M.phil Thesis (Gazipur)

184
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 Rahman Department of Management Studies University of Dhaka &

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

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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.

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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

Dedicated to

My Respected Father Al-Hajj Md. Bashir Uddin Molla

5

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

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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.

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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

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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

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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

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33 6.5 Structure of Family Based Credit Model 106

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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

14

Introduction

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

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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.

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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;

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9. Encouraging commitment to the goals and values of the organization.

Source: BRAC Annual Report (2007)

1.3 Organogram of BRAC

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BR

AC

Ann

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08:8

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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.

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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

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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.

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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

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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

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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%

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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

29

Literature Survey

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

Chapter-Three

34

Research Methodology

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-Four

41

BRAC Microfinance Program

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

4.10 Information of BRAC Micro finance program

Source: Official Records

54

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-Six

Model Development

98

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

105

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.

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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

108

Chapter Contents

7.1 Conclusions

7.2 Recommendations

109

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

112

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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Annexure-02

114

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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Annuex-05: Some pictures of BRAC borrowers familiesPicture-1

(Source: BRAC Annual Report, 2007)

117

Picture -2

(Source: BRAC Annual Report, 2007)Picture -3

(Source: BRAC Annual Report, 2007)

118

Picture -4

(Source: BRAC Annual Report, 2007)

119

Picture -5

(Source: BRAC Annual Report, 2007)

120

Picture -6

(Source: BRAC Annual Report, 2007)

121

Picture -7

(Source: BRAC Annual Report, 2007)

122

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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