MICROCAPITAL BRIEF: Bangladeshi Microfinance No Longer Dominated by Group Loans to Women, Inflexible Product Lineup

The work of microfinance institutions (MFIs) in Bangladesh was originally dominated by the original model implemented by the Grameen Bank, an MFI founded in 1976 by Dr Muhammad Yunus. This model was principally based on group-lending to women and involved fixed loan amounts and repayment terms, weekly meetings, mandatory payments into a group savings account and 16 social pledges repeated at each meeting. An early change by Grameen, known as Grameen II, allowed more flexibility to borrowers who default as a result of uncontrollable circumstances. In recent years, Grameen Bank and many other MFIs in Bangladesh have been offering microloans to men, a more flexible savings program that allows borrowers to deposit and withdraw money on their own schedule and programs that allow borrowers to choose the amount of their loan and the repayment term. Other available products include savings, insurance and specialized loans such as energy, education and housing loans.

The 73 MFIs in Bangladesh that report data to the US-based nonprofit Microfinance Information Exchange (MIX), held an aggregate gross loan portfolio of USD 2.6 billion disbursed to approximately 22.7 million borrowers in 2010.

By Charlotte Newman, Research Associate

About Grameen Bank
Grameen Bank is a Bangladeshi microfinance institution that provides loans to poor entrepreneurs in rural areas. It was founded in 1976 by Muhammad Yunus, who, along with Grameen Bank, won the 2006 Nobel Peace Prize for his work in developing the concept of microfinance. As of December 31, 2010, Grameen Bank reported to the US-based nonprofit Microfinance Information Exchange total assets of USD 1.7 billion, return on assets (ROA) of 0.7 percent and return on equity (ROE) of 10.7 percent. As of September 30, 2011, Grameen Bank reported a gross loan portfolio of USD 959 million and 8.34 million active borrowers.

Sources and Additional Resources:

Huffington Post: “Microfinance in Bangladesh: It’s Not What You Thought,” http://www.huffingtonpost.com/elisabeth-rhyne/microfinance-in-banglades_b_1266759.html

MicroCapital.org story, February 11, 2012, “MICROCAPITAL BRIEF: Bangladeshi Government Reportedly Seeking Control of Grameen Bank ‘Empire’,” https://www.microcapital.org/microcapital-brief-bangladeshi-government-reportedly-seeking-control-of-grameen-bank-empire/

MicroCapital.org story, November 18, 2011, “MICROCAPITAL BRIEF: Bangladeshi Government Provides Interest-Free Microfinance Loans to Livestock Farmers,” https://www.microcapital.org/microcapital-brief-bangladeshi-government-provides-interest-free-microfinance-loans-to-livestock-farmers/

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