MICROCAPITAL BRIEF: BRAC Development Institute Releases “Bangladesh Microfinance Review,” Indicates Need for Product Diversity

The BRAC Development Institute (BDI) set up by the Bangladesh Rehabilitation Assistance Committee (BRAC), a Bangladesh-based development organization, recently released “Bangladesh Microfinance Review, August 2011” and concluded that “while the sector has achieved operational efficiency, it needs to diversify its products in order to serve unmet demand for credit.”

BRAC reports that the review points out the following: (1) three microlenders, namely ASA, BRAC and Grameen Bank, jointly control approximately 60 percent of the Bangladesh microfinance sector; (2) while some of the country’s microfinance institutions (MFIs) are diversifying into microinsurance and other services, overall there is an overall slow adaptation of innovative products as compared to MFIs in other countries; and (3) the number of borrowers is around 18.5 million and the average cost of servicing microloans is approximately USD 14, which ranks as “one of the lowest worldwide.”

The full report is not yet available.

By Nisha Koul, Research Associate

About BRAC (Bangladesh Rehabilitation Assistance Committee): Established in 1972 as the Bangladesh Rehabilitation Assistance Committee, BRAC is a development organization based in Bangladesh. According to its website, “BRAC works with people whose lives are dominated by extreme poverty, illiteracy, disease and handicaps. With multifaceted development interventions, BRAC strives to bring about change in the quality of life of poor people in Bangladesh.” As of 2010, BRAC reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 1 billion, a gross loan portfolio of USD 620 million, approximately 5.4 million borrowers, return on assets (ROA) of 3.84 percent and return on equity (ROE) of 12.4 percent.

Sources and Additional Resources:

BRAC Blog, “MF Sector Operates Efficiently But Needs Product Diversity, States Bangladesh Microfinance Review August 2011,” http://blog.brac.net/2011/08/mf-sector-operates-efficiently-but.html

The Financial Express, “Three microlenders control two-thirds of the MF industry,” http://www.thefinancialexpress-bd.com/more.php?news_id=147663&date=2011-08-26

MicroCapital.org story, August 3, 2011, “MICROCAPITAL BRIEF: Economics Professor Abdul Bayes Argues Microfinance Improves Rural Markets in Bangladesh,” https://www.microcapital.org/microcapital-brief-economics-professor-abdul-bayes-argues-microfinance-improves-rural-markets-in-bangladesh/

MicroCapital.org story, April 19, 2011, “MICROCAPITAL BRIEF: Moody’s Rating for Bangladesh Cites Microfinance Sector as Critical Player in Socioeconomic Development,” https://www.microcapital.org/microcapital-brief-moody%E2%80%99s-rating-for-bangladesh-cites-microfinance-sector-as-critical-player-in-socioeconomic-development/

MicroCapital Universe profile, BRAC (Bangladesh Rehabilitation Assistance Committee), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=BRAC

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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