The microcredit operations of Grameen Bank (GB) and other big NGOs have expanded in the rural areas of Bangladesh as credit disbursements increased by 14% in the first 9 months (July-March) of the previous fiscal year 2012-2013.
“A large segment of the population, particularly the rural poor, who are now aware about the benefits of the micro-credit that helped lift them out of severe poverty and accelerate the pace of the economic development,” said a Bangladesh Bank (BB) senior executive.
The central bank took several initiatives such as opening bank accounts with Tk10 and expansion of mobile banking service to help bring rural people under the banking service. As a result, the rural people’s access to banking service has expanded, resulting in increased microcredit disbursement, he said.
According to a BB report, the total microcredit disbursement of large NGOs, including Grameen Bank, Brac, ASA and Proshika, stood at Tk255bn up to March 2013 as compared to Tk223bn of the same period previous year.
Brac Executive Director Mahabub Hossain said despite high interest rates, rural people have a demand for microcredit as they are being benefited. “The small entrepreneurs, who are being refused from banks to get credit, are coming to the microcredit institutions and are becoming successful in their businesses. Credit limits for them have increased in proportion to the vertical expansion in their business.”
Grameen Bank disbursed microcredit worth Tk27bn from July to September, Tk30bn from October to December and Tk32bn from January to March of the fiscal year 2012-2013 as against Tk24.29bn, Tk29.59bn and Tk31.16bn respectively during the previous fiscal year.
Grameen Bank’s credit disbursement has increased gradually every year as it has disbursed credit worth Tk116bn in FY12, Tk103bn in FY11, Tk87bn in FY10, Tk71bn in FY09, Tk55bn in FY08, Tk50bn in FY07, Tk46bn in FY06, Tk31bn in FY05 and Tk23bn in FY04 respectively.
Of the large NGOs Grameen Bank, Brac, ASA and Proshika have disbursed credit worth Tk89bn, Tk82.67bn, Tk81.41bn and Tk2bn respectively in the first 9 months (July-Mar) of FY13.
Total loan recovery of the microcredit operations stood at Tk258bn in the first 9 months of FY13 compared to Tk215bn in the previous fiscal year.
Of the total Grameen Bank, Brac, ASA and Proshika had recovered Tk86bn, Tk88bn, Tk82bn and Tk2bn respectively.
Total loans overdue stood at Tk15bn out of total loans outstanding Tk600bn.
The microcredit growth was achieved due to the expansion of microcredit-related activities in rural areas, said an official of the Microcredit Regulatory Authority (MRA).
MRA Director Abu Farah Md Nasser said microcredit operations have expanded because of increased funds.
Earlier microcredit institutions depended on foreign donations, often causing them to suffer from fund crisis. But the institutions have now overcome the crisis as they now collect deposits following the MRA Act, 2006 and have also been allowed to reinvest.
As a result microcredit funds have increased rapidly. In 2011, the total fund was Tk60bn which has grown to Tk75bn within one year in 2012.
In addition, improved life style and changes in business patterns have helped increase clients’ demand for credit. MRA has also been conducting awareness programmes on microcredit, which has also helped the disbursement rate to grow, Nasser said.
