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|Eco-Social Development Organization (ESDO)|
|We Seek an Equitable Society free from all Discriminations|
The majority of the world’s poor live in Asia and most of them live in rural areas. These areas are also in famous for the food insecurity and malnutrition associated with poverty. Making even a modest dent in rural Asian poverty has the potential to realize large gains in global human development.Reducing Rural Poverty in Asia provides evidence-based guidelines for policymakers in developing countries, for researchers focusing on development problems, and for the international development assistance community in the continuing search for ways to effectively reduce poverty in the developing world. Detailed examinations are clearly presented on the efforts for poverty alleviation through micro enterprise development and rural public employment programs that focus on public works and household/small-scale industries.
MFIs all of the programs are targeted at the functionally landless rural poor. All the MFIs provide mostly small, un-collateralized one-year term loans to individuals belonging to jointly liable peer groups, and they use similar on-site loan disbursement and weekly collection methods by forming village organizations or centers.
A research reveals that NGOs started credit program in mid eighties and their activities increased noticeably higher after 1990 (CDF, 2000). With the increasing number of collateral free micro credit disbursement by MFIs, some Nationalized Commercial Banks (NCBs), and Specialized Banks like BKB and RAKUB have been encouraged to provide a considerable amount of their rural credit to the poor without security. However, the amount is much less compared to the deposit mobilization from the rural sector of the country. Today, some of the Private Commercial Banks (PCBs) have also started direct and linkage programs with NGOs. Total loan disbursement (cumulative) by these four kinds of institutions till December 2001 was taka 434.55 billion; of which disbursement under Government program was taka 37.77 billion (8.69%), Grameen Bank disbursed taka 154.11 billion (35.46%), other Banks and MF-NGOs disbursed taka 78.41 billion (18%) and taka 164.26 billion (37.80%) respectively (figure-1). Recovery rate of all these organizations excluding formal banks and government sponsored programs stood at 95 percent.
The Impact of Micro-Finance at Macro Level
The dependency of poor people on the money lender or richer people has been reduced substantially in the society and people are getting access to institutional sources for credit. Even the formal sectors have been keeping confidence on the poor for lending money, which is a qualitative change in the rural society due to micro-finance intervention.
Employment opportunities of the poor have increased to a great extent in terms of both longer working hours and new employment. The targeted households that are eligible for participation in micro-finance programs have a higher probability of being self-employed than their counterparts in non-program villages.
As the main target group of micro-finance is women, they have gained a special financial power over men. Now more and more rural women move outside their home after joining micro-finance program. They now go to office, banks, market and other places without a male company. This is a positive indicator of women empowerment.
The poverty rate of the country did not decrease significantly in last few years. It did not increase though. The main focus of micro-finance is to alleviate poverty, but it could not reach the poorest of the poor till now. One of the reasons might be the failure to reach the hard-core poor by these programs. Now MF-NGOs are seriously thinking about this issue and have started some programs to solve this problem. But it is a challenging work to do, because this group of the population first needs money for consumption. Without solving these problems they are not able to invest credit for cash flow, which they need to repay the loan in time. Therefore, it has been seen that there are big successes of micro-finance at micro level that do not show any significant impact at macro level. In the recent literature it is often mentioned as the problem of "Macro-Micro Mis-match" (Sen, 2001).
Most of the services provided by commercial banks are bank door services, which mean the clients have to go to the banks to avail financial services. Most of the services provided by Microfinance institutions are door step services, which mean the staffs of the MFIs deliver their financial services at client’s door step. Commercial banks have relatively easy funding and engage in financial services with comparatively sound income households, which allow them to charge lower interest rate (10% to 16%) on their loans because the risk is low. On the other hand, MFIs usually charge high interest rate (18% to 26%) because the funding is not that easy and they deal with relatively risky set of borrowers with collateral free loans.
Commercial banks need not a collector to collect loan while MFI needs additional staff to collect the loan money. Besides, MFI loans are generally disbursed to individuals or groups which are geographically diverse, without extensive scrutiny. Another distinguishing process feature of banks and MFIs’ is deposit facility. In case of deposit or savings, commercial banks offer specific products at fixed rates of interest for the depositor. These deposits can be withdrawn anytime. But for MFIs’, a certain amount has to be saved by the group members compulsorily so that they can avail loans. The size of these deposits is also less in comparison with banks (Gateway 2017).
The scale of operations of commercial banks is not limited to households. In fact, the lending operations of commercial banks are divided into agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure and renewable energy. These account for around 40% of their credit (Mohan & Ray 2017).
On the other hand, MFIs’ disburse loans of small amounts to poor households to invest in their small business or for personal use. The basic purpose of MFIs’ is to enable financial inclusion. They seek to empower those sections of society that are not covered by commercial banks and are vulnerable to private money lenders (Singh 2016).
Account Name: Eco-Social Development Organization (ESDO)
Account Title: Eco-Social Development Organization (ESDO)
Bank Name: Agrani Bank Limited
Account Number: 0200001304136
Bank Address: Thakurgaon Branch, Thakurgaon, Bangladesh
Bank SWIFT Code: AGBKBDDH
Bank Code: 2921
Routing Instructions for Disbursements: 010940976