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Conclusions------------------------------------------------------------------------. investment and replica -------------------------------.page 10 9. Successful Stories in Bangladesh ---------------------------------------. References---------------------------------------------------------------------------page 11 .page 4 3.page 5 4.page 9 8.page 10 10.Table of Contents Title page Abstract 1. Bangladesh Rural advancement Committee------------------------.page 4 A.page 9 C. Grameen Bank ---------------------------------------------------------. Social and Economic impact in Bangladesh---------------------------------. Association for social advancement ---------------------------------. Growth in Micro Finance institution -----------------------------------------.page 9 D. Implification of micro finance towards eradicating of poverty --------------. Is Grameen Bank Different from conventional bank--------------. Grameen loan system.page 4 C. Introduction--------------------------------------------------------------------.page 3 2.page 7 6. Causes of poverty & its reduction process--------------------------------------page 7 7.page 8 A. Grameen Bank Concept-------------------------------------------------------. Structure & Institutional Framework ------------------------------------------page 5 5.page 8 B. Idea of Micro Credit----------------------------------------------------page 4 B. Features of Micro Credit ---------------------------------------------.
It liberates both poor and women from the clutches of poverty. It is no more a mere concept. consultants. According to a guess estimate of Muhammad Yunus. Among the micro-finance organizations (NGO’s) in Bangladesh. Despite of the frequent natural catastrophe hit in the country. It is no longer the subject matter of micro-credit practitioners alone. a new meaning and a place in development literature. Its aim is to create a poverty museum every area in Bangladesh.9 million clients including 26. poverty jump down from 57% to 40% and average GDP growth increased over the last six year is 6% . 1. each and . Grameen bank is in a leading position who is trying to develop poor as well as vulnerable people providing micro-loans without requiring any collateral or mortgage. Hence. magnificent development has been witnessed. universities. one can do whatever one does best and earn money for it. One can overcome poverty. Credit creates opportunities for self-employment rather than waiting for employment to be created. Credit is a powerful instrument to fight poverty. philanthropists and others have increasing interest in it.8 million very poor when they started with the program. It is now a worldwide movement. Introduction Bangladesh is a highly populated country and the amount of population is 160. erosion and storm gives more trouble to the country. The role of micro-credit in reducing poverty is now well recognized all over the world. It brings the poor into the income stream. banks. donors. development agencies. One can become the architect of one–s destiny and the agent of change not only for one–s family but also for the society. Given the access to credit under an appropriate institutional structure and arrangement. Moreover. the number of poorest clients’ families reached by MCPs would be at least 35 million by the end of 2002.5 million with a density of 834 inhabitants in per square kilometer. This includes those who have not been reported by the MCS.Abstract Micro-credit refers to programs that are poverty focused and that provide financial and business services to very poor persons for generation of self-employment and income. re-current natural disaster such as flood. however. Governments. people are losing their lives and shelter. The total outreach of Microcredit Programs (MCP) as compiled by the Micro-credit Summit (MCS) is 54. With the advent of Grameen Bank and other such programs micro-credit obtained a new identity. In 1990’s.
social and economic impact of micro-credit in Bangladesh has been conferred. programs extend small loans to very poor people for self-employment projects that generate income. difference between Grameen Bank and Conventional Bank. investment procedure and replica model elucidated. Micro-credit summit was held at Washington DC on 2-4February 1997. This loan giving approach placed Grameen Bank in a unique position in micro-finance and approaches beyond the boundaries. this paper has structured into six parts. adopted microcredit that. 2. Second part highlights the structure of micro-credit. It is amazing how does the little amount of money gives strength to the poor to start a business and helping to break out the vicious cycle of poverty. In order to get loan people go to the conventional bank but Grameen Bank approaches rootless or landless people’s door steps. First part discusses about microcredit system. Idea of Microcredit Micro-credit is a small amount of loan given to the poor to develop their standard of living. allowing them to care for themselves and . it is a financial innovation system that comes from Grameen banking system or procedure which is based on trust and collateral-free and opposite to conventional banking system. noun. this paper focuses how micro-finance is helping out to eradicate poverty in Bangladesh. Fourth part describes causes of poverty and its reduction strategy framework. It is incredible that. Defining micro-credit. it is a . The implications towards eradication of poverty explained in section fifth and finally. With this initiation.[*]Kro’kre-dit). This small amount of loan or financial supports to the needy people helps to encourage setting up free-businesses. Section three illustrates Grameen loan system. Following this approach. This small amount of loan can help people to come out the cycle of poverty by generating income. Grameen Bank Concept A.“Financial service where small amounts of money (usually around $50-$150) are loaned to poor people for use as a capital to start or expand small businesses” . without guarantee any bank can allocate or sanction loan to the rootless or vulnerable people.However presently Grameen relocation is administered all over the world and dedicated to create poverty free world. institutional framework and advancement of the micro-finance institution. In other way. “Microcredit (mI.
pure drinking water and illiteracy.95 million borrowers door-step in 84. For this GB is looking beggar from the street to provide loan so that they can start SME or any other small businesses to turn out from poverty. Whoever believes landless people are highly privileged by getting collateral free loan? Grameen Bank is giving favor to them. C. Every Grameen branch borrowers can recite “sixteen decisions” . landless as well as vulnerable. General Features of Microcredit Grameen Bank allocates credits to the poor and uneducated women in rural places and created trouble-free loan method with easiest re-payment system without imposing any terms and condition because its main concern is to build social assets in order to achieve prosperity. These all are known as “sixteen decision” . micro-credit is an extension of extremely tiny loan given to the rural poor villagers to assist them to be identical human beings. It is well known that conventional banks are profit maximizing whereas Grameen Bank’s objective is to provide financial services to fight against poverty.691 villages to deliver bank services at rural areas . Yunus says. sanitation. social movement. B. rootless. Is Grameen Bank Different from Conventional Bank? The founder of Grameen Bank Dr. educational and health sectors. “Less you have. However.144 staffs meet 7. if you have nothing you will get the highest priority”.Microcredit Summit .their families” . About 97% borrowers are female and getting “ownership of assets” for their families. more attractive you are. In this process Grameen system helps to implement some goals in social. Grameen Bank always gives priority to the poor. the more you can get”. So. education as well as treatment to their families. That’s why half of the population of the world is not allowed to get loan from conventional bank. This bank is dedicated to give micro-loan to beggar not for consumption but for business to change their social status. these decisions also help enormously to create heath awareness. Grameen Bank’s 23. ensuring education . so that they can operate small-scale business and can afford shelter. His belief is against the trend that “the more you have. food.These sixteen decisions are still effectively working and implementing among the Grameen borrowers. These all decisions demonstrated not only micro-credit or micro-loan system but also trying to solve population problems.
Moreover. Bangladesh Institute of Development Studies (BIDS) studied the expansion of micro.1 shows how micro-finance Institution expanded over the time.finance institution from 1997 to 2000. 3. First step is to create motivation that everybody has a potentiality to do and receive. Gradually comes rest of the work such as. GROWTH IN MICROFINANCE INSTITUTION During 1970’s. Though interest is 20% but repayment is 98%.economic development of rural people of Bangladesh on the basis of self-reliance”. Source: CDF data 4. Later in 1975. Figure. Second step is to build up the society and arranging training program. Fig 1: Growth in Microfinance in Bangladesh. returns.for borrower’s children. . At present more than 7. A small number of NGO’s were working with great effort. All these issues can be triumphant after achieving economic empowerment. The main purpose of “Swanirvar Bangladesh” is to attain the all-round socio. operations and credit cost. “Swanirvar Bangladesh” came into relocate the “hands of beggar into the hands of worker” . Later on microcredit organization flourished in 1990s. STRUCTURE AND INSTITUTIONAL FRAMEWORK Figure. GB is trying to create social awareness against the dowry system.5 million micro lenders exist in Bangladesh. Interest rest is high because of Grameen giving door to door services and provides exclusive training program for the borrower’s and all activities are handled by the Grameen field workers. Professor Yunus started to give micro-credit loan “Dheki Rin Pkolpo” with the help of Bangladesh Bank in collaboration with “Swanirvar Bangladesh”. fund collection.2 shows the structures of micro-credit. Third step is to give credit proposal then distribute fund for personal investment.
2: Microcredit structure Following this discussion supports the institutional network this is important to accomplish micro-credit loan system. Basically this network theory has been used for informational advantages. This network consisted of two networks one is focal and another is principle network. . This model is used by the Grameen Bank of Bangladesh and Self Employed Women Association (SEWA) of India. Principle network forms with four or five focal network and controls the focal network.Fig. Institutional network comes from the social network theory. Here hub is the controlling figure. Besides. focal network is combined with five actors suggesting five borrowers. In micro-finance institutions each network is closely connected. It called the management framework. Each and every borrower is closely connected by the hub.
garment sewing. weaving. If the performances are reaching at the satisfactory level then next two borrowers can apply for loans. Consequently. fifth member can be selected for loan.Fig 3: Institutional Network 5. INVESTMENT AND REPLICA Grameen bank adopted unique loan systems that are voluntary formation where people create groups. After approving loan Grameen Bank arranges a training program. paddy husking. After getting loans people are engaged different types of business such as pottery. Figure 4. it will not work. Only two members are allowed to take a loan at first time. Training program comes after the loan is because Grameen Bank assumes that if it starts first most of the borrower will be scared with the system and they will lose their interest to get loans. storage and marketing for self-development. indicates how they distribute loans among the borrowers step by step. GRAMNEEN LOAN SYSTEM. . Finally. Each and every group is consisting of five in numbers.
clothing. Poverty is an income level below some minimum level necessary to meet basic needs. If all basic needs are absent it can be said people are living under poverty. According to World Bank. lack of representation and freedom”. food. poverty lines vary in time and place. education and safe drinking water. Poverty is powerlessness. Poverty is hunger. living one day at a time. treatment. Poverty is not having a job.Fig 4: Replica of loan system 5. Poverty is lack of shelter. societal norms and values. and each country uses lines which are appropriate to its level of development. Poverty is measured by deprivation of basic needs like shelter. CAUSES OF POVERTY AND ITS REDUCTION PROCESS In this section cause of poverty and overall objective of its reduction has discussed. But the content of the needs is more or less the same everywhere. . is fear for the future. Poverty is being sick and not being able to see a doctor. Poverty is not having access to school and not knowing how to read. This minimum level is usually called the “poverty line”. What is necessary to satisfy basic needs varies across time and societies. Poverty is losing a child to illness brought about by unclean water. Therefore.
tsunami and cyclone are also the causes of poverty. hurricane. A. especially women. to improve their lives and break away from poverty through micro-finance. IMPLICATION OF MICROFINANCE TOWARDS ERADICATING OF POVERTY As we know. The objectives are to help the world’s poorest. However. Successful Stories in Bangladesh In Bangladesh.credit Summit Campaign year 2004. there are ten active institutions or association that facilitates micro-credit to the Bangladeshis. flood. . Lack of industries and factories in a place are also the cause’s poverty. according to data gathered by the Micro. showed positive results since it was introduced. . the role play by microcredit towards eradication of poverty in Bangladesh and other countries. When these natural catastrophes hit the country wealth has been destroyed. Fig 5: Poverty Reduction Strategy Framework [Source: Poverty Redetection Strategy Paper.Natural disasters like tornado. the World Bank] 7.
000 from ASA in 2001. furniture and jewelries’.65 USD) from selling the fruits. BRAC recovers the loan on weekly basis in installments with 15% flat rate of interest. pottery. ASA only serve micro. and purchase saris. It started in 1978 with various types of development programs for the socio-economic progress of the distress rural poor . she managed to buy three cows for milk production. ASA had made a successful women entrepreneur in Dhaka and a role model in her group by started with a loan of Take 10. agricultural.credit and discarding all other social programs.000 taka (367.Here are the examples of role play by the institution or association regarding micro-credit facility in Bangladesh that bring the local people out of poverty. After two years. Her successes now widen other thought from her village. purchase of rural transport such as rickshaw. Now. for the release of mortgage loan. most of the villagers joined the BRAC program and will be success one day. Bangladesh Rural Advancement Committee (BRAC) BRAC was founded in 1972 and one of the largest NGOs in the world and the pioneers in NGOs activities in Bangladesh. poultry and paddy husking . small trading. She was given a horticulture nursery asset with a land and proper training before she started planting. her nursery is flourishing and producing guava. GB only provides micro-credit for productive activities . A case study made at district Rangpur had proved the excellence of BRAC facility . D. B. Association for Social Advancement (ASA) ASA is the second largest micro-finance NGOs in Bangladesh. With all those profits.5% service charge over a year. A housewife with a retarded husband was joined BRACTargeting the Ultra Poor Program. Grameen Bank The Grameen Bank (GB) is one of the most successful experiments in extending credit to the poor in Bangladesh.with the loan she bought sewing machines and started embroidery work for boutiques and fashion houses. mango and papaya plants. Her income varies and up to 25. increased food expenditure. BRAC provides micro-credit to its members for the following purposes: to crop cultivation. C. weaving. fishing. ASA provides personal and group based micro-credit with a 12. boats and bullock cart.000 a month. But since 1998. Instead of . food processing. Now she has 10 sewing machines and 10 employees and makes a profit of almost take 15.
Grameen launched it yoghurt business. In general. Micro-credit also gives a big impact to the poor people to combat poverty in their life. GB also treated people of Bangladesh efficiently through it social project by joining multinational companies as its social entrepreneurship part. credit. which provides malnourished children with a low-cost source of nutrition. as more of them turn to be an entrepreneur’’. This paper is given the clear idea about micro- . women are treated as housewife and only responsible for household. 8. the concept of lending in micro-credit had developed leadership roles to the women that given facilities from micro-credit institution. micro-credit institutions provide poor people different financial services along with savings. This paper highlighted how micro-credit works for the poor by giving small amount of money and how they benefit by Grameen loan. The program has also had an impact on the choice of economic activity among borrowers. There is a shift from wage employment in agriculture and “domestic service and household work in favor of trading. 9. Mostly in Bangladesh. Microcredit has evolved due to its special features on loan giving process in order to startup businesses. BASF Grameen provides cheap treated mosquito nets to help prevent malaria.giving micro-credit to the group of people. Besides. So Grameen Bank’s approach towards the loan system brings additional social benefits. Grameen Veolia has built several water treatment plants that provide clean drinking water to the poorest in Bangladesh. livestock rearing and domestic processing and manufacturing. And for the socio-economic development Grameen has adopted so many easy use methods. where some ground water is contaminated by arsenic. Grameen Danone. Social and Economic impact in Bangladesh There are various social impact had been intertwined with micro-credit. For example. The dependence on wage labor was much less among the Grameen Bank clients. Conclusion It is anticipated that micro-loan will contribute to our economy by eradicating poverty in a real sense. Development should be grounded by cultural. social and economic growth of the country. and insurance facilities.
The most important issue of micro-credit is how its structure formed and institutional network works with effectively to reducing poverty. GRAMEEN BANK and SONALI BANK of Bangladesh. PROSIKHA. This paper also talks about the implication of microcredit towards eradication of poverty through government and non.government organizations like ASHA. Another important issue has Bank been for discussed to eradicate poverty with promoting good governance by Grameen socio-economic development of the country. This paper also studied with the growth of micro-finance institutions in Bangladesh and how they are helping enormously to eradicate poverty. BRACK. . Creating sustainable development of the society Grameen Bank’s structure and program is essential. This paper is also talked about the Grameen loan system and investment to the poor people and its replication all over the world.credit loan and structure of the Grameen Bank as well.
K. 109 6. H. Yew York.org 8. “Role of NGO’s Microcredit Programme in Poverty Reduction in Bangladesh: A Study on some Selected NGOs”.H. Mohammad Yunus (2007) Banker to the Poor: Micro-lending and the battle against world poverty. Pakistan Journal of Social Sciences 3 (8): 1053-1059. Lovell. December 29. http://www. Ahsan A. “2008 Borlaug-Ruan Internship Report”. 10. (2005).M.grameen-info.176. Document of The World Bank. 5.greenstar. 34448-bd. Perkins J. Breaking the cycle of poverty 11. 12.org .org. Pakistan Journal of Social Sciences 3 (8): 1053-1059. Report no.com/2009/01/08 9.bangladesh-bank.pdf.wordpress. http://www. . 4.K. 2005 2. Ahsan A. Bangladesh. Source: http://filipspagnoli. C. (2008). “Role of NGO’s Microcredit Programme in Poverty Reduction in Bangladesh: A Study on some Selected NGOs”.org/microcredit/microcredit-brief. http://www.H. (2005). http://www. (1992).M. http://www.org 3.swanirvarbangladesh. Bangladesh. Poverty Reduction Strategy Paper. joint IDA-IMF staff advisory note.grameen-info.REFERENCES 1. 7.
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