
Regular deposits weekly savings.
Must form a small group of 5 members within the Village Organization (VO).
(c)Procedures
Members can apply for the first loan following 8 weeks of membership in a
Village Organization (VO).
Loans are given for both individual and joint activities.
No collateral is needed.
Minimum savings balance required: 2% of lst loan, 5% of 2nd loan, and 10% of
3rd loan 15% of 4th loan. It thus goes up to 50% with an increase of 5% for
each subsequent loan.
(d) Process of BRAC’s Micro credit
Credit need is determined in small group meeting.
Loan application is filled and signed by the borrowers with recommendation of
their small group leaders. This is followed by the approval from president or
secretary of the Village Organization (VO). The application is examined and
signed by the Program Assistant (PA).
The Program Organizer (PO) examines all information in the loan application
and recommends it for approval.
The area Manager/Regional Manager approves loan for disbursement up to
Tk.10000 (US$ 250).
The Programme Organizer (PO), Accounts disburses loans to each individual
after preparing the disbursement sheet, duly signed by the borrowers at his/her
presence.
53
As soon as the loan is disbursed, the Programme Assistant (PA) makes the
necessary entries on the loan collection sheet and the passbook.
Installments are deposited through the small group leaders at the
bi-weekly/monthly meetings.
(e) Documents Required for BRAC’s Micro credit
Loan Application
An Agreement between the Borrower and BRAC
Loan Disbursement Sheet
Pass Book
(f) Loan Limit
1st Loan Maximum Tk. 4,000
2nd Loan Maximum Tk. 6,000
3rd Loan Maximum Tk.10, 000
(g) Subsequent Loan
If a member borrows Tk.10, 000 and repay on time, he/she is entitled to take Tk.2,000
more in every subsequent loan. BRAC also extends loan for housing, tube-well and
latrine. The limits for these loans are as follows:
A. Housing: Tk.3, 500, Tk.6, 000 and Tk.8, 000 depending upon the length of the
membership
B. Tube-well: Tk.2, 000
C. Latrine: Tk.1, 000
(h) Loan Repayment
Loans are repaid in 23 equal bi-weekly installments within 52 weeks. Program
Assistants who are the grass-root level workers attend bi-weekly meetings of the
Village Organization (VO) and collect loan installments and deposit the same to the
BRAC account on the same day.
54
(i) Loan Fund
BRAC’s loan comes from the following sources:
3. Grant : 40%
4. Government : 4%
5. PKSF : 11%
6. BKB : 2%
7. Member Savings : 21%
8. Own : 22%
9. Total : 100%
(j) Income Generating Activities
BRAC categorizes the income generating activities into two: (I) Program and (ii)
General. Program activities are fisheries, poultry and livestock, etc. while small trade
and other existing traditional activities are general. For program activities, BRAC
provides training along with credit.
(K) Interest
BRAC charges interest at the rate of 15 per cent (except housing loan) to its borrowers.
The interest rate is 10 per cent for housing loan. The interest is calculated on flat
method.
(L) Preconditions for loan
The following are the preconditions of deserving BRAC Loans:
I. Regular attendance in meetings.
II. Regular savings by the members.
III. A group bank account
IV. Completion of the functional education course.
V. Demonstration of efficiency in collective economic or social activities.
VI. Capacity to manage finances and administration by the group.
VII. Ability to provide at least 10% of the scheme cost.
(Source: Credit Infusion in an Integrated Development Strategy: The BRAC
Approach, Principles, Process and Mechanism. (1987)
55
4.9 The Rural Credit Project (RCP)
In 1989, BRAC began its own bank, now operating as the Rural Credit Project. The
bank is designed as a self-sustaining, self-financing entity that provides banking
services to members of mature VOs who "graduate" to the bank. This new program
represents a major step by BRAC to-ward self-financing sustainability of its long-term
credit activities.
Figure 4.9 is an organogram of RCP. RCP is organized similarly to RDP, except that
the field units are called branches instead of area offices, and each branch has only
three POs and nine GSs.
56
Figure-4.9
4.11 Microfinance programme at a Glance
BRAC Microfinance Programme - Key Statistics
Particulars Dec-2006 Dec-2007 Dec-2008
Districts Covered 64 64 64
Total no. of Branch Offices 1,383 2,867 2,700
Village Organizations 170,277 260,785 293,016
Number of Group Members 5.31 million 7.37 million 8.09 million
Active Borrowers 4.55 million 6.4 million 6.36 million
Members Savings (millions) BDT 10595
(USD 156)
BDT 13,467
(USD 198)
BDT 15,765
(USD 231)
Loan Outstanding (millions) BDT 24,355
(USD 358)
BDT 36,344
(USD 534)
BDT 44,903
(USD 658)
Average Monthly
Disbursement (millions)
BDT 3,551
(USD 52)
BDT 5,194
(USD 76)
BDT 7,024
(USD 103)
Loan Recovery Rate 99.52% 99.54% 99.30%
Total number of Staff 17,271 34,841 26,749
Source: BRAC Annual Report (2008)
4.12 Principles of BRAC Credit
The following are some basic principles which serve as guides for providing credit:
a) Loans are granted on a self-liquidating basis, repayment of principal and
interest must derive from the use to which the loan is put. Thus, to give a loan
for agricultural purposes and arrange repayment from, say, land rent income
would not satisfy that condition.
b) No loan is given to a borrower to buy land from another borrower who owns
less than he.
55
c) Repayment is expected and scheduled in increasingly graduated steps to
correspond with the completion of the schemes gestation period and
increasing income from the venture. Since people with subsistence income
have competing demands their income, loan repayment must follow
immediately on receipt of the income. The longer a loan is outstanding the
more difficult it is to get repayment.
d) There is a minimum requirement for security. Land mortgage security is
virtually useless since titles are often defective and such mortgage has never
been enforced, in case of default. Moreover, the target people of BRAC have
virtually nothing to give as security.
Elimination of collateral raises the problem of security of the loan. Since the primary
objective of BRAC is to lend to poor people who have little or no worthwhile assets
to offer as collateral, BRAC aims to substitute collateral with through investigation
of the borrower’s ability and the proposed venture's income generating potential,
prior to sanctioning of a loan. This is supplemented by continuous, intensive
monitoring during the entire life of the loan. In other words, the credit worthiness of
the borrower does not depend on his existing wealth, but on his ability to use a loan
to produce a return on investment higher than the original investment, and his
intentions regarding repayment. Both of these require a thorough knowledge of the
borrower on the part of the BRAC worker. He must also have a working knowledge
of the production techniques, economics and profitability (including marketing
prospects) of income generating activities in the area covered by him. The very
satisfactory results of following this principle in BRAC lending are the testimony of
its validity.
Needless to say, collateral is not foregone where available. Where loan is given for
purpose of an income producing assets, the asset remains hypothecated until the loan
is completely repaid.
e) Subsistence people are invariably forced to sell their surplus output right after
the harvest when prices are depressed. In already established branches, RDP
56
has been providing warehousing facilities so that borrowers may store their
immediate surplus and obtain a loan against it to meet their obligations. They
can then sell it when the price is more favorable. This facility strengthens the
borrowers holding capacity to a great extent.
f) Loans are given for rural economic activities which have a strong
development component. Loans are given preferably for activities where the
return is higher than the return the borrowers have received from similar
activities in the past. Thus the poor who have been growing the traditional
varieties of rice will have a much better likelihood of getting a BRAC loan if
they switch over TO the HYV. Implicit in this policy is the availability of all
the inputs and immediate profit potential of the scheme.
57
Chapter-Five
Findings and Analysis
Chapter Contents
5.1 Impact of Micro–credit program of BRAC borrowers
5.2 Ways of Making Micro-credit program more effective
5.3 Table showing the Socio-economic condition of BRAC
borrowers before and after joining58
Chapter-Five
Findings and Analysis
The researcher collected data from the BRAC borrowers. The respondents gave their
opinion to the researcher about the previous and present socio-economic conditions.
There are some changes in previous and present socio -economic conditions.
However findings from the study are discussed in the following paragraphs:
5.1 Impact on micro–credit program
Micro-credit program is like light house in the socio–economic development .Micro
-credit in socio- economic development of Bangladesh represents that it can respond
to the changing and varied needs of the poor. BRAC micro–credit borrowers’
personal information, income, expenditure, housing condition, use of safe water, use
of sanitary latrine, ability to receive treatment from qualified doctors, above all to
know the impact of socio- economic development after taking the micro-credit are
discussed below:
5.1.1 Educational Background of BRAC borrowers
Illiteracy is a curse and education is the backbone of a nation. For this reason the
light of education is a must for the society. Education is very important for proper
use of credit. However, educational backgrounds of BRAC borrowers are discussed
below:
Table: 5.1.1 Educational level
Education level No. of respondents Percentage (%)
Illiterate 12 6
Can sign only 45 22.5
Class I-V 100 50
Class VI-SSC 40 20
Class HSC-above 3 1.5
Total 200 100
Source: Field Survey, 2009
59
6
22.5
50
20
1.5
100
0
20
40
60
80
100
120
Percent (%)
Illiterate
Can sign Only
Class I-V
Class VI-SSC
Class HSC-Above
Total
Figure: 5.1.1 Level of Education
From the above table and graph, it shows that BRAC provide loans to the needy
people irrespective of education level. Most of the borrowers are of class I-V
educational level l00 (50%). The borrowers who are under class VI-S.S.C level got a
substantial amount of loans from the BRAC .The authority sanctions loans to the
educated persons also who can utilize the funds more properly and effectively .The
borrowers who completed S.S.C level did not show that much interest or BRAC did
not show support for getting loans as glanced in the above table .The reason might be
that, they had the opportunity to get higher education and better employment.
5.1. 2 Occupational patterns of BRAC borrowers
There are various types’ of occupation of BRAC borrowers. These are house
making, agriculturist, day laborer, cottage industry worker and businessman.
Occupational pattern of BRAC borrowers are given below:
60
85
40.5 1.5
6.52.5
100
0
10
20
30
40
50
60
70
80
90
100
Percent (%)
Domestic work
Agriculturist
Day labor
Cottage industryworker
Business men
Others
Total
Table 5.1.2: Occupational pattern
Occupation No. of respondent Percent (%)
House wife 170 85
Farmer 8 4
Day labor 1 .5
Cottage industry worker 3 1.5
Business men 13 6.5
Others 5 2.5
Total 200 100
Source: Filed survey, 2009
Figure 5.1.2: Principal occupations at the time of loan application
The table and graph 5.1.2 shows the occupational pattern of BRAC borrowers at the
time of survey. Majority of the borrowers was house wives, 170(85%) persons. This
85 percent of the borrowers were underemployed at the time of taking loan. The next
occupations are business13 (6.5%) persons, farmer (4%) persons, Day laborer,
1(.5%) person, cottage industry 3(1.5%) persons and other 5 (2.5%) person.
61
Percent (%)
949
3010.51.5
100
15-24
25-34
35-44
45-54
55-Above
Total
From the same table, it was seen that, the tendency of taking credit is more in case of
house wives .Because housewives invest the money in small cottage industry and
other business purposes. So, the borrowers of BRAC are now they directly involved
in some income generating activities.
5.1.3 Age structure of BRAC borrowers
Age is a very important factor in the field of credit. The young person is energetic,
innovative and the old person is experienced. Different age’s borrowers took credit
from BRAC. Such as:
Table 5.1.3: Age based person
Age No. of respondent Percent (%)
15-24 18 9
25-34 98 49
35-44 60 30
45-54 21 10.5
55-Above 3 1.5
Total 200 100
Source: Field survey, 2009
Figure 5.1.3: Age distribution
62
56.5
30.5
101.5 1.5
100
0
10
20
30
40
50
60
70
80
90
100
Percentage (%)
1 person
2 persons
3 persons
4 persons
Above 4 persons
Total
The table and graph 5.1.3 shows that, 98 (49%) borrowers were age group of 25-34
and 60(30%) persons of loan borrowers were age group of 35-44 and 21(10.5%) of
loan borrowers were age group of 45-54 and 18(9 %) persons were age group of 15-
24, only 3(1.5%) persons were age group of 55-above. Because this group are young,
more energetic and innovative than other groups. In this age group people work hard
to earn money.
5.1.4 Distribution of the earning members in the family
If the number of income earner is more in a family, that family needs no loan. But if
the income earners are less in a family, more loan is needed in that family .So it is
obvious that, the number of income earners produces an intense effect in taking loan.
However, distributions of households’ income earners are given below:
Table: 5.1.4: Distribution of the earning members in the family
Earning people No. of respondent Percentage (%)
1 person 113 56.5
2 persons 61 30.5
3 persons 20 10
4 persons 3 1.5
Above 4 persons 3 1.5
Total 200 100
Source: Field Survey, 2009
Figure 5.1.4: Distribution of the number of earning members
63
The table 5.1.4 shows the distribution of number of earning members in the family
113(56.5%) respondents have one earning member in the family, 61(30.5%)
respondents have 2 earning members in the family, 20(10%) respondents have 3
earning members in the family, 3(1.5%) respondents have 4 earning members in the
family and 3(1.5%) respondents have more than 4 earning members in the family.
From the same table, it was found that, the family which had one earning people
took more credit than the family which had more than one earning people. Because if
a family depends on one people to earn money had to work hard to run the family
successfully. But if two or more people earn money for the family then
responsibilities go to more people.
5.1.5 Distribution of children in the family of BRAC borrowers
If the number of children less in a family ,that family needs no loan .But the more
children in a family , the more loan is needed in that family. So it is obvious that the
number of children produces an intense effect in taking loan. However the
distribution of children in the family is presented given below:
Table: 5.1.5 Distribution of children in the family
Number of children No. of respondent Percentage (%)
No children 142 71
1-3 56 28
4-6 - -
Above-6 2 1
Total 200 100
Source: Field Survey, 2009
64
71
28
1
100
0
20
40
60
80
100
120
Percentage (%)
No children
3-Jan
Above-6
Total
Figure 5.1.5: Distribution of children in the family
The table and graph 5.1.5 shows that, 142(71%) borrowers have no children in their
family, 56(28%) borrowers have 1-3 children in their family and 2(1 %) borrowers
have 6 or more children’s in their family.
From the same table it was found that most of the borrowers 142(71%) had no
children .Because the age group of borrowers 15-24 and 25-34 took more credit than
other age group and maximum borrowers are bachelor.
5.1.6 Distribution of number of times taken loan of BRAC borrowers
The distributions of the number of times taken loan from BRAC by borrowers are of
four categories .The chart is given below:
Table 5.1.6 Distribution number of times taken loan
Times taken loan No. of respondent Percent (%)
1-4 148 74
5-9 32 16
10-14 15 7.5
15-above 5 2.5
Total 200 100
Source: Field Survey, 2009
65
0
20
40
60
80
100
120
Percent (%)
1to 4
5 to 9
10 to 14
15-above
Total
Figure 5.1.6: Opinion of number of times taken loan
In the table and graph 5.1.6 shows that 148(74%) borrowers took the loan 1-4 times
and 32(16%) took loan 5-9 times and 15(7.%) borrowers obtained loan 10-14 times
and only 5(2.5%) borrowers took the loan 15-above times.
There are some borrowers who have taken credit from BRAC, growth and
development, occurred tremendously, have achieved qualification to receive loan
from Bank or SME sectors, have not taken loan from BRAC, have taken loan from
bank or other sectors. But some borrowers have taken loan several times from
BRAC.
5.1.7: Purposes for taking the credit from BRAC
The borrowers took the loan for various purposes. These purposes were maintaining
the family and building the house, business and purchasing rickshaw and sewing
machine. The purpose for taking the credit from BRAC is given below:
66
14.5
56
69.5
4 1.58.5
100
0
10
20
30
40
50
60
70
80
90
100
Percentage (%)
Family maintaining
Business
Purchasing rickshaw,Sewing machine
Poultry firm
Purchasing land
To build house
Others
Total
Table 5.1.6: Purposes for taking the credit
Purposes for taking the
credit
No. of respondent Percentage (%)
Family maintaining 29 14.5
Business 112 56
Purchasing rickshaw,
Sewing machine
12 6
Poultry firm 19 9.5
Purchasing land 8 4
To build house 3 1.5
Others 17 8.5
Total 200 100
Source: Field Survey, 2009
Figure: 5.1.7: Distribution of taking the credit from BRAC
67
Purposes of taking the credit from BRAC are presented in table 5.1.7. The table
shows that, 29(14.5%) borrowers took the credit for family maintaining, 112(56 %)
borrowers took the credit for business, 12(6%) borrowers took the credit for
purchasing rickshaw, sewing machine, 19(9.5%) borrowers took the credit for
poultry firm, 8(4%) borrowers took the credit for purchasing land, 3(1.5%)
borrowers took the credit for building houses and 17(8.5 %) borrowers took the
credit for other purposes.
5.1.8. Distribution of the period of receiving the credit
The table 5.1.8 presents the distributions of the period of receiving the credit are
given below:
Table 5.1.8: Level of the period of receiving the credit
Period No. of respondent Percentage (%)
1 year 34 17
2 years 68 34
3 years 30 15
4 years 18 9
Above 5 years 50 25
Total 200 100
Source: Field Survey, 2009
68
17
34
159
25
100
0
20
40
60
80
100
120
Percentage (%)
1 year
2 years
3 years
4 years
Above 5 years
Total
Figure 5.1.8: Distribution of the year of receiving credit
The above table and graph shows that, 34(17%) borrowers took the credit for 1 year,
68 (34%) borrowers’ took the credit for 2 years, 30(15%) borrowers took the credit
for 3 years, 18(9%) borrowers took the credit for 4 years and 50(25%) borrowers
took the credit for above 5 years.
5.1.9. Distribution of numbers of family members taken credit from BRAC
There are many families where more than one member took the credit. However, distributions of family members taken credit from BRAC are given below:
69
7
91.5
1.5
100
0
10
2030
40
5060
70
8090
100
Yes No others Total
Percentage (%)
Percentage (%)
Table5.1.9: Level of numbers of family members taken credit from BRAC
Number of persons No. of respondent Percentage (%)
Yes 14 7
No 183 91.5
others 3 1.5
Total 200 100
Source: Field Survey, 2009
Figure 5.1.9: Opinion of numbers of family members taken credit from BRAC
The table shows that 14(7%) family members took the credit from BRAC and
283(91.5%) family members did not take the credit from BRAC.
From the same table it was found that 14 respondent’s family members took credit
from BRAC. Because family members saw that respondents income has been
increased after taking credit from BRAC .So they were motivated by seeing the
70
124
65
7 4
200
62
37.5
3.5 2
100
0
20
40
60
80
100
120
140
160
180
200
No. of respondent Percent (%)
One
Two
Three
Above Three
Total
change among the respondents. For this reason they took credit from BRAC and
tried to increase their monthly income .In some cases respondents took the credit
indirectly by using the name of family member to carry out installment of BRAC.
5.1.10 Distribution of borrowers taking loan from NGO’sThe elaboration of NGO is Non Government Organization which plays a vital role in
promoting the capabilities of the people living in poverty. This is the reason for
which the people take loan from NGO. However, distribution of borrowers taking
loan from various NGO, s is shown in the table:
Table-5.1.10 Distribution of respondents took loan from the number of NGO
NGO No. of respondent Percent (%)
One 124 62
Two 65 32.5
Three 7 3.5
Above four 4 2
Total 200 100
Source: Field Survey, 2009
Figure 5.1.10: Level of respondents took loan from the number of NGO
71
8 7.5
35.5 37.5
15 17.52030
21.5
7.5
100 100
0
20
40
60
80
100
120
Percent (%) Percent (%)
Before Joining BRAC After Joining BRAC
Nil
Up to 10
11 to 25
26 to 50
51 to above
Total
The table 5.1.10 shows that, 124 (62%) borrowers took the loan from one NGO and
65(37.5%) borrowers took the loan from two NGO’s, 7(3.5%) borrowers took the
loan from three NGO’s and only 4 (2%) borrowers took the loan from 4 or above 4
NGO.
From the same table, it was found that, some respondents took loan from two or
more NGOs because after taking loan they had to pay specific amount of money to
BRAC in every month .In some cases they need more money to invest their business
which was not sufficient to meet up more demand of money the respondents took
loan from two or more NGOs.
5.1.11 Impact on changes on land ownership
Increase in land ownership is an important indicator of improvement in economic
conditions of a poor family. However, land ownership patterns of BRAC borrowers
are given below:
Table-5.1.11 Land Ownership Pattern of BRAC borrowers
Land Ownership
Group (decimals)
Before Joining
BRAC
After Joining BRAC Nature of
Change
(%)No. of
respond
ents
Percent
(%)
No. of
respondents
Percent
(%)
Nil 16 8 15 7.5 -.5
Up to 10 71 35.5 75 37.5 +2
11 to 25 30 15 35 17.5 +2.5
26 to 50 40 20 60 30 +10
51 to above 43 21.5 15 7.5 +14
Total 200 100 200 100
Source: Field Survey, 2009
72
Table-5.1.11 Land ownership pattern
The 5.1.11 shows the land ownership pattern of BRAC borrowers. It is observed that
there was significant improvement in the land ownership pattern of the BRAC
members after joining BRAC, 15(7.5%) borrowers were landless after joining BRAC
as against 16(8%) borrowers before joining BRAC and up to 10 decimals of land
owned by 75(37.5 %) borrowers while 71(35.5%) borrowers owned the same quality
of land before joining BRAC and 60(30%) borrowers owned 11 to 25 decimals of
land, while the same quality of land owned by 30 (15%) borrowers of the borrowers
before joining BRAC and 60(30%) borrowers 26 to 50 decimals of land owned while
40(20%) borrowers owned the same quality of land before joining BRAC and only
15(7.5%) borrowers of sample 51 to above decimals of land owned while 43(22.5%)
borrowers owned same quality of land before joining BRAC.
From the above table it was found that, after taking the credit from BRAC, the
respondent’s capability of buying land increased because borrower's used the credit
in productive activities such as business, cottage industry, sewing machine, poultry
etc. As a result borrower’s income was increased. From increased income they
deposit money each month. After a certain period the borrower's were able to
purchase the land. As a result land ownership of the borrowers increased.
5.1.12 Distribution of Non-land assets of BRAC borrowers
73
17
3022.5
1317.5
100
0
10
20
30
40
50
60
70
80
90
100
Percent (%)
Up to 50000
Tk. 50001 to100000
Tk. 100001 to200000
Tk. 200001 to300000
Over the 300000
Total
Non-land asset means capital, gold, cattle, cottage industry, shop etc. Table & graph
5.1.12 presents the ownership of non-land assets of BRAC borrowers.
Table-5.1.12 Ownership of non-land assets of BRAC borrowers
Value of non-land assets No. of respondent Percent (%)
Up to 50,000 34 17
Tk. 50,001 to 1,00,000 60 30
Tk. 1,00,001 to 2,00,000 45 22.5
Tk. 2,00,001 to 3,00,000 26 13
Over the 3,00,000 35 17.5
Total 200 100
Source: Field Survey, 2009
Figure 5.1.12: Ownership of non-land assets
The table 5.1.12 shows that, 34(17%) borrowers have owned up to 50,000 of Non-land assets and 60(30%) borrowers have owned Tk. 50,000 to 1,00,000 and 45(22.5%) borrowers have owned Tk. 1,00,001 to 2,00,000 and 26(13%) borrowers have owned Tk. 2,00,000 to Tk. 3,00,000 and 35(17.5%) borrowers have owned over Tk. 3,00,000.
74
150
7560
3045
22.5
120
60
3 1.5 8 42 1 12 6
200
100
200
100
0
50
100
150
200
250
No. ofrespondent
Percent (%) No. ofrespondent
Percent (%)
Before Joining BRAC After Joining BRAC
Upto Tk.5000
Tk. 6000-1000
Tk. 10001-15000
Tk. 15000-Above
Total
5.1.13 Impact on household income
The major objective of micro-credit is to create income among borrowers. Taking
loan from BRAC, the poor people have increased their income and become self-
employed .However ,distribution of level and distribution of income of borrowers
before and joining BRAC:
Table-5.1.13 Opinion of respondents about improvement of monthly income
Size of per capita
income
Before Joining BRAC After Joining BRAC Nature of
Change
(%)No. of
respondent
Percent
(%)
No. of
respondent
Percent
(%)
Upto Tk.5,000 150 75 60 30 -35
Tk. 6,000-1,000 45 22.5 120 60 +37.5
Tk. 10,001-15,000 3 1.5 8 4 +2.5
Tk. 15,000-Above 2 1 12 6 +5
Total 200 100 200 100
Source: Field Survey, 2009
Figure 5.1.13: Distribution of income of respondents
The table 5.1.13 shows that, households with per capita income less than up to Tk.
5,000 per annum were about 150(75%) number of borrowers before joining BRAC
75
while the proportion has come down to about 60(30%) number of borrowers after
joining BRAC the proportion of households with per capita income Tk. 6,000 to Tk.
10,000, 45(22.5 %) number of borrowers before joining BRAC. While after joining
BRAC, it has been increased from 22.5 percent to 60 percent i.e. 120 number of
borrowers in sample borrowers. The proportion of households with per capita
income in the 10,001-15,000 was about 3 (1.5%) numbers of borrowers before
joining BRAC. While at the time of survey, the proportion increased 8(4%) number
of borrowers on the other hand only 2(1%) borrowers with per capital income above
Tk. 15,000 per annum were about 2 (1 %) people before joining BRAC. While at the
time of survey the proportion has increased 12(6%) percent number of borrower.
From the above table and graph it was shown that, micro–credit programs of the
BRAC the borrowers are engaging themselves in the income generating and self
employment works. So the monthly income of borrowers increased after taking
credit from BRAC. Because the borrowers utilized the credit properly in different
sectors such as business ,small and cottage industry, poultry firming ,buying of
sewing machine ,rickshaw ,van etc. So micro–credit has a positive impact on
savings.
5.1.14 Impact on expenditure
The table 5.1.14 presents the level of monthly expenditure of BRAC borrowers. It is
given below:
76
71
48.5
27.5
42.5
1.57.5
100
0.5 1
100
0
20
40
60
80
100
120
Percent (%) Percent (%)
Before Joining BRAC After Joining BRAC
Series1
Series2
Series3
Series4
Series5
Series6
Table-5.1.14 Level of monthly expenditure of BRAC borrowers
Level Before joining
BRAC
After joining BRAC Nature of
change (%)
Frequency Percent
(%)
Frequency Percent
(%)
0-5,000 142 71 97 48.5 -22.5
6,000-10,000 55 27.5 85 42.5 +15
11,000-15,000 - - - - -
16,000-20,000 - - 15 7.5 +7.5
21,000-25,000 3 1.5 1 .5 +1
26,000-above - - 2 1 +1
Total 200 100 200 100
Source: Field Survey, 2009
Figure 5.1.14: Distribution of monthly expenditure
The table 5.1.14 present that, 142(71%) borrowers of the households had expenditure
up to Tk. 5,000 per month before joining BRAC. While after joining BRAC 97(48.5
%) borrowers had expenditure and 55(27.5%) respondents had expenditure 6,000-
77
0
50
100
150
200
250
0 2 4 6
Before Joining BRACBorrowers
Before Joining BRACPercent (%)
After Joining BRACBorrowers
After Joining BRACPercent (%)
10,000 while after joining BRAC 85(42.5%) persons had expenditure of the same
level and 15(7%) persons had expenditure Tk. 16,000-20,000 after joining BRAC
and only 2(1%) borrowers had expenditure above Tk. 26,000 after joining BRAC.
From the same table it was found that, borrowers’ expenditure increased because
borrowers used the credit in productive activities such as business, cottage industry,
sewing machine, poultry etc. As a result borrowers’ income increased and ultimately
the expenditure had been increased after taking the credit from BRAC.
5.1.15 Level of houses of BRAC borrowers
A house is a place where a man lives. Housing is one of the basic needs of men. The
distribution of the level of the status in housing of BRAC borrowers is given below:
Table-5.1.15 Distribution of level of status in house
Status Before joining
BRAC
After joining BRAC Nature of
change (%)
Borrowers Percent
(%)
Borrowers Percent
(%)
Bamboo Made 36 18 19 9.5 -8.5
Soil Made 27 13.5 21 10.5 +3
Tin Shed 120 60 115 57.5 +2.5
Building 17 8.5 45 22.5 +14
Total 200 100 200 100
Source: Field Survey, 2009
78
Figure 5.1.15: Impact on housing
It is observed from table 5.1.15 that, 36(18%) number of borrowers had bamboo
made house before joining BRAC. While after joining BRAC, the share of bamboo
made houses reduced. The share of bamboo made houses reduced to 19 (9.5%)
number of borrowers from 18 percent. The share of soil made houses 27(13.5%)
number of borrowers while after joining BRAC. The share of soil houses has been
reduced substantially. The share of soil made houses reduced to 21(10.5%) number
of borrowers from 27(13.5%) number of borrowers. The shares of tin shed house
were 120(60%) number of borrowers before joining BRAC. While before joining
BRAC, the share of tin shed made houses has reduced substantially. The share of tin
shed made houses reduced to 57.5 percent from 60 percent. And the share of brick–
building houses was 17(8.5%) number of borrowers before joining BRAC. While the
same increased to 45(22.5%) number of borrowers 45.
From the above table it was seen that, borrowers housing status significantly has
been improved after taking the credit from BRAC .Before taking the credit from
BRAC, the number of bamboo made, soil made and tin shade houses were more and
number of buildings were less. But after taking the credit from BRAC the number of
bamboo made, soil made and tin shade houses has been decreased. On the other hand
number of building increased due to the increase of monthly income as well as
tendencies of saving money.
5.1.16 Tendency on drinking water
79
93.5 97.5
3.5 21.51.5 0.5
100 100
0
20
40
60
80
100
120
Percent (%) Percent (%)
Before JoiningBRAC
After Joining BRAC
Tube well
Pond
River
Well
Total
Pure drinking water is essential for health. Sources of drinking water of BRAC
borrowers are different categories such as tube-well, pond, river and well. Sources of
drinking water of BRAC borrowers are given below:
Table-5.1.16 Sources of Drinking Water of BRAC borrowers
No. of respondent Before joining
BRAC
After joining
BRAC
Nature of
change (%)
Percent (%) Percent (%)
Tube well 93.5 97.5 +4
Pond 3.5 2 -1.5
River 1.5 - -1.5
Well 1.5 .5 -1
Total 100 100
Source: Field Survey, 2009
Figure 5.1.16: Sources of Drinking Water
The table and graph 5.1.16 shows that, 187(93.5%) number of borrowers had access
to tube well drinking water before joining BRAC. While after joining BRAC the
80
percentage of using safe drinking water has been increased to 195(97.5 %) borrowers
after joining BRAC against 93.5 percent, 7(3.5%) number of borrowers of using
pond drinking water. While after joining BRAC the percentage of using pond
drinking water decreased to 2 percent from 3.5 percent ,3(1.5%) number of
borrowers had access to river drinking water, while after joining BRAC the
percentage of using river drinking water increased to nil from 1.5 percent and
3(1.5%) number of borrowers had access to well drinking water. While after joining
BRAC the percentage of using well drinking water decreased to .5 percent from 1.5
percent.
From the same table it was found that, joining BRAC, some people who drank water
from pond, river and well because of having few knowledge of the will happening of
drinking the water from those sources. But after joining the BRAC, the borrowers’
awareness’, knowledge increased and capacity to buy a tube- well increased.
5.1.17 Impact on sanitation
Sanitary latrine is essential for good health. Toilet facilities of BRAC borrowers are
given below.
Table-5.1.17 Toilet facilities of BRAC borrowers
Type of
Latrine
Before Joining
BRAC
After Joining BRAC Nature of
Change (%)
No. of
respondent
Percent
(%)
No. of
respondent
Percent (%)
Sanitary 180 90 190 95 +5
Other 20 10 10 5 -5
Total 200 100 200 100
Source: Field Survey, 2009
81
180
90
190
95
201010 5
200
100
200
100
0
20
40
60
80
100
120
140
160
180
200
Sanitary Other Total
Before Joining BRAC No.of respondent
Before Joining BRACPercent (%)
After Joining BRAC No. ofrespondent
After Joining BRACPercent (%)
Figure5.1.17: Toilet facilities
The table and graph 5.1.17 shows that, 180(90%) number of borrowers had hygienic
sanitary latrines before joining BRAC. While the percentage of using sanitary
latrines increased to 95 percent after joining BRAC 20(10 %) number of borrowers
did not have sanitary latrine before joining BRAC. While the figure reduced to only
10(5%) borrowers after joining BRAC.
From the above table it was found that, after joining the BRAC ,the borrowers used
more sanitary latrine than before because their knowledge ,awareness’ increased due
to participation of different meetings and discussion sessions.
5.1.18 Sources of power of BRAC borrowers
Without electricity civilization of modern era is impossible. Electricity is essential
for growth and development of any country. Recently Bangladesh is facing scarcity
of electricity. It is a serious problem of Bangladesh. However, sources of power of
BRAC borrowers are given below:
82
120
60
160
8080
40 4020
200
100
200
100
0
50
100
150
200
250
No. ofrespondent
Percent (%) No. ofrespondent
Percent (%)
Before Joining BRAC After Joining BRAC
Electricity connection
Without Electricityconnection
Total
Table-5.1.18 Electricity connection of BRAC borrowers
Type
connection
Before Joining BRAC After Joining BRAC Nature of
Change (%)No. of
respondent
Percent
(%)
No. of
respondent
Percent
(%)
Electricity
connection
120 60 160 80 +20
Without
Electricity
connection
80 40 40 20 -20
Total 200 100 200 100
Source: Field Survey, 2009
Figure 5.1.18: Impact on power
Table 5.1.18 shows that, before joining BRAC 120(60%) borrowers had electricity
connection .After joining BRAC 80% respondents took electricity connection
because the borrowers invested the credit in business or other productive activities
which increased the income of respondents, and made them able to take connection
of electricity. As they are economically solvent they will be able to pay the
electricity bill of each month.
5.1.19 Impact on health
83
50 25
150 75
130 65
49 24.520 10
1 0.5
0%10%20%30%40%50%60%70%80%90%
100%
No. ofrespondent
Percent (%) No. ofrespondent
Percent (%)
Before Joining BRAC After Joining BRAC
No
Sometimes
Yes
The development of health is an important factor in the overall development of the
country. But people of Bangladesh are very poor. They are not able to attend
qualified physicians. However, attendance to qualified physician of BRAC
borrowers is given below:
Table-5.1.19 Attendance to qualified physicians of BRAC borrowers
Status Before joining
BRAC
After joining BRAC Nature of
change (%)
No. of
respondent
Percent
(%)
No. of
respondent
Percent
(%)
Yes 50 25 150 75 +15
Sometimes 130 65 49 24.5 -13.5
No 20 10 1 .5 -9.5
Total 200 100 200 100
Source: Field Survey, 2009
Figure 5.1.19: Going to qualified physicians
The table 5.1.19 shows that, 50(25%) numbers of borrowers went to qualified
doctors before joining BRAC. But after joining BRAC the percentage has been
increased to 75 from 25 percentages. 130(65%) number of borrowers went
sometimes to qualified doctors before joining BRAC. While after joining BRAC the
84
percentage reduced to 24.5 from 65 percent and 20(10%) borrowers did not go
20(10%) number of borrowers but after joining BRAC the percentage reduced only
1 ( .5%) number of borrowers did not go to qualified physicians.
From the findings after joining BRAC the percentage of going to qualified
physicians has been increased. Because the borrowers have invested the credit
properly which increased the income of respondents, made able to attend qualified
doctor .As they are economically solvent they will be able to pay the fee of qualified
(M.B.B.S) doctors .The other reason was that due to the participation in different
meetings, discussion sessions, their awareness’ and knowledge has increased. So the
number of borrowers visiting the qualified physicians has increased.
5.1.20 Opinion about the socio-economic conditions of BRAC borrowers
Socio-economic development is the supreme target of the micro-credit objective of micro-credit is to develop the socio-economic conditions of its borrowers.
Table-5.1.20 Socio-economic profile of the respondents
Socio-economic conditions No. of respondent Percent (%)
Improved 195 97.5
Unchanged 5 2.5
Deteriorated - -
Total 200 100
Source: Field Survey, 2009
85
Percent (%)
97.5
2.5
100
Improved
Unchanged
Total
Figure 5.1.20: Opinion about the socio-economic conditions of respondents
Out of 200 respondents 195(97.5%) improved their socio economic condition by
taking credit from BRAC. Because they used the credit properly in business sector
and got high profit. So improving the socio-economic status of the borrowers
through the provision of credit for income and employment generating activities is
the motto. But 5(2.5%) borrowers were not able to change their socio-economic
conditions by taking credit from BRAC due to misuse of credit.
5.1.21 Opinion of improvement of monthly income of BRAC borrowers
The major objective of micro-credit is to create income among poor households and
thereby alleviate poverty. However, opinions of improvement of monthly income of
borrowers are given below:
Table-5.1.21 Impact on income
86
Percent (%)
69.5
300.5
100
Increased
Very little increased
Not increased
Total
Income change No. of respondent Percent (%)
Increased 139 69.5
Very little increased 60 30
Not increased 1 .5
Decreased - -
Total 200 100
Source: Field Survey, 2009
Figure 5.1.21: Opinion of respondent about improvement of monthly income
The table 5.1.21 shows that, 139 (69.5%) respondents invested properly, made
proper planning to run the business, monitored the business regularly, tried to find
out problems of business and solved the problems accordingly. As a result their
business ran successfully, they got high profit from their business and their income
increased highly. On the other hand some respondents 61(30.5%) did not make
proper planning to run the business and did not monitor the business regularly so
there were no profit from their business but loss occurred in their business. As a
result the income of some respondents has decreased.
5.1.22 Distribution the principal amount used for paying installment
The Principal amount is actual credit which borrowers take from BRAC. Table
5.1.22 presents distribution of the principal amount used for paying installment.
Distribution of the principle amount used for paying installment is given bellow:
87
46
154
200
23
77100
0
50
100
150
200
250
Yes, I pay No, I don’t pay Total
No. of Respondent Percentage (%)
Table 5.1.22: Distribution the principal amount used for paying installment
Paying installment No. of respondent Percentage (%)
Yes, I pay 46 23
No, I don’t pay 154 77
Total 200 100
Source: Field Survey, 2009
Figure 5.1.22: Distribution the principal amount used for paying installment
In the table and graph 5.1.22 shows that, 46(23%) respondents paid principal amount
of installment and 154(77%) respondents not paid principal amount of installment. It
was found that the female respondents took credit from BRAC and gave to their
husbands. They wanted to invest the money in the business sector but unfortunately
some husbands spent the money in family purposes. As they didn’t invest money in
business so there was no profit, and they were unable to pay the installments. In
some cases, some husbands spent money in misuse and gambling etc. As a result
some respondents pay installments from principal amount.
88
171
15 14
200
85.5
7.5 7
100
1
10
100
1000
Yes, I am No, I amnot
Others Total
No. of Respondent
Percentage (%)
5.1.23 Impact on solvency
Loan is needed to acquire solvency. Distribution changes of solvency are given
below:
Table 5.1.23: Changes of SolvencySolvency No. of respondent Percentage (%)
Yes, I am 171 85.5
No, I am not 15 7.5
Others 14 7
Total 200 100
Source: Field Survey, 2009
Figure 5.1.23: Level of solvency
Out of 200 respondents, 171(85.5%) became solvent economically because they used
the credit properly. But 29(14.5%) respondent did not use the money properly. So
they did not become solvent economically.
5.2 Ways of making micro-credit program more effective
Effective of BRAC’s micro-credit is need more loan amount, effective training for
borrowers and savings etc. Information about micro-credit of BRAC borrowers such
89
Percent (%)
5039
9.5 1.5
100
0
20
40
60
80
100
120
1000-5000
6000-10000
11000-16000
17000-Above
Total
Percent (%)
as amount of credit, number of times of taking loan, purpose for taking the credit,
payment of installment is given below:
5.2.1 Amount of credit taken by borrowers from BRAC
The table 5.2.1 shows the amount of credit taken by the borrowers from BRAC. The
amount of credit taken by borrowers is divided into four categories .Such as:
Table 5.2.1: Invest taken by BRAC borrowers
Credit taken No. of respondent Percent (%)
1,000-5,000 100 50
6,000-10,000 78 39
11,000-16,000 19 9.5
17,000-Above 3 1.5
Total 200 100
Source: Field Survey, 2009
Figure5.2.1: Credit taken by BRAC respondent members
Above the table and graphs 5.2.1 shows that, 100(50%) persons of credit borrowers
were using credit amount of Tk. 1,000-5,000 and 78(39%) respondents invested Tk.
90
Percentage (%)
35
33.5
283.5
100
Own income
Good business
Proper usage ofthe credit
others
Total
6000-10000 and 19(9.5%) borrowers took credit amount of Tk. 11,000-16,000 and
only 3(1.5%) beneficiaries got credit of Tk. 17,000-above.
From the same table it was found that, the amount of taking money varies from
respondents to respondent according to need.
5.2.2 Distribution of installment
Paying installment is a very important factor in credit system. There are different
categories of paying installment. Such as:
Table 5.2.2: Payment of installment of respondentsSource No. of respondent Percentage (%)
Own income 70 35Good business 67 33.5Proper usage of the credit 56 28others 7 3.5Total 200 100
Source: Field Survey, 2009
Figure 5.2.2: Payment of installment
91
Table and graph 5.2.2 shows that, 70(35%) borrowers paid weekly installment
through own income, 67(33.5 %) borrowers paid weekly installment by good
business, 56(28%) borrowers paid weekly installment through proper usage of the
credit and 7(3.5%) borrowers paid weekly installment through others source.
From the same table it was seen that the weekly installments of the respondents vary
from 100 to 400 or above. Some respondent took more money, their amount of
weekly installment is more and the respondents who took less money their amount of
weekly installment are less.
5.2.3. Distribution of the amount of weekly installment
Installment of the amount is very important for the credit system. Table 5.2.3
presents the distribution of the amount of weekly installment at the time of survey.
However distribution of the amount of weekly installment is given below:
Table 5.2.3: Level of the amount of weekly installmentWeekly Installment No. of respondent Percentage (%)
1-100 16 8
101- 200 36 18
201- 300 67 33.5
301- 400 35 17.5
Above 400 46 23
Total 200 100
Source: Field Survey, 2009
92
8
18
33.5
17.523
100
0
10
20
30
40
50
60
70
80
90
100
Percentage (%)
1-100
101- 200
201- 300
301- 400
Above 400
Total
Figure 5.2.3: Amount of weekly installment
Table 5.2.3 presents the distribution of the amount of weekly installment at the time
of survey. The table shows that, weekly installment of 116(8%) respondents is Tk.1-
100, of 36(18 %) respondents is Tk.101-200, percent i.e. of 67(33.5%) respondents is
Tk. 201-300, 35(17.5%) respondents is Tk. 301-400 and of 46(23%) respondents is
Tk. above 400.
From the same table, it was shown that, installment of credit depends on credit
amount. Borrowers who have more credit had to pay more installment. But
borrowers who have less credit had to pay less installment.
5.2.4 Distribution of monthly deposit of BRAC borrowers
Micro credit savings is a very important part. Distribution of monthly deposit of
BRAC borrowers is given below:
93
75
109
151
200
37.554.5
7.5 0.5
100
0
20
40
60
80
100
120
140
160
180
200
No. of respondent Percent (%)
Tk. 1-100
Tk. 101-500
Tk. 501-1000
1000- Above
Total
Table-5.2.4 Distribution of monthly deposit of BRAC borrowers
Monthly Deposit No. of respondent Percent (%)
Tk. 1-100 75 37.5
Tk. 101-500 109 54.5
Tk. 501-1000 15 7.5
1000- Above 1 0.5
Total 200 100
Source: Field Survey, 2009
Figure 5.2.4: Distribution of monthly deposit
The table and graph shows that, 75(37.5%) borrowers deposited Tk. 1 to 100 and
109(54.5 %) borrowers deposit Tk. 101 to 500 and 15(7.5%) borrowers Tk. 501 to
1000 deposit Tk. 501 to 1000 and only 10(5%) borrowers deposit above Tk.1000.
From the above table it was found that before receiving credit from BRAC they were
not introduced to deposition of money month wise .They introduced by the BRAC
personnel that they had to deposit some money in each month. As their income
increased, awareness about deposit of money, each respondent began to deposit
money every month. So BRAC has a positive impact on saving of borrowers.
5.2.5 Opinion about the credit of BRAC borrowers
94
75
22.5
2.5
100
0
20
40
60
80
100
120
Percent (%)
Sufficient
Insufficient
Very Negligible
Total
The opinion about the credit of BRAC borrowers are three categories. These are
sufficient, insufficient and very negligible. However the opinion about the credit of
BRAC borrowers is given below:
Table-5.2.5 Opinion about the credit
Opinion about the credit No. of respondents Percent (%)
Sufficient 150 75
Insufficient 45 22.5
Very Negligible 5 2.5
Total 200 100
Source: Field Survey, 2009
Figure 5.2.5: Opinion about the loan
Out of 200 respondents 150(75%) respondent told that the credit was sufficient
because they had no money to invest they thought 5,000 taka is enough to invest in
village level to earn some money .But 45(22.5%) respondents told that the amount of
money is insufficient. Because they want to invest money in big business .So they
said amount of credit of BRAC is insufficient.
5.2.6 Training of BRAC borrowers
95
81 40.5
119 64.5
200 100
0 50 100 150 200 250 300
Yes, I have
No, I don’thave
Total
Training is a social, continuous process of giving knowledge, increasing skills and
efficiency and accommodating the employee in the organization for the performance
achievement of the organizational goal. (Rahman, 2006)
Training is important for borrower to use credit properly. The objective of training is
to develop skill which will raise the productivity of the trainee. However, training of
BRAC borrowers is given below:
Table 5.2.6: Opinion about of training
Training No. of respondents Percentage (%)
Yes, I have 81 40.5
No, I don’t have 119 59.5
Total 200 100
Source: Field Survey, 2009
Figure 5.2.6: Level of training
Out of 200 respondents, 81(40.5%) borrowers took part in the training and
completed successfully. But 119(64.5%) respondents did not participate the training
due to communication gap, irresponsibility of borrowers, fear of installment payment
etc.
96
5.3 Table showing the socio-economic condition of BRAC borrowers before and after joining:
StatusPercentage before
joining BRAC (%)
Percentage after joining BRAC
(%)
Nature of Change (%)
Comments
1.Attending qualified doctor
Yes 25 75 +50IncreasedSometimes 65 24.5 -40.50
No 10 0.5 -9.52. Use of electricity Electricity
connection60 80 +20
IncreasedWithout electricity connection
40 20 -20
3. Use of tube wells Tube well 93.5 97.5 +4
IncreasedPond 3.5 2 +1.5River 1.5 - -1.5Well 1.5 .5 -1
4. Land ownership pattern Nil 8 7.5 -.5
Up to 10 35.5 37.5 +2 Improvement11 to 25 15 17.5 +2.526 to 50 20 30 +1051 to above 22.5 7.5 -15
5. Income level Up to Tk. 5000
75 30 -4.5
Tk. 6000-10000
22.5 60 +37.5Increased
Tk. 10001-15000
1.5 4 +2.5
Tk. 15000-above
1 6 +5
6. Level of Monthly expenditure
Tk 0-5000 71 48.5 -22.5
Tk 6000-10000
27.5 42.5 +15
IncreasedTk 11000-15000
- - -
Tk 16000-20000
- 7.5 +7.5
Tk 21000-25000
1.5 .5 -1
Tk 26000-above
- 1 +1
7. Level of status in housing building
Bamboo Made 18 9.5 -8.5 Increased
Soil Made 13.5 10.5 -3Tin Shade 60 57.5 -2.5Building 8.5 22.5 +14
8. Use of Sanitary latrine Sanitary 90 95 +5 Increased
Others 10 5 -59. Opinion about the credit
More than 5 Sufficient
Sufficient 74.5Insufficient 22.5very negligible 2.5
10. Opinion about the socio-economic condition
Improved 97.5 Improved
Unchanged 2.5Deteriorated -
Source: Field Survey, 2009
From the above table, it is shown that, socio-economic conditions of borrowers by BRAC credit increased.
97
Chapter Contents
6.1 Definition of Model
6.2 Objectives of Model6.3 Types of Model
6.4 Model Development Process
6.5 The Family Based Credit Program: A Proposed Model
99
Chapter-Six Model Development
6.1 Definition of Model
Model is a realistic description of a theoretical framework of a thought and the micro
-credit model is similarly a symbolic representation of the micro credit process.
1. “Model is Graphical, mathematical (symbolic), physical, or verbal representation
or simplified version of a concept ,phenomenon, relationship, structure, system, or an
aspect of the real world.”(Source: www.businessdictionary.com)
2. “Model is an abstraction of reality, generally referring in investments to a
mathematical formula designed to determine security values. Economists also use
models to project trends in economic variables such as interest rates, economic
activity, and inflation rates” (Source: Financial dictionary)
3. “A model is the description of observed or predicted behavior of some system,
simplified by ignoring certain details. Models allow complex systems, both existent
and merely specified to be understood and their behavior predicted. A model may
give incorrect descriptions and predictions for situations outside the realm of its
intended use. A model may be used as the basis for stimulation”. (Source:
Computing Dictionary)
4. “Model is a systematic description of an object or phenomenon that shares
important characteristics with the object or phenomenon. Scientific models can be
material, visual, mathematical or computational and are often used in the
construction of scientific theories.”(Source: Science Dictionary)
5. “Model is a representation of a system that allows for investigation of the
properties of the system and in some cases, prediction of future outcomes. Models
are often used in quantitative analysis and technical analysis, and sometimes also
used in fundamental analysis.”(Source: investwords.com)
100
In conclusion, when micro- credit process is represented through any figure or visual
method is called micro credit model.
6.2 Objectives of a Model
The objectives of a model include (1) to facilitate understanding by eliminating
unnecessary components (2) to aid in decision making by stimulating 'what if'
scenarios (3) to explain, control and predict events on the basis of past observations.
Since most objects and phenomenon are very complicated (have numerous parts) and
much too complex (parts have dense interconnections) to be comprehended in their
entirety, a model contains only those features that are of primary importance to the
model maker's purpose. Models range from simple sketches to computer programs
with millions of lines of code but all of them have one thing in common some
elements of the actual 'thing' are abstracted or mapped into the model
(Source: www .businessdictionary.com)
6.3 Types of Model
Model is divided into three classes on the basis of their degree of abstraction.
(1) Iconic model: Iconic model is least abstract, physical, 'look-alike' model, such
as a model airplane or train.
(2) Analogous model: Analogous model is more abstract but having some
resemblance to what it represents, such as a chart, graph, map, network diagram.
(3) Symbolic model: Symbolic model is most-abstract model with no resemblance
but only an approximation to what it represents, such as a mathematical equation or
formula, financial statement, language and set of accounts. (Source:
www.businessdictionary)
6.4 Model Development Process
A six step model development process, followed by AERMIC, resulted in the
promulgation of a regulatory replacement for the ISC model, AERMOD. The
process followed is as follows:
1) Initial model formulation;
2) Developmental evaluation;
3) Internal peer review and beta testing;
4) Revised model formulation;
101
5) Performance evaluation and sensitivity testing;
6) External peer review.
6.5 Proposed Model for Micro-credit Program of BRAC: Family Based Credit Model
Bangladesh is a developing country having 16 corer people. Among the population,
maximum lives in the rural area which is poverty prone area than urban area. To
eradicate poverty micro credit is being provided and it has been given for last 30
years in the rural area of Bangladesh by various NGOs and micro credit institutions.
But poverty could not be removed. Because, the credit has given to a group, it is not
the family. If family size credit program is introduced, it is hoped that poverty can
be eliminated from the society of Bangladesh.
Definition of Family Based Credit Model
Family Based Credit Model is to increase income, to alleviate poverty creating
employment opportunity following effective training and giving work oriented
products among the family members.
Objectives of Family Based Credit Model
1. To make each member of a family independent.
2. To increase income of a family.
3. To create dignity of livelihood.
4. To increase revenue for the nation.
5. To make the country independent.
Characteristics of Family Based Credit Model:
1. Mission: Its mission is to help (low and medium households) themselves to
overcome poverty and increase earnings.
2. Product Credit: No money, Work. Nobody will be provided with cash money.
A member is permitted a purchase those commodities such as sewing machine, van,
cow etc, he wants to get.
3. Group: A family is a group.4. Size: Loans are medium in size .Minimum amount taka 50,000 for a family.
5. Target users: Low and medium households.
102
6. Utilization: The use of funds for income generation and enterprise
development.
7. Duration: Its duration is 2 years or 100 weeks.
8. Interest: Interest is given by simple interest method.
9. Training: A person must receive training who are interested to increase
earnings of the family.
10. Installment: They must repay the installment per week.
Component of Family Based Credit Model:There are six components of products credit model as follows:
1. Selection of borrowersFirstly the borrowers will be selected. In that case the priority will be given in
their educational qualification, age and economic condition. Criteria for
selecting borrowers are as follows:
(i) Economic condition will be medium and lower level.
(ii) Credit will be given to both educated and illiterate people.
2. Savings
Then the borrowers will be encouraged in savings. In this stage they have to save 10
taka per week which is refundable.
3. Training
The third step of the model is training to the credit holders, who do not have the
knowledge, experience and efficiency in proper use of the credit. The proper use of
the credit is possible through training. For this, the credit holder must be given the
training of proper use of money besides the training of tailoring, rearing cows,
handicraft etc.
4. Allocation of Family Based Credit Model
Nobody will be provided with cash. Credit will create a significant productive base.
So a credit holder such as sewing machine van, rickshaw, cow and any income base
products, borrowers want to get. In some cases cash will be provided. The product
loan will be distributed among only the trained holders.
5. Evaluating and Monitoring
103
Proper evaluating and monitoring is to be ensured so that the borrowers can properly
use the credit. The next step of the model is evaluating and monitoring to the credit
holders. If the credit holders don’t use the money properly, they will be helped
perfectly by supervising.
6. Recovery of the credit
In this stage the installment will be taken after three month of distributing money.
Those who are failure to pay the installment must be taken under law on legal
process. Those who use the money effectively will be given more new products.
7. Out comes
It is hoped that to implement the model successfully, if the credit holders can
increase their self employment, socio–economic development, increasing revenue
then so country will economically independent.
These are the main components of Family Based Credit Model.
104
Structure of Family Based Credit Model
Generally father /husband are main income earner of family in Bangladesh. Every
member will be income earner through it. Family Based Credit Model is presented
below:
Family
Member'
Main Job Present
Income
Product
Credit
Credit
Amount
Probable
monthly
income
Total
Income
Father Service/Business/
Agriculture ;
6000 Fruit garden 5000 500 6500
Mother Housewife - Milk able cow
cultivation
20000 3000 3000
Elder son Student/Job less - Poultry/Dairy
firm
10000 500 500
Younger son Student - Handicrafts/Van 5000 1500 1500
Elder Daughter Student/Job less - Sewing Machine 5000 1000 1000
Younger
Daughter
Student - Goat cultivation 5000 500 500
Total Taka 6000 50000 7000 13000
Table 6.5: Concept of Family Based Credit Model
The main aim of this project is to provide extra income source besides its member’s
main job which help to increase earnings. Indeed each member of a family will be
independent.
Methods of payment of credit
In order to implement the family base credit project every family needs maximum
50,000 taka in a medium size. This credit will be given at the rate of 10% interest as
a service charge per two years. It will be repaid every week as an installment. Such
as income generating activities of tk. 50.000 of a family 10% service charge in taka
5000 i.e. gross collection taka is 55,000 two years period (100 week) i.e. weekly
installment is 55,000/100 = 550 and in every month 550 x4 = 2200 tk. Monthly
disposable earnings is tk. 7000. It's a result first two years income is tk. 7000-1200 =
5800 tk. After two years the credit will be repaid and for the augmentation of each
income generating activities factor income will be free from poverty.
106
If the abovementioned proposed Family Based Credit Model is implemented,
poverty is expected to be reduced in the families through out the country if other
conditions favor .In this way Bangladesh can have herself employed and independent
families.
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Chapter-Seven
Conclusions and Recommendations
7.1 Conclusions
Bangladesh Rural Advancement Committee (BRAC) is the largest and most
successful NGO in the world. BRAC is working in health, education, and livestock,
fisheries, agriculture and microfinance program. BRAC microfinance program has
been working for the disadvantage rural population specially women. Objective of
BRAC microfinance is to improve the economic and social status of the rural poor
by extending credit facilities to undertake profitable income and employment
generating activities. Products and services of BRAC microfinance are micro loan,
micro enterprise loans, and remittance delivery service. Components of the BRAC’s
microfinance program are (a) DABI (b) PROGOTI (c) Unnoti. Poverty alleviation is
the supreme target of the BRAC micro credit program. BRAC touch the fundamental
elements of socio-economic development. Participation in micro–credit program has
a beneficial effect on household welfare by increasing women’s income contribution
to household .The socio-economic condition of the BRAC borrowers are
increasing .BRAC borrowers are making house and sanitary latrine, sinking tube-
well. The researcher shows that, the economic conditions, health & sanitation, uses
of electricity & drinking water etc have been improved after taking credit from
BRAC.
However, it can be said that, BRAC's micro-credit program has a positive role on
socio-economic development of Bangladesh.
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7.2 Recommendations
The findings of the study can be used to put forward some suggestions regarding the
credit operations of the BRAC towards the welfare of the respondents and therefore
the provision of credit can be viewed as an instrument for income generating.
According to the findings and the analysis the researcher recommends the following
suggestions:
Amount of the loan: The first loan should be increased at least tk.
50, 000.Since the amount of loan is too small to proceed towards self-reliance of
borrowers. So to reduce their dependence on credit, the amount of loan should be
increased.
Productive base: Credit should create a significant productive base.
Interest rate: The interest rates are high for rural credit than commercial
bank loan. Despite poverty the poor borrowers are earning considerable
family income to improve their socio-economic condition. Therefore interest
rate should be reduced.
Quality training: Borrowers should be provided with quality training for
proper utilization of borrowed money.
Proper supervision: Proper supervision is to be ensured so that the borrowers
can not misuse the money.
Cottage industries: Cottage industries should be encouraged for women so
that women borrowers can use the investment by themselves.
Payment of installment: Payment of installment should start at least after
three month of takings the first installment of loan disbursed.
Loan funds: BRAC should increase its loan able funds and motivate the
borrowers to increase their savings. This would reduce the high interest paid
to external sources.
If above mentioned recommendations are accepted, it can be hoped that the socio-
economic conditions of BRAC borrowers will improve.
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Annexure-01
References
1. Arefin, Shanaz (1996), Role of NGO's in Development a Study of Poverty Alleviation Programs in Bangladesh, M.Phil Dissertation, Department of Public Administration, Dhaka University, Dhaka
2. BRAC Annual Report, (2007), BRAC, Dhaka.3. BRAC Annual Report (2008), BRAC, Dhaka. 4. BRAC Annual Report (2010), BRAC, Dhaka.5. BRAC Bullitein: Social Enterprise & Invest (2007), BRAC, Dhaka. 6. BRAC Microfinance Programme, (2008), BRAC, Dhaka.
7. BRAC RCP Project Records (2009).
8. Credit Infusion in an Integrated Development Strategy: The BRAC Approach,
Principles, Process and Mechanisms (1987), BRAC, Dhaka.
9. Computing Dictionary. 10. Financial Dictionary
11. Gupta & Gupta (2010), Business Statistics, Sultan Chand and Sons, New Delhi.
12. Islam, M. Nurul (2008), In Introduction to Research Methods, Mullik & Brothers,Dhaka. .
13. Investorwords.com14. Khan, M. Abdul Wadud (1998), The Role of NGO'S in Rural Development:
A Case Study on BRAC's Rural Development Program, Department of Social Science, Dhaka University.
15. Lovell,Catherin H.(1992), "Breaking the Cycle of Poverty: The BRAC Strategy,University Press limited , Dhaka.
16. Mobarak Salma (2009), Micro-credit: A strategy for Empowering Women in Bangladesh, M. Phil dissertation, Department of Public Administration, Dhaka University.
17. Official Records, BRAC, Head Office, Dhaka.
18. Rahman, M Ataur (2006), Human Resource Management, Zahin Publications, Dhaka.
19. Saifullah, A.K.M (1999), Changing Dimension of NGO Activities in Bangladesh:A Study of BRAC, M.Phil Dissertation, Department of Public Administration, Dhaka University, Dhaka.
20. Science Dictionary 21. Wording.com22. www.wikipedia.org
23. www.businessedictionary.com
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Annxure-03
Codes of conduct of Members of BRAC Micro Credit Programs
BRAC’s 17 promises for the credit group
1. We will not engage in malpractice or injustice.
2. We will work hard and bring prosperity for our family.
3. We will send our children to school.
4. We will adopt family planning and keep our family size small.
5. We will try to be clean and keep our house tidy.
6. We will always drink pure water.
7. We will not keep our food uncovered and will wash our hands before we take our
meal.
8. We will construct our latrines and will not leave our stool where it doesn’t belong.
9. We will cultivate vegetables and trees in and around our house.
10. We will try to help each other under all circumstances.
11. We will fight against polygamy and injustices to our wives and all women.
12. We will be loyal to the organization and abide by the rules and regulations.
13. We will not sign anything without having a good understanding of what it means
(we will look carefully before we act).
14. We will attend weekly meetings regularly and on time.
15. We will always abide by the decisions of the weekly group meetings.
16. We will regularly deposit our weekly savings.
17. If we receive loan we will repay it.
Source: Khandker, 1999, P.27
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Annexure-04
Features of BRAC Credit Program
Features
Membership criteria Maximum landing holding of .5 acre of land. At least one household member must work for wages (since 1992 one member allowed per household).
Group features 30-40 members from village organizations.
Village organizations are divided into solidarity groups of 5-7 members. Separate groups for men and women. Each women group has a counterpart men group. Weekly meetings of solidarity groups.
Savings mobilization Tk. 2 per week. 4 percent of each loan (nonrefundable) goes to group fund. 1 percent of each loan used for group insurance.
Credit deliverymechanism
No collateral but group liability. 50 week installment of loan. Interest at the end of loan cycle. 20 percent interest for production loans. Maximum loan Tk. 1000.
Social development Training duration 3-6 months. Review of code of conduct at village organization meetings. Substantial skill-based training.
Source: Khandaker, 1999, p. 24
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Picture-8
Monjura Begum and her family live in their new home rebuilt by members of the Village Poverty Alleviation Committee.
Picture-9
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Annexure-6
Questionnaire
A survey on
The Role of Micro-credit in Socio-economic Development of Bangladesh: A Case Study on BRAC
[As a part of M.Phil program]
ForMd.Kamruzzaman M.Phil Researcher
Registration no 507078Management Discipline
Faculty of Business Studies GroupNational University
Gazipur2009
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The Role of Micro-credit in Socio-Economic Development of Bangladesh: A Case Study on BRAC
Questionnaire
(A) Impact of Micro-credit program of BRAC borrowers
1. What is your name?
2. What is your permanent address?
C/O: Village:
P.S: District:
3. What is your educational qualification?
Illetrature Can sign only I-V
VI-SSC HSC-Above
4. What is your occupation?
House making Farmer Day labourer
Cottage industry Business Other
5.How old are you? 15-24 25-34 35-44 45-54 Above 55
6. What is your sex? Male Female7. What is your number of family members?
Male ………………Person Female ……………………..Person
8. What is your number of earning members in the family?
(I) at the time of joining BRAC:
1 Person 2 Persons 3 Persons 4 persons above 4 persons
9. How many children do you have in the family?
No children 1-3 4-6 above 6
10. How many times you have received the loan from BRAC?
1-4 5-9 10-14
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11. What is your purpose of the loan? Familial purpose for business for paying loan For purchase rickshaw, Sewing machine Familial expenditure
For building construction for firming poultry others
12. What is the period of receiving the loan?
1 year 2 years 3 years 4 years above 5 years
13. Why paying weekly installment is not a problem? , because-
Own income Good business Proper usage of the credit others
14. Is any number in the family received loans from BRAC?
Yes, No, thinking of taking others
15. How many NGO you already have taken the loan from?
One Two Three above -three
16. Own land (Including home stead land)
(a) At the time of joining BRAC ……. Decimals
(b) At present (2009)……………………Decimals
17. Cultivate land
(a) At the time of joining BRAC ……….Decimals
(b) At present (2009) …………….Decimals
18. Value of Asset
(a) At the time of joining BRAC …………….Taka
(b) At present …………………………..Taka19. If yes, which is the organization?
Bank NGO Mohajon Relatives & Friend Neighbors Others
20. What was your monthly income before starting receiving the loan?? (Per month)
0-5,000 taka 5,001-10000 taka
1,001-15,000 15,001-Above
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21. After starting receiving the loan what is your monthly income at present?
0-5,000 taka 5,001-10,000 taka
10,001-15,000 taka 15,001-Above
22. What are the modes of spending the loan?
Business Purchase cattle Purchase Rickshaw, Sewing machine
Vegetable Garden and plantation tree
23. Is the proper usage of loan being confirmed?
Yes No
24. What is the reason behind for the incapacities for not improper usage?
No earning person poverty in the family the loan is purposed the for itself Others 25. How much money do you save per month?
Tk.1-100 Tk.101-500 Tk.501-1,000 Tk.1, 000-above
26. What is the expenditure of your family -
Tk.0-5,000 Tk.5, 001-10,000 Tk.10, 001-15,000 Tk.15, 001-20,000
Tk.20, 001-25,000 Tk.25, 001-Above
27. What is the condition of your house at the time of joining BRAC?
Soil made Bamboo made Tin shed Building Others
28. What is the present condition of your house?
Soil Made Bamboo Made Tin shed Building Others
29. How many school going children you had at the time of joining BRAC?
Could go to school ……………………. person
Went to school …………………………………. Person
30. What is the number at present?
Can go to school …………………………. person
Goes to school ……………………………….. Person
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31. What are the reasons behind the lacking?
Financial awareness others
32. Do you use any sanitary latrine in your house?
Yes No, I will plan
33. If, not why?
Financial Lack of awareness other
34. What was the source of your drinking water at the time of joining BRAC?
Tube-well Pond River Well
35. What is the source of your drinking water at present?
Tube-well Pond River Well
36. What are the reasons for not drinking tube-well water?
Lack don’t have enough money to buy one
Don’t have one nearby others
37. Do you see specialized Doctors?
Yes No Sometime
38. Do you have power supply in home?
Before joining BRAC Electricity connection without electricity connection
At present: Electricity connection without electricity connection
39. What is your opinion about the socio-economic conditions?
Improved Unchanged Deteriorated
(B) Ways of Making Micro-credit program effective
40. How much money do you owe to BRAC?
1000-5000 6000-10000 11000-16000 17000-Above
41. What is your opinion about the amount of the loan?
Amount is adequate Amount is not adequate Very Nominal others
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42. What is the amount of weekly installments?
1-100 taka 101-200 taka 201-300 taka 301-400 taka above 400 taka
43. Is the principal amount used for paying the installment??
Yes, I pay No, I don’t pay
44. Do you have any training on receiving loan loan?
Yes, I have No, I don’t have
45. Do you deposit money?
I do No, I don’t I try, but can not I will in future others
THANK YOU
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