Chapter One

Introduction
1
Morning Star
Introduction
The Morning Star Welfare Centre is a voluntary membership organization. It was established in
19 and was named !"amily to "amily #rogram of St. $in%ent &' #aul's So%iety.' (t that time)
World $ision *angladesh had provided finan%ial fa%ilities to %arry out their a%tivities su%h as
edu%ation) health) mi%ro %redit and s+ill development. Till ,---) all of the a%tivities of this
organization were e.e%uted with the finan%ial help of World $ision *angladesh. *ut now Morning
Star Co-operative Union is a self/dependent organization and doing their a%tivities without the
help of World $ision *angladesh.
History
This organization was registered under $oluntary So%ial Welfare (gen%y (%t.1901.in the year 1911
under registration number dha/-,1,1.The ob2e%tive of this organization is to provide mi%ro %redit
loan among the poor disadvantage people to remove poverty through establishing Mi%ro Credit
#rogram. They mainly fo%us on poor women and %hildren to give them finan%ial support and ma+e
them self/reliant. It also provide edu%ational fa%ilities at primary level to the poor %hildren. (t
present this organization has 0339 members under mi%ro %redit program and total %apital is
13-------.Total manpower is 3- in%luding 14 "ield Supervisors. 5a%h "ield Supervisors is ta+ing
%are at least 6-- members 7women8.
The head offi%e of Morning Star is situated at Moghbazar. 9ere the main a%tivities are performed. It
has also two bran%hes) Turag bran%h and *oard *azar bran%h. These bran%hes are %ontrolled from
the head offi%e. #oor group of women have been sele%ted from Moghbazar) #earabugh) :oyatola )
(am/bagan) #agla Mazar) Chairman ;oli) Modhubugh ) Mirbugh) *egun *ari) Malibugh) &ilu
<oad) Sheddeshori) *adda ) <ampura of &ha+a and &howr ) =amarpara ) <aza *ari) <anavhola)
:oyan%hala and :oyanogor of Turag >Thana and =hail+ur) &hirashrom) *ahar Mar+et ) Targas
)Moiran and *oshura of *oard *azar ?oydebpur Thana in order to ma+e them self/ reliant.
This organization also applied for registration under mi%ro %redit regulatory (%t/,--0.*ut for some
prin%iple reasons it was not possible for Morning Star to get the membership under *angladesh
*an+. So they de%ided to get the membership from CC@A* as a %o/operative %redit union and
applied for the registration. Bn "ebruary ,-13 they gained the membership under CC@A*. :ow
,
!The Morning Star Welfare Centre' has be%ome !The Morning Star Co/operative Credit @nion Atd'.
(ll the a%tivities are done a%%ording to the rules of CC@A*. :ow the members of this organization
are treated as !Shareholders' and their savings as !Shares'. So it's a big opportunity for The Morning
Star to e.pand their a%tivities widely and provide more servi%es to the poor people to remove
poverty from our %ountry.
Definition Microcredit
Mi%ro%redit is the e.tension of very small loans 7mi%roloans8 to the unemployed) to poor
entrepreneurs and to others living in poverty that is not %onsidered ban+able. These individuals la%+
%ollateral) steady employment and a verifiable %redit history and therefore %annot meet even the
most minimal Cualifi%ations to gain a%%ess to traditional %redit. Mi%ro%redit is a part of
mi%rofinan%e) whi%h is the provision of a wider range of finan%ial servi%es to the very poor.
Mi%ro%redit is a %riti%al anti/poverty tool // a wise investment in human %apital. When the poorest)
espe%ially women) re%eive the %redit) they be%ome e%onomi% a%tors with power. #ower to improve
not only their own lives but) in a widening %ir%le of impa%t) the lives of their families) their
%ommunities) and their nations.D
/=ofi (nnan) Se%retary ;eneral) @:
Social objectives of micro credit
In development rhetori%) mi%ro/%redit is the e.tension of small loans to women for in%ome/
generating pro2e%ts and has been eulogized as a magi% bullet of poverty alleviation. It has a uniCue
set of social objectives that it aims to implement through mi%ro/%redit poli%ies.
It promotes %redit as a human right.
It is aimed towards the poor) parti%ularly poor women.
It is based on 'trust') not on legal pro%edures and system.
It is offered to %reate self/employment) in%ome/generating a%tivities and housing for the
poor) as opposed to %onsumption.
It was initiated as a %hallenge to %onventional ban+ing whi%h re2e%ted the poor by
%lassifying them as 'not %reditworthy'.
3
It provides servi%e on the door/step of the poor based on the prin%iple that the people should
not go to the ban+) the ban+ should go to the people.
It gives high priority to building so%ial %apital.
OB!C"I#!S
#ision$
To be%ome a dynami% welfare organization that will fa%ilitate the possible empowerment and
development of the poor families of *angladesh at Morning Star's possible rea%h.
Mission$
To serve the poor families of *angladesh by providing the following servi%es in a sustainable
manner as far as possibleE
#roviding finan%ial servi%es to the people who are poor and disadvantaged
<emoving illitera%y by providing primary edu%ation.
#roviding general health %are to those who are deprived of basi% medi%al fa%ilities.
Ma+ing s+illed people by providing spe%ial training to enhan%e employment
opportunity.
%oals$
*e%oming a world %lass organization is one of the ma2or goals of The Morning Star. It wants to
in%rease its range of a%tivities to serve the poor people as mu%h as possible to ma+e them solvent.
(lso to ensure primary edu%ation to the deprived %hildren. ;aining trust of the members is another
goal of this organization.
#alues$
6
Morning Star "amily Welfare Centre has some values a%%ording to whi%h they perform their
a%tivities.
The employees of the organization are very a%tive and helpful to their members. They are
always ready to provide ne%essary information and good advi%e to their members.
There e.ists a good and mutual wor+ing atmosphere in the offi%e. Wor+ers do their wor+ as
a team to serve their members as mu%h as possible.
:ot only the members but also the wor+ers of the organization are benefited from it by
getting various fa%ilities.
This organization always tries to get new ideas through investigation and adopt new
te%hnology to serve their members better fa%ilities at reasonable rate.
It wants to earn respe%t) trust and goodwill from its lo%al people through performing their
a%tivities effi%iently and honestly.
4
Chapter Two
Morning Star Organization profile
0

THE MORNING STAR CO-OPERATIVE CREDIT UNION LTD.

ORGANOGRAM
Grade
BOARD OF DIRECTORS
ADMINISTRATION
(Secretary)
ACCOUNTS & FINANCE
(Treasurer)
SUB
COMMITEES
CHIEF EXECUTIVE OFFICER
(A!"#ted)
$r!%ra& O'cer
Cred"t
Ad&#( Su!rt
Ser)"ce
(U#der Ma#a%er)
$r!%ra& O'cer
*ed%er
ACCOUNTS
(Acc!u#ts O'cer)
+r( Acc!u#ts O'cer
Acc!u#ts,O'ce
Ass"sta#t
MICRO-CREDIT
(Sr( F"e.d
Suer)"s!r)
HEA*TH
(Sr(
Suer)"s!r)
$RE-SCHOO*
EDUCATION
(Sr(
Suer)"s!r)
SE/ING
TRANING
(Teac0er)
S1I** DEV(
TRANING
+r( F"e.d
Suer)"s
!r
+r( F"e.d
Suer)"s
!r
+r( F"e.d
Suer)"s
!r
*OGISTIC SERVICEES
($e!#2 Dar3a#2 Aya2
C.ea#er)
E4ecut")e
1
2
3
4
FINANCE
(F"#a#ce
O'cer)
$r!%ra&
Suer)"s!r
5
6
7
8
&roducts'Services$
The servi%es or produ%ts offered by this organization areE
1. Mandatory Savings
,. $oluntary Savings
3. Children Savings
6. Aoan
4. Mi%ro Insuran%e
() Mandatory Savings$
In Mandatory Savings) members %an deposit any amount of money depending on their willingness
and ability starting from 1--T+. They get 0F interest on their savings in every end of the year. They
%an also ta+e loan from these Savings. "or this they have to pay loan installment with ,6F interest
7de%line method8 along with the mandatory deposit in every month. The members are given 1-F
rebut from their loan interest. *ut if any one is unable to pay this amount then he or she is +nown as
!default member' and will fail to re%eive the rebate.
*ules of Mandatory Savings$
To get membership) people have to %olle%t membership form from the offi%e and submit
it with ne%essary reCuirements i.e.
3 %opy of passport size %olor photographs of the person who wants to be the member
, %opy of passport size photographs of the person's guardian. This guardian must be an
earnable person. 9usband) father or brother of the member %an be the guardian.
#hoto%opy of the members :ational I& or :ame registration %opy.
Members have to deposit at least 1--T+ and highest amount depending on their
willingness and ability
1
Members have to deposit money through a re%eipt boo+ and also maintain a pass boo+
provided by the offi%e.
Members get 0F yearly interest on their Savings
They %an ta+e loan from this Savings
+) #oluntary Savings$
In $oluntary Savings members have to deposit money starting from 1--T+ up to their %apabilities.
They get 0F interest on their Savings. Members %an withdraw money from their a%%ount whenever
they need but at least ,--T+ has to be remained for +eeping the a%%ount running. *ut members are
unable to get any loan fa%ilities.
,) C-ildren Savings .*umj-um/$
The Morning Star Co/operative Credit @nion Atd. also provides Children Savings whi%h is also
+nown as !<um2hum'. (im of %ondu%ting this a%%ount is to %reate saving habit in %hildren's mind.
Children aged from 4 to 1 %an open this a%%ount. This a%%ount has to be %ondu%ted by parents.
Members %an withdraw any amount of money but remaining balan%e must be at least ,--T+.
6. 0oan$
The Morning Star Co/operative Credit @nion Atd. also provides Aoan to the poor women. The
pro%edure of getting loan) at first she have to be member of this organization and deposited %ertain
amount of money suppose a member deposited 4---t+ she get 14---t+ as per loan but a member
does not get more than 3-----t+.
1) Micro Insurance$
The Morning Star Co/operative Credit @nion Atd. newly start the mi%ro insuran%e program for the
members every month this organization ta+es 1--t+ as per insuran%e installment from the members.


9
Chapter Three
Bac2ground of Microcredit
1-
() Operation of micro credit system in Banglades-
*angladesh is a developing %ountry having a very poor finan%ial mar+et. In su%h type of mar+et the
introdu%tion of the mi%ro %redit was a finan%ial innovation. In *angladesh mi%ro %redit was
introdu%ed late seventies. Mi%ro %redit is the provision of small loans for the in%ome generating self
employment a%tivities. It %an be define asD Mi%ro %redit) or mi%rofinan%e) is ban+ing the
unban+ables) bringing %redit) savings and other essential finan%ial servi%es within the rea%h of.
millions of people who are too poor to be served by regular ban+s) in most %ases be%ause they are
unable to offer suffi%ient %ollateral. In general) ban+s are for people with money) not for people
without.G 7;ert van Maanen) Mi%ro %reditE Sound *usiness or &evelopment Instrument) Bi+o%redit )
,--68 ;rameen ban+ was the first organization whi%h introdu%ed su%h type of loan. The main
ob2e%tive of the mi%ro %redit is to redu%e the poverty and ma+e stable the in%ome of the poor people.
Sin%e most of the people in *angladesh live below the poverty line) the mi%ro %redit plays an
important role. The initiative ta+en by the ;rameen ban+ was supported by all the people and
organizations in *angladesh. Mi%ro %redit programmes target those without landless and the poor
ladies. 9- per%ent of the mi%ro %redit re%ipients are women. The loans provided by the organizations
are %ollateral free and usually have a maturity of 4- wee+s with wee+ly repayment. There is no
spe%ial se%tor for the mi%ro %redit. It %an be given as the agri%ulture %redit or rural %redit or
%ooperative %redit or %onsumer %redit from the saving and loan asso%iations or from the %redit
unions or from the money lenders. (fter the great su%%ess of the ;rameen ban+ in the field of mi%ro
%redit different +ind of organizations %ome forward to provide mi%ro %redit to the poor people of
*angladesh. The mentionable organizations are *angladesh rural advan%ement %ommittee 7*<(C8)
(sso%iation for so%ial advan%ement 7(S(8) #<BSI=( et%. These organizations introdu%ed mi%ro
%redit for eradi%ate poverty from the so%iety) empower the women ) give free edu%ation to the
%hildren) family planning) women health %are. These organizations support the governmentHs
poverty redu%tion efforts through the above mentioned poli%y. In every %ase women have been able
to gain some a%%ess to land) they have also ta+en loans for firming a%tivities) in%luding beef
fattening) vegetable growing) fish %ulturing and betel leaf %ultivation.
11
+) History of Microcredit$
The history of mi%ro finan%ing %an be tra%ed ba%+ as long to the middle of the 11--s when the
theorist Aysander Spooner was writing over the benefits from small %redits to entrepreneurs and
farmers as a way getting the people out of poverty. *ut it was at the end of World War II with the
Marshall plan the %on%ept had a big impa%t.
The today use of the e.pression mi%ro finan%ing has its roots in the 19-s when organizations) su%h
as ;rameen *an+ of *angladesh with the microfinance pioneer Mo-ammad 3unus4 where
starting and shaping the modern industry of mi%ro finan%ing. 5not-er pioneer in this se%tor is
52-tar Hameed 6-an. (t that time a new wave of mi%rofinan%e initiatives introdu%ed many new
innovations into the se%tor. Many pioneering enterprises began e.perimenting with loaning to the
underserved people. The main reason why mi%rofinan%e is dated to the 19-s is that the programs
%ould show that people %an be relied on to repay their loans and that itIs possible to provide
finan%ial servi%es to poor people through mar+et based enterprises without subsidy. S-ore ban2
7as t-e first microfinance and community development ban2 founded (89: in C-icago)
(n e%onomi%al historian at Jale named Timothy ;uinnane has been doing some resear%h on
"riedri%h Wilhelm <aiffeisenIs village ban+ movement in ;ermany whi%h started in 1106 and by
the year 19-1 the ban+ had rea%hed ,million rural farmers. Timothy ;uinnane means that already
then it was proved that mi%ro%redit %ould pass the two tests %on%erning people's payba%+ moral and
the possibility to provide the finan%ial servi%e to poor people.
(nother organization) the %aisse populaire movement grounded by (lphone and &orimKne
&es2ardins in Luebe%) was also %on%erned about the poverty) and passed those two tests. *etween
19-- to 19-0 when they founded the first %aisse) they passed a law governing them in the Luebe%
assemblyM they ris+ed their private assets and must have been very sure about the idea about
mi%ro%redit.
"oday t-e ;orld Ban2 estimates t-at more t-an (< million people are served by some 9===
microfinance institutions all over t-e 7orld) C;(# e.perts mean that about 4-- million families
benefits from these small loans ma+ing new business possible. In a gathering at a Microcredit
Summit in ;as-ington DC t-e goal 7as reac-ing (== million of t-e 7orld>s poorest people by
credits from t-e 7orld leaders and major financial institutions)
1,
,) Definition Microcredit
Mi%ro%redit is the e.tension of very small loans 7mi%roloans8 to the unemployed) to poor
entrepreneurs and to others living in poverty that is not %onsidered ban+able. These individuals la%+
%ollateral) steady employment and a verifiable %redit history and therefore %annot meet even the
most minimal Cualifi%ations to gain a%%ess to traditional %redit. Mi%ro%redit is a part of
mi%rofinan%e) whi%h is the provision of a wider range of finan%ial servi%es to the very poor.
Mi%ro%redit is a %riti%al anti/poverty tool // a wise investment in human %apital. When the poorest)
espe%ially women) re%eive the %redit) they be%ome e%onomi% a%tors with power. #ower to improve
not only their own lives but) in a widening %ir%le of impa%t) the lives of their families) their
%ommunities) and their nations.D
/=ofi (nnan) Se%retary ;eneral) @:
:) Classification of Microcredit
Instead of 2ust saying Nmi%ro%reditD we should spe%ify whi%h %ategory of mi%ro%redit. *road
%lassifi%ation of mi%ro%reditE
18 Traditional informal mi%ro%redit 7su%h as) moneylender's %redit) pawn shops) loans from friends
and relatives) %onsumer %redit in informal mar+et) et%.8
,8 Mi%ro%redit based on traditional informal groups 7su%h as) tontin) su su) <BSC() et%.8
38 (%tivity/based mi%ro%redit through %onventional or spe%ialized ban+s 7su%h as) agri%ultural
%redit) livesto%+ %redit) fisheries %redit) handloom %redit) et%.8
68 <ural %redit through spe%ialized ban+s.
48 Cooperative mi%ro%redit 7%ooperative %redit) %redit union) savings and loan asso%iations) savings
ban+s) et%.8
08 Consumer mi%ro%redit.
8 *an+/:;B partnership based mi%ro%redit.
18 ;rameen type mi%ro%redit or ;rameen%redit.
98 Bther types of :;B mi%ro%redit.
13
1-8 Bther types of non/:;B non/%ollateralized mi%ro%redit.
1) Macro level economy$
1)( Definition$
Ma%roe%onomists study aggregated indi%ators su%h as ;&#) unemployment rates) and pri%e indi%es
to understand how the whole e%onomy fun%tions. Ma%roe%onomists develop models that e.plain the
relationship between su%h fa%tors as national in%ome) output) %onsumption) unemployment)
inflation) savings) investment) international trade and international finan%e. In %ontrast)
mi%roe%onomi%s is primarily fo%used on the a%tions of individual agents) su%h as firms and
%onsumers) and how their behavior determines pri%es and Cuantities in spe%ifi% mar+ets.
While ma%roe%onomi%s is a broad field of study) there are two areas of resear%h that are emblemati%
of the dis%iplineE the attempt to understand the %auses and %onseCuen%es of short/run flu%tuations in
national in%ome 7the business %y%le8) and the attempt to understand the determinants of long/run
e%onomi% growth 7in%reases in national in%ome8
1)+ "-e Impact of Microfinance
In the 19-s) three out of four *angladeshis lived in poverty and the %ountry was %onsidered a test
%ase for development. <apid population growth) freCuent natural disasters) and low e%onomi%
growth throughout the 191-s suggested that a large number of households would remain trapped in
%hroni% poverty.
&efying this outloo+) *angladesh began e.perien%ing more sustained e%onomi% growth sin%e the
199-s) whi%h was a%%ompanied by impressive poverty redu%tion. "or e.ample) in 1991/9,) about
0-F of the population was below the poverty line and around 4-F was below the e.treme poverty
line. *y ,--4) those figures had gone down to 6-F and ,4F respe%tively.
The *angladesh e%onomy began e.perien%ing stru%tural %hanges in the 199-s following trade
liberalization and domesti% mar+et reforms. In urban areas) private se%tor growth and employment
were spurred by rapid growth in garments e.ports while rural areas benefited from the deregulation
of agri%ulture mar+ets) boosting agri%ultural produ%tion. (t the same time) relatively higher paying
16
rural non/farm opportunities in%reased and the labor for%e slowly began to shift away from
agri%ulture.
(ll in all de%lining population growth rates) improved human %apital) improved infrastru%ture)
mainly in the form of more e.tensive road %ommuni%ations networ+s) and in%reased foreign
remittan%e have been put forth as fa%tors e.plaining *angladeshOs enhan%ed growth and de%lining
poverty
Contribution of Micro ?inance$
Two well +nown studies assess short and medium/term mi%rofinan%e impa%ts from the borrowersO
point of view) using repeated household surveys %arried out in rural *angladesh. @sing nationally
representative data) their findings suggest that poverty reduction among t-e borro7ers due to
microfinance is ()< percentage points per year) Moreover) mi%rofinan%e programmes have
spillover effe%ts on the non-borro7ers -- t-eir poverty level goes do7n by =), percentage point
a year)
5ven without the in%ome gains) the poor may still benefit from mi%ro%redit servi%es if it helps them
withstand in%ome and non/in%ome sho%+s su%h as an e%onomi% disaster resulting from the sudden
death of a produ%tive family member) the loss of an e%onomi% asset) or natural disasters. Without
some form of insuran%e 7either publi% or private8) the poor may not be able to smooth %onsumption
during those disasters) whi%h may lead to sharp %ut/ba%+s in essential food and non/food
e.penditures.
Several studies %onfirm that mi%ro/%redit programmes help households partially insure against
sho%+s so that they effe%tively play an important Gsafety netG role. Bne %arefully designed study
finds that mi%ro%redit borrowers are about 1=@ less prone to consumption fluctuation t-an t-eir
counterpart non-member poor -ouse-olds in Banglades-)
Clearly) further innovations are reCuired to strengthen this %ru%ial ris+/redu%tion role) and in general
to offer fle.ible finan%ial servi%es %atering to different types of poor households) in parti%ular for the
e.treme/poor. Bne e.ample is a micro-finance programme 2no7n as &*IM!4 implemented by
&6S?4 7-ic- offers a fleAible repayment sc-edule and consumption smoot-ing4 as 7ell as
production loans) (s a result) a re%ent evaluation shows that &*IM! is more effective t-an
regular microfinance in reac-ing t-e ultra-poor4 as 7ell as t-e seasonal-poor)
14
M"Is in *angladesh vary signifi%antly in terms of their non%redit servi%es though they typi%ally
in%lude training) related business development servi%es and so%ial messages on edu%ation) health
and %ivi% rights. "-ese noncredit interventions raise self-employment profits in rural
Banglades- by (+1@ 7-ile t-e combined impact of credit and noncredit interventions on self-
employment profits is (91@)
The impa%t evaluation literature on mi%ro/finan%e in *angladesh also %ontains some %autionary
notes. "or e.ample) it is %lear that not all borrowers benefit eCually as it depends on their local
economic environment) their entrepreneurial ability and t-e eAtent t-eir income sources is
diversified. ( few studies also show that mi%ro%redit does little to %hange gender ineCuities by
limiting female %ontrol over loans.
9owever) on balan%e there is more eviden%e suggesting that mi%ro%redit does influen%e gender
relations positively. (%%ess to mi%ro%redit leads to women ta+ing a greater role in household
de%ision ma+ing) having a greater a%%ess to finan%ial) e%onomi% and so%ial resour%es and having
greater mobility in *angladesh. .
It is %lear that mi%rofinan%e %an prote%t households from sho%+s) %ontribute to %hanging so%ietal
norms about the role of women in so%iety and lead to some households moving out of poverty.
Bverall) it has played its part in the impressive progress *angladesh has made in poverty redu%tion
over the past two de%ades. Clearly) not everyone utilizes loans produ%tively) and there is a ris+ of
falling into over/indebtedness. So) the role of mi%rofinan%e should be strengthened through further
innovations whi%h ta+e into a%%ount these pitfalls.
"inally) mi%rofinan%e is not a pana%ea and will %learly not eliminate all poverty in any %ountry.
Thus) the potential of mi%rofinan%e %an be best e.ploited by re%ognizing the lessons from %areful
impa%t evaluation studies) strengthening programmes on the basis of this resear%h and field
e.perien%e) and by in%orporating mi%ro/finan%e programmes into *angladeshOs overall poverty/
redu%tion strategy.
"-e Components of t-e Macro economy$ "-e "-ree Mar2et 5renas
This %omple. intera%tion o%%urs within three basi% types of mar+etsE goods and servi%es) the labor
mar+et) and the finan%ial mar+et. In essen%e) the %ir%ular flow diagram tra%+s the flows of these
three %omponents of the e%onomy.
10
%oods-and-Services Mar2et
"irms) both foreign and domesti%) produ%e goods and servi%es that are %onsumed by households and
the government in return for revenue.
0abor Mar2et
9ouseholds supply labor to firms and the government in return for wages.
Money Mar2et
"inan%ial assets flow between firms) households) and foreigners. When households or foreigners
pur%hase government bonds) su%h as Treasury bonds) notes) and bills) they re%eive interest
payments. When households or foreigners pur%hase %orporate bonds and shares of sto%+) they
re%eive interest and dividend payments. When households or foreigners pur%hase real estate) they
re%eive rents.
5%onomi% a%tivity in a mar+et e%onomy %onsists of the flow of money for produ%ts) labor) and
finan%ial assets.
<) "-e organiBations 7-ic- provide micro credit$
In *angladesh there are several types of organizations provide mi%ro %redit. (ll of the organizations
are nongovernmental organizations 7:;B8. These organizations play an important role for the
e%onomi% development of *angladesh. ;rameen ban+) *angladesh rural advan%ement %ommittee
7*<(C8) (sso%iation for so%ial advan%ement 7(S(8) #<BSI=( are the important mi%ro %redit
providing organizations in *angladesh.
() %rameen ban2$
;rameen ban+ is one of the largest nongovernmental organizations in *angladesh. The founder of
this ban+ was the famous e%onomist &r. Mohammad Junus. ;rameen ban+ was first introdu%ed the
mi%ro %redit to the rural people. This ban+ always prefers women rather than men to provide mi%ro
1
%redit. *e%ause it is found that women are more %ons%ious then men about the savings %hildren's
diet) family health and nutrition. 9owever the most important ob2e%tive of the ban+ is to provide
loan to the poorest first. Women represent the group whi%h is the poorest of the poor. ;rameen ban+
has some so%ial %ommitment. The ban+ en%ourages all of its borrowers to save 4 per%ent of the loan
amount plus one ta+a per wee+. (s soon as a borrower a%%umulates suffi%ient saving) she buys one
7and only one8 share in the *an+) whi%h %osts P3.Bnly the borrowers of the ban+ %an buy the share.
Bne of the important strategies of the ban+ is that after ta+ing the interest from the borrowers it
ma+es a modest profit and then it gives the profit to the share holder as dividend. The %urrent rate of
interest on wor+ing %apita is ,- per%ent and on home loan is 1 per%ent. Aast year the ban+ has made
a profit of @SP 01-)---. In a developing %ountry su%h type of organization plays an important role.
(< Decisions of %rameen Ban2$
1. We shall follow and advan%e the four prin%iples of ;rameen *an+E &is%ipline) @nity)
Courage and 9ard wor+ > in all wal+s of our lives.
,. #rosperity we shall bring to our families.
3. We shall not live in dilapidated houses. We shall repair our houses and wor+ towards
%onstru%ting new houses at the earliest.
6. We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus.
4. &uring the plantation seasons) we shall plant as many seedlings as possible.
0. We shall plan to +eep our families small. We shall minimize our e.penditures. We shall loo+
after our health.
. We shall edu%ate our %hildren and ensure that they %an earn to pay for their edu%ation.
1. We shall always +eep our %hildren and the environment %lean.
9. We shall build and use pit/latrines.
1-. We shall drin+ water from tube wells. If it is not available) we shall boil water or use alum.
11. We shall not ta+e any dowry at our sonsO weddingsM neither shall we give any dowry at our
daughterOs wedding. We shall +eep our %entre free from the %urse of dowry. We shall not
pra%ti%e %hild marriage.
11
1,. We shall not infli%t any in2usti%e on anyoneM neither shall we allow anyone to do so.
13. We shall %olle%tively underta+e bigger investments for higher in%omes.
16. We shall always be ready to help ea%h other. If anyone is in diffi%ulty) we shall all help him
or her.
14. If we %ome to +now of any brea%h of dis%ipline in any %entre) we shall all go there and help
restore dis%ipline.
10. We shall ta+e part in all so%ial a%tivities %olle%tively.
+) Banglades- rural advancement committee .B*5C/$
*<(C was introdu%ed after the liberation war in *angladesh. It was started its wor+ to provide
relief to the war effe%ted people. (fter some years this organization has ta+en some important
%ommitment. It provided support to the people who were deprived from the so%ial opportunity su%h
as rural women fisher men and the landless. *<(COs initial e.perien%e with %redit dates ba%+ to the
early 19-s. In 196) *<(C provided %redit to the villagers in its Sulla #ro2e%t in Sylhet distri%t
through the Sulla Thana Central Co/operative (sso%iation. In the following year) %redit was
advan%ed without interest to several landless groupsM in 190) *<(C started providing %redit to
landless through its Mani+gan2 pro2e%t. *<(C had ta+en some of the rural &evelopment
programme 7<&#8 whi%h was started in 199. The <ural &evelopment #rogramme 7<&#8 is one of
the ma2or programmes of *<(C. Started in 199) <&# had grown by &e%ember 1919 into a large
programme providing %redit to target groups from 11 bran%hes in 64 sub/distri%ts of ,, distri%ts.
The ma2or ob2e%tive of the <&# was to %hange the so%io e%onomi% and politi%al %ir%umstan%es
through the mi%ro %redit. *<(C has introdu%ed the mi%ro %redit to the borrowers to use the loan
a%%ording to the purpose for whi%h it was given. This organization does not provide any loan for the
%onsumption purpose. (ll the loans are given on the basis of the re%ommendation from the village
organizations. The amount of the loan varies depending on the nature of the s%heme. The smallest
was for T+. 4-- and the largest for T+. 6 million. Aarge loans are given for %olle%tive enterprises)
su%h as deep tube wells) power tillers and so on) organized by several village organizations) whereas
individual loans vary from T+. 4-- to T+. 1)---.
There are three lengths of duration for whi%h %redit is advan%ed to group members >
19
short/term for a period of 1, months or less
medium/term %redit for a period greater than 1 year but less than 3 years
Aong/term %redit for 3 years or more.
In every %ase *<(C has %harged 10 per%ent interest for all loans. The main target group of
the *<(C is those people who want to be self dependent through their manual labour.
,) 5ssociation for t-e social advancement .5S5/$
(S( is one of the biggest international mi%ro finan%e organizations in the world. It started wor+ in
191 and introdu%ed its mi%ro finan%e programme in 1991. This organization has a spe%ial feature
that it is an innovative firm. So the feature of this organization is not same to the others. (S( uses a
mi%ro finan%e model !%ost effe%tive sustainable mi%rofinan%e model.' This model is followed by the
many %ountries li+e (sia) (fri%a) South (meri%a and the Middle 5ast. (pplying this model all the
%ountries is trying to eradi%ate the %urse of the poverty. (S( wor+s for those people who are poor
but enable to redu%e their poverty. In the ?une ,--4 (S( has laun%hed %redit programme whi%h
rea%hed 4.6 million people. (S( has introdu%ed voluntary savings along with mandatory wee+ly
savings of ta+a1- per wee+. (fter introdu%ing the In%ome generation a%tivities the poor women get
loans from (S(. The poor women in the rural area are ta+en the main benefit of the %redit
programme. Initially it provides 6---t+. to 0--- t+. Aoans. The duration is one year and 14F
servi%e %harge should be paid. (S( mobilized 1.1 million ta+a from its member in ,--4. In the
past year saving returned and withdrawn was t+. 1.961 million. In the ,--6 the borrower of the (S(
was ,. million but at the end of the year it in%reased by 3.44 million. The total amount of the
disbursed loan was 10.304 million in ,--4 and the loan outstanding in%reased to 3.1 million t+.
(S( also provides the small business loan. The minimum amount of the small loan is ,---- T=.
,-
OrganiBation Cumber
of
members
Cumber
of
borro7ers
Savings
Cumulative
disbursement
Out
standing
loan
amount
%rameen
Ban2
3.0 3.4 196.1 33,.4 ,94
B*5C 6.4 3.1 116.6 ,-16., ,19.9
5S5 ,. 6 6.3 19-- ,36
&rosi2a ,.1 1.4 ,6.3 606.6 01.3
The total amount of loans disbursed during ?anuary to ?une ,--4 was T+ 1),3, million and loans
outstanding at the end of ?une ,--4 were T+ 1)19 million.
:) &ros-i2a
#roshi+a was established in 190. Whi%h is also one of the important mi%ro %redit provider
organization in *angladesh. It provides the te%hni%al and the mar+eting assistan%e where needed. (t
the end of ,--3 #rishi+a had over 1., million a%tive borrowers) of whom over -.1 million were poor
women 7Mi%ro %redit Summit ,--68
Sources of Micro-Credit and 5mounts Borro7ed
Bver 99F of the borrowers interviewed are females and less than one per %ent males as per random
sele%tion of the respondents e.plained in %hapter 1. Most of the borrowers are in the age group of
,1/4- yearsM and most of the borrowers 716F8 are primarily housewives. Bnly 4F have business as
the main profession. The ma2ority 704F8 of the respondents are also illiterate) while 1F have
studied up to Class/$ and another ,1F between Class/$ and Class/$III. Three of the respondents
are graduates. The overwhelming ma2ority 79,F8 are married.
Main sour%es of mi%ro/%redit of the respondentsE
Distribution of respondents by main source of micro-credit
Sour%es :o. of <esponses F
;rameen *an+ 1),-- 33.9
(S( 141 ,6.1
*<(C 63 ,1.-
*uro Tangail 133 3.1
<&<S 10 ,.6
#alli &aridra *imon%hon #ratisthan 00 1.9
TMSS 46 1.4
#roshi+a 69 1.6
*<&* 66 1.,
#opi 61 1.,
So%iety for so%ial servi%e 3 1.-
5C *angladesh 19 -.4
Bthers 73 sour%es8 ,16 0.1
Total 3)43 1--.-
,1
Cumber of MCIs used by t-e respondents
:o. of sour%es "reCuen%y F
Bne 1)-1 01.1
Two 0-4 ,6.,
Three 101 0.6
ThreeQ , 1.1
Total ,)696 1--.-
The ,)4-1 respondents re%eived a total of 3)43 mi%ro/%redits in the loan period) as appropriate for
parti%ular respondents) during whi%h the survey was %ondu%ted. It is seen that ,6F too+ loans from
two sour%es) 0F from three sour%es) and 1F from more than three sour%es. (bout 01F used only
one sour%e.
The three leading sour%es of mi%ro/%redit from whi%h the respondents have mainly borrowed are
;rameen *an+ 736F8) (S( 7,6F8 and *<(C 7,1F8. (ll other sour%es a%%ount for about ,1F of
the loans ta+en.
*ate of Interest and Cost of Borro7ing
The rate of interest %harged by different MCIs to the borrowers at the time of san%tioning loans and
for fi.ating of installments is shown in Table 6.1. It will be seen from the Table that the nominal rate
of interest %harged by the leading MCIs vary from 1-F to 14F) while there are other MCIs whi%h
%harge interest rates ranging from 1-F to 11F.
Base rates of interest c-arged by different MCIs
:ame of MCI <ate of interest %harged 7F8
;rameen *an+ 1-
*<(C 14
(S( 14
#<BS9I=( 16
<&<S 1,
#alli &aridra *imo%hon #ratisthan 14
Bthers 7generally8 1-/11
Interest rate based on average balan%e 7I<(*8 of loan and rate of effe%tive %ost of borrowing
7<5CC8 for four large MCIs
MCI I<(* 7F8 <5CC 7F8
;rameen *an+ ,0.0 3-.4
,,
*<(C 6-.1 66.1
(S( 6-.1 66.1
#<BS9I=( 31.0 6,.3
While I<(* and <5CC in the %ase of ;rameen *an+ are as high as ,F and 31F respe%tively)
these rates are mu%h higher at 39/61F and 6,/64F respe%tively in the %ase of *<(C) (S( and
#<BS9I=(.
Source of Inspiration for "a2ing Micro-Credit
"or almost two/thirds of the respondents 73F8) the sour%e of inspiration for ta+ing mi%ro/%redit has
been family members. In the %ase of about 10F) self/initiative has been the main reason) while
about 9F were persuaded by the MCIs 7Table ,.48
The most influential family member has usually been the husband in the %ase of female borrowers
usually for establishing a sour%e of in%ome but also at times for se%uring money to serve other
purposes su%h as edu%ational and marriage related e.penses of %hildren and paying up of
outstanding debts.
Table ,.4 Sour%e of inspiration for ta+ing mi%ro/%redit
Sour%e of inspiration "reCuen%y of responses
:o. F
Self 39, 14.
"amily 11,1 3.1
MCIs ,34 9.6
Bthers 60 1.1
Total ,)4-1 1--.-
UtiliBation of Micro-Credit
5%onomi% a%tivities underta+en by the borrowers using the money re%eived from MCIs are shown
in Table ,.6. There are some %ases of more than one a%tivity underta+en by the same borrower. It is
%lear from the Table that the largest number of a%tivities underta+en 73F8 relate to trading
in%luding in paddy) ri%e) stationery) gro%ery) fish) and other ordinary goods and servi%es 7in some
%ases with some pro%essing8. The ne.t two important %ategories are renting in of agri%ultural land
and agri%ulture related a%tivities 7ea%h about 13F8. The ne.t three a%tivities mentioned are pur%hase
,3
and pulling of ri%+shaw 79F8) using the %redit money to defray the %osts of edu%ation and marriage
of %hildren 71F8) and pur%hase and rearing of %ows 7F8. (nother noteworthy a%tivity is the
payment of previous loan 70.6F8.The other a%tivities in%lude poultry and goat rearing) preparation
and sale of puffed ri%e) fish %ulture) and similar other ordinary e%onomi% a%tivities. "urther) there
are few borrowers who in fa%t have lent the money borrowed from MCIs to others on interest or
used it to defray medi%al and other %osts.
Clearly) the respondents ta+ing mi%ro/%redit have generally remained tied to rudimentary e%onomi%
a%tivities) many of whi%h do not have mu%h prospe%t of e.panding into sustainable growth be%ause
of either mar+et saturation 7most of the produ%ts and servi%es are dire%ted to lo%al mar+ets8 andRor
limited s%ope of produ%tivity improvement.
!conomic activities underta2en by using micro-credit
(%tivityS "reCuen%y of responses
:o. F
#oultry ,4 -.9
;oat rearing ,3 -.1
Cow rearing ,31 1.
#uffed ri%e 14 -.4
(gro/support and agro/based a%tivities 361 1,.4
"ish %ulture 3 1.6
Trading 7in some %ases with some
pro%essing8SS
1)--1 30.9
<i%+shaw pulling ,61 1.1
#ay up previous loan 10 0.6
<ent in agri%ultural land 341 1,.9
Aend money on interest 19 -.
Meet medi%al e.penses ,1 1.-
Meet edu%ational and marriage e.penses ,14 .9
Bthers 16 -.4
Total ,)31 1--.-
D) Impact of microcredit in macro level economy$
i) !conomical Impact
:;Bs of *angladesh has been widely resear%hed and re%ognized for ma+ing a differen%e in the
lives of its members. Studies show that the borrowers of these :;Bs are steadily moving out of
,6
poverty. Bne su%h study shows that it is at the rate of 4F a year. (%%ording to another study based
on a household survey in an area where these :;Bs has been operating for more than a de%ade)
about 1=@ of t-e -ouse-olds -ave crossed t-e poverty line. (nother ,4F were about to %ross it
and the rest was struggling mainly be%ause of health reasons.
( study found that without any %apital base at the beginning) the borrowers started a%%umulating
%apital as they 2oined :;Bs whi%h has not been possible by others. The loan is reCuired to be paid
ba%+ in small installments as per agreement. The borrowers pay the installment from generated
in%ome) leaving the original %apital inta%t. Their %apital base usually in%reases in large amounts as
they go for subseCuent loans that enable them to go for medium and long/term investments. The
study also found that 31 per%ent of the borrowers reported themselves as unemployed before 2oining
:;B. :;Bs of *angladesh have %reated new employment for them and espe%ially for the female
members who were earning nothing before. The effe%t of the loans on redu%ing unemployment is
impressive. The borrowers were found less underemployed than before. More t-an 8( percent of
t-e borro7ers in t-e survey area reported t-at C%Os -ad made a positive contribution to
t-eir standard of living. The ban+ has been able to lift a signifi%ant proportion of its borrowers and
their household members out of poverty. ( World *an+ study found that profits from :;B/finan%ed
businesses were increasing borro7erEs consumption by (D@ per year4 and t-at t-e percentage
of borro7ers living in eAtreme poverty 7as reduced by 9=@ 7it-in :)+ years of joining)
(%%ording to a re%ent survey %ondu%ted by ;rameen *an+ the %umulative per%entage of borro7ers
7-o -ave crossed t-e poverty line until ,--, is over :<@)
:;Bs of *angladesh are %ontributing dire%tly and indire%tly to the gross domesti% produ%t of
*angladesh. &uring the period 1996/1990) its net contribution to %D& as a per%entage of total
;&# in %urrent pri%es has been more t-an one percent.
The borrowers have been found to improve their %onditions in terms of housing and %lothing too.
They %an afford more and warm %lothes during winter seasons. Till the end of (pril ,--3) t-ey
-ave built 1<<,,, -ouses 7it- -ousing loans from C%Os) ;omen are t-e o7ners of 81@ of
t-ese -ouses. They hold the title for the land of these houses. This was unthin+able for them before
they 2oined :;B.
ii) Social Impact
The poor have little a%%ess to edu%ation) health) sanitation and other so%ial servi%es. @nder these
%ir%umstan%es) :;Bs provided them a forum) a networ+ where they are organized into groups and
,4
federated into %enters. They be%ome de%ision ma+ers) leaders and a so%ial for%e. They be%ome
group and %enter leaders and also members of the *oard of &ire%tors of some :;B) whi%h they
own. In the *oard of &ire%tors of ;rameen there are nine borro7ers out of t7elve members in
total) The ;rameen borrowers go for implementation of so%ial development programs under the N10
&e%isionsD that they have ta+en. The ;rameen borrowers who be%ame village phone ladies by
leasing %ellular phones for providing village pay phone 7$##8 servi%es to the neighborhood do not
only earn more) but also en2oy a gra%ious so%ial status. These women have brought the world %loser
for themselves as well as for their %ommunities. ;rameen women have be%ome mobile. They are
e.posed to the outside world and are a%tive parti%ipants in so%ial networ+ing and %ommer%ialization
pro%ess by attending %enter meetings) wor+shops) intera%ting with national and international
dignitaries) produ%ing) selling and buying produ%ts. ;rameen borrowers be%ome more %ons%ious
about their family size and family welfare and are determined to improve their Cuality of life.
Studies show that infant mortality among %rameen families -as decreased by ,:@4 and the
adoption of family planning among them is double the national average for *angladesh. In terms of
edu%ation) ;rameen borrowers> families are also ahead of others. In ;rameen families) all s%hool/
age %hildren are going to s%hool. (fter the introdu%tion of the Hig-er !ducation 0oan .H!0/ there
are no %ases of %hildren being deprived a%%ess to higher edu%ation due to finan%ial %onstraints.
Whatever indi%ators su%h as respe%t from neighbors and spouses) self/esteem) self/%onfiden%e) self/
e.pression) ability to protest so%ial in2usti%e) %apa%ity to solve so%ial issues are applied to measure
%hanges in so%ial %onditions of poor women) ;rameen borrowers are found better off than others.
The pro%ess is %ontinuing and progress is visible. This has all been possible be%ause of their a%%ess
to %redit.
iii) Impact on &olitical &articipation$
#overty alleviation does not only mean meeting basi% food and non/food reCuirements but also
e.er%ising politi%al rights and en2oying politi%al freedom. "reedom of spee%h) %hoi%e) human rights)
%asting and see+ing votes for publi% offi%e and other posts are some of the indi%ators by whi%h it
may be measured whether the poor organized under :;Bs of *angladesh have a better
understanding of their politi%al rights and obligations. (lthough it is a modest beginning) it is
signifi%ant to note that :;B borrowers and their household members are ta+ing part in larger
numbers as voters and %andidates in lo%al and %entral government ele%tions. They are en%ouraged to
dis%uss their rights at their %enter meetings before ele%tions and to ta+e de%ision to vote for
%andidates who a%%ording to their 2udgment will advo%ate for and serve their %ause. Many :;B
,0
members %ontested and were ele%ted during the lo%al government ele%tions held in 199 and ,--3.
(%%ording to reports) in the +==, local government elections <918 C%O members contested for
t-e post of c-airman and members of 7-om :(98 candidates got elected as members. "-e
percentage of C%O members in t-e local %ovt) bodies is more t-an D@)
iv) Impact on %overnmental activity
:ow a day's ;overnment of *angladesh has also influen%ed by the su%%ess of mi%ro%redit
programme and wants to help this se%tor. With the su%%ess of the ;rameen *an+'s programme many
large :;Bs of *angladesh introdu%ed mi%ro%redit programme for their target groups. Smaller
:;Bs followed the same path. *ut the smaller :;B's la%+ed adeCuate finan%ial support for their
mi%ro%redit programme. 9owever) there were not many donors ready to %ome up with the funds for
mi%ro%redit programme for these small :;B's. (t the same time) for those whi%h re%eived some
support there was no guarantee about the %ontinuity of donor funds. 9owever) :;B's had gradually
a%Cuired some s+ill and organizational strength to organize lo%al poor people and to e.tend finan%ial
servi%es to them. In this %onte.t) %overnment of Banglades- set up t-e &alli 6arma Sa-aya2
?oundation .&6S?/ in may (88= as an apeA organiBation to provide loans to the :;B's whi%h is
turn would provide %ollateral free %redit to their poor members and to provide advisory servi%es and
training to :;B's for enhan%ing their institutional %apa%ity. &6S?4 set up as a Fcompany not for
profitE by t-e %overnment is uniGue in its c-aracter and operations)
v) Impact on Healt- Sector$
Mi%ro%redit programme has important %ontribution in raising health +nowledge among poor women
in rural *angladesh. Credit programme -elps t-em in many 7ays suc- as no7 t-ey 2no7 t-e
correct age of marriage4 uses sanitary latrine4 contraceptive use4 reduce fertility and
occupation of -usband -ad no association 7it- t-e prevalence of maternal 2no7ledge. The
+nowledge is mu%h greater among %redit forum parti%ipants than non/parti%ipants. !Aposure to t-e
media and t-e education of 7omen -ad also played a significant role in raising t-e level of
2no7ledge. Several resear%hes "indings refle%ted that the duration of credit programme
participation and eAposure to t-e media 7ere significantly more li2ely to raise t-e -ealt-
2no7ledge among 7omen when the influen%es of demographi% and so%io/e%onomi% fa%tors were
%ontrolled. In %on%lusion we %an say that the mi%ro/%redit programmer %an be an effe%tive tool in
promoting health among poor people in *angladesh.
,
vi) ;omen empo7erment
Most mi%ro%redit finan%ers lend only to or give priority to women) and women ma+e up over 1-
per%ent of the total borrowers in *angladesh. Aots of studies have shown that when the women have
de%ision/ma+ing power over household e.penditures) they spend more on edu%ation and health of
the %hildren. (s su%h) whole families) and so%iety at large) benefit.
Mi%ro%redit helps women to start businesses by granted small) %ollateral/free loans. It %an in%rease
women's empowerment. Mi%ro/%redit programs allow women to invest in in%ome/generating
pro2e%ts. Bnly the poorest women %an 2oin. These s%hemes are intended to help women and their
families wor+ their way out of poverty. &uring 1994) roughly 3 million women in *angladesh too+
small loans from su%h programs. Similar programs for e.tending %ollateral/free %redit are being
repli%ated around the world) in both developing and industrialized %ountries. To get a loan) women
2oin finan%ial groups that meet wee+ly. The groups guarantee the loans. The reCuired wee+ly
meetings provide opportunities for so%ializing and sharing information. Studies have shown that
su%h gatherings %an promote the spread of novel behaviors and attitudes) su%h as using modern
%ontra%eptives or wanting fewer %hildren. "urthermore) agen%ies administering the programs also
provide information on and a%%ess to modern %ontra%eptives or wanting fewer %hildren. "inally)
be%ause the programs improve the e%onomi% status of women within their families and %ir%ulate
%ash into village e%onomies) the programs might also lead to fundamental %hanges in the status of
women. Women who 2oined the groups were more li+ely than others to be edu%ated) married to
edu%ated men) and to have wor+ed for money in the past. They are very mu%h interested about their
%hildren's edu%ation and spe%ially edu%ation for their daughters. "orming groups for women to meet
regularly dis%uss new ideas) and share information may be a potent fa%tor in bringing about broad/
based so%ial %hange) espe%ially in a setting li+e *angladesh where women are otherwise isolated.
vii) Impact on t-e House-old
Mi%ro%redit has great impa%t on the house hold. (fter ta+ing loan from M"Is and use that money a
family can lives in a -ouse 7ort- at least "2) +14=== or a house with a tin roof) and ea%h member
of the family is able to sleep on bed instead of on the floor. "amily members can drin2 pure 7ater
of tube-7ells) boiled 7ater or water purified by using alum) arseni%/free) purifying tablets or
pit%her filters. (ll %hildren in the family over siA years of age are all going to sc-ool or finished
primary s%hool. "amily members have adeGuate clot-ing for everyday use) 7arm clot-ing for
7inter) su%h as shawls) sweaters) blan+ets) et%) and mosCuito/nets to prote%t themselves from
,1
mosCuitoes. "amily has sources of additional income) su%h as vegetable garden) fruit/bearing
trees) et%) so that they are able to fall ba%+ on these sour%es of in%ome when they need additional
money. The borrower maintains an average annual balan%e of "2) 14=== in -er savings accounts.
"amily e.perien%es no diffi%ulty in having three sCuare meals a day throughout the year) i.e. no
member of the family goes hungry any time of the year. "amily %an ta+e %are of the health. If any
member of the family falls ill) family %an afford to ta+e all ne%essary steps to see+ adeCuate
health%are.
S!0!C"!D SOCIO-!COCOMIC #5*I5B0!S
Cultivable 0and O7ners-ip
Table 3., shows the %ultivable land ownership pattern of the borrowers' households. The data show
that there has also been virtually no %hange in the pattern of %ultivable landownership of the mi%ro/
%redit re%eiving households. If landlessness is defined with referen%e to 4- de%imals) about the same
proportion of the mi%ro/%redit re%eiving households 70/F8 are landless both before and now. The
proportion) again about the same before and now) owning 4-/1-- de%imals is 13/16F) while 2ust
over 9F) both before and now) own above 1-- de%imals.
Cultivable land owned by the borrowers' households
(mount of
%ultivable land
owned
7in de%imal 8
(t present *efore enrollment
:o. of respondents F :o. of respondents F
@p to ,4 1)066 04. 1)04 0.-
,0/4- ,01 1-.6 ,4 1-.3
41/4 ,,3 1.9 ,-6 1.1
0/1-- 13 4.4 13- 4.,
1-1 and above ,30 9.6 ,34 9.6
Total ,)4-1 1--.- ,)4-1 1--.-
5ccess to Healt- Service
(%%ess of the borrowers' households to health servi%es
(%%ess to health %are (t present *efore enrollment
,9
:o. of
respondents
F :o. of
respondents
F
CannotR%ould not
afford to go to
do%torsM don'tRdid not
go to Cua%+s
1)-40
6,.,
1)4-6
0-.1
Treatment ta+en from
Cua%+s ,, ,1.1 19, 34.
Treatment ta+en from
Cualified do%tors 419 ,3.0 01 ,.
Treatment ta+en from
Cualified do%tors and
health %enters
1,,
6.9
3,
1.3
:o %omment 1, -.4 4 -.,
Total ,)4-1 1--.- ,)4-1 1--.-
The Table shows that there has been signifi%ant improvement in a%%ess to health servi%es of the
households sin%e enrollment. The proportion of the respondents who %ould not afford to go to
Cualified do%tors or went to Cua%+s for treatment has de%lined from 90F to 1F. (lso) the
proportion re%eiving treatment from Cualified do%tors and health %enters was about 6F before
enrollment) whi%h is now about ,9F. The reasons for the improvements in the a%%ess to health
servi%es sin%e enrollment as reported by 1 respondents are shown in Table
<easons for the improvement in a%%ess to health servi%es
<eason :o. of
respondents
F
Mainly influen%e of mi%ro/%redit ,66 31.0
Aargely influen%e of awareness raising
by health :;Bs and in%reased
availability of health fa%ilities 4, 01.6
Total 1 1--.-
Some 3,F of those who now have a%%ess to improved health servi%es have said that the
improvement has been possible mainly as a result of borrowing from MCIs. The other 01F have
indi%ated that the improvements have been more due to awareness rising by health :;Bs and
in%reased a%%ess to health servi%es provided by government health fa%ilities and :;Bs. *ut still
1F of all respondents either do not re%eive proper treatment or ta+e re%ourse to treatment by
3-
Cua%+s. This indeed is a %lear testimony to the persisting e.tremely poor availability of health
servi%es in the rural areas of *angladesh.
Sanitation
"rom Table 3.1 it will be seen that about ,1F of the borrowers' households now have sanitary
latrines but they did not before enrollment. In the %ase of others status/Cuo remains su%h that no
sanitary latrines before and now for 34F of the households) sanitary latrines before and now for
19F of the households) and no latrines of any type before and now for about 1F of the households.
The reasons for the swit%h) as given by those who use sanitary latrines now but did not before) are
reported in Table 3.4. It may be seen from this Table that only about one/third of those who are now
using sanitary latrines but not before enrollment have indi%ated that the %hangeover has been mainly
due to mi%ro/%redit/inspired and fa%ilitated. *ut two/thirds say that the improvement they have
a%hieved in this regard is mainly be%ause of persuasion and support from other organizations
in%luding both governmental and non/governmental and the ta+ing of mi%ro/%redit has not been
dire%tly influential in this regard.
Status of latrines in the borrowers' households
Status of sanitary latrine "reCuen%y F
Sanitary latrine before and also now
enrollment
116 34.3
:on/sanitary latrine before but sanitary
latrine now
- ,1.3
Sanitary latrine before and now 60 19.-
:o latrine of any type before and now 193 .
:on/response ,61 9.0
Total ,)4-1 1--.-
<easons for improvement in the %onditions of latrines used
<eason :o. of respondents F
Mainly due to mi%ro/
%redit
,3, 3,.1
Mainly due to reasons
other than mi%ro/
%redit
1
60 00.1
:o response 1 1.1
Total - 1--.-
31
Impact on !ducation
This Table presents data on the impa%t of mi%ro/%redit on edu%ation in the borrowers' households. In
the %ase of ,0F of the respondents) %hildren do not go to s%hool on a regular basis now as they did
not before enrollment. In the %ase of 11F of the respondents) no %hild went to s%hool before
enrollment but now all the %hildren do go regularly. In the %ase of F of the respondents) only boys
went to s%hool but now girls also go to s%hool. In the single largest proportion of the households
731F8) all the %hildren used to go to s%hool before and they do so now.
Clearly) therefore) only in about one/fourth of the borrowers' households) there has been an
improvement either in terms of all %hildren or girls going to s%hool now) while they did not before.
Moreover) it appears that mi%ro/%redit is not the main fa%tor behind the positive %hanges in the
edu%ation of %hildren. More important reasons in%lude awareness rising and grants provided to girls
if enrolled in s%hools.
C-ildrenEs education in t-e borro7ersE -ouse-olds as of no7 compared to t-at before
enrollment
Status of %hildren's edu%ation "reCuen%y F
:o %hildren go to s%hool now) did not
do so before
06, ,4.
Bnly son7s8 used to go to s%hool before
enrollment but girls also go now
10, 0.4
:o %hild went to s%hool before
enrolment) all %hildren go now
644 11.,
(ll %hildren used to go to s%hool before
and the same is true now
943 31.1
:on/response ,19 11.4
Total ,)4-1 1--.-
*easons 7-y girls also go to sc-ool no74 7-ile t-ey did not before enrollment
<eason "reCuen%y F
Mi%ro/%redit 64 ,.1
Bther reasonsS 1-, 0,.9
:on/response 14 9.3
Total 10, 1--.-
"-e reasons 7-y no c-ildren 7ent to sc-ool before but all t-e c-ildren go to sc-ool no7
<eason "reCuen%y F
3,
Mi%ro/%redit 1 10.-
Bther reasonsS 36 16.-
Total 664 1--.-
?amily Income
It will be seen from the Table 3.13 that the total monthly in%ome per family of about a Cuarter of the
respondents is less than T+.3)---. (ssuming that there are) on average) five members in a family)
the per %apita in%ome is T+.0-- per month. Thus) given that the per %apita in%ome of the rural poor
in the %ountry) as of ,--6) is T+.40, 7see in *ibliographyE Mo" ,--0) p. 16,8) one Cuarter of the
respondent households are generally at or below the per %apita in%ome of the rural poor. (bout 61F
of the households have monthly in%ome of between T+.3) --- and T+.4) ---) while that of about
,1F between T+.4) --- and T+.1-) ---.
Distribution of respondents by mont-ly family income categories
Monthly family in%ome
%ategory
:o. F
T3)--- 061 ,4.0
3)---/T4)--- 1)-,, 6-.9
4)---/T1-)--- 019 ,.4
1-)---/T14)--- 1-1 6.3
14)---/T,-)--- 19 -.1
,-)--- or more ,, -.9
Total ,)4-1 1--.-
Overall Conditions of 0iving
The relevant data are shown in Table 3.16. It will seen from the Table that 34F of the respondents
are somewhat better off while ,0F are somewhat worse off with ,6F e.perien%ing no %hanges to
report. *ut) while 16F of the respondents have reported as being mu%h worse off) only 1.4F
indi%ated that they are mu%h better off. In general) therefore) mi%ro/%redit does not appear to have
made mu%h of a differen%e to the living %onditions of the borrowers' households.
33
Overall living conditions at present compared to before enrollment
Aiving %onditions at present
%ompared to before enrollment
"reCuen%y F
Mu%h better 3 1.4
Somewhat better 104 36.0
:o %hange 490 ,3.1
Somewhat worse 061 ,4.9
Mu%h worse 369 16.-
:on/response 0 -.,
Total ,)4-1 1--.-
In terms of reasons given by those who are somewhat better off in%lude in addition to mi%ro/%redit)
employment of one or another of the formerly unemployed family members and in%reased in%ome
from sour%es other than mi%ro/%redit. Bn the other hand) those who are worse off have indi%ated
that the in%rease in in%omes from mi%ro/%redit related a%tivities have not been signifi%ant. (lso they
have had in%reases in their family sizes as well as health problems of family members disabling
them to earn in%omes.
(s+ed as to whether they are satisfied or not about their present living %onditions) the distribution of
the respondents is Cuite similar to that reported in the above paragraph. (bout ,3F are indifferent)
i.e. they are neither satisfied nor dissatisfied) while ,F are satisfied and a mu%h larger proportion
74-F8 is dissatisfied or highly dissatisfied.
"a2ing everyt-ing into consideration are t-e respondents satisfied or not 7it- t-eir present
living conditions
Satisfa%tion level "reCuen%y F
$ery satisfied 11 -.
Satisfied 041 ,0.3
:either satisfied nor
dissatisfied
401 ,,.
&issatisfied 113 34.3
$ery dissatisfied 3, 16.9
:on/response , -.1
Total ,)4-1 1--.-
36
It is indi%ated by the responses relating to the present living %onditions %ompared to that before
enrollment and the level of satisfa%tion with the present living %onditions that mi%ro/%redit has not
%ontributed mu%h to poverty alleviation) mu%h less on a sustained basis.
?uture Socio-economic &erspectives &rimarily Depending on Micro-Credit
(s+ed as to how they see their future so%io/e%onomi% prospe%ts if they rely primarily on mi%ro/
%redit) i.e. if the mi%ro/%redit is the main vehi%le for so%io/e%onomi% improvement) only about 30F
of the respondents have e.pressed the opinion that they see good future prospe%ts) while about 19F
are not sure and 36F foresee that their so%io/e%onomi% %onditions will deteriorate. Clearly) the
per%eption of the ma2ority of the respondents is that they do not foresee improvements or that there
will be deterioration. 7Table 3.108
?uture socio-economic prospects relying primarily on micro-credit
#er%eived prospe%t "reCuen%y F
$ery good 10 -.0
;ood 14 34.-
:either good nor bad 6, 11.9
*ad 011 ,6.
$ery bad ,61 9.0
:on/response ,9 11.,
Total ,)4-1 1--.-
( further Cuestion was as+ed as to whether there had been any %hange in their so%ial position
following enrollment. Bnly about 6.0F of the respondents have said that they are now more
respe%ted) while another ,3F have said that their so%ial intera%tion have in%reased. (bout 40F have
reported no %hange in their so%ial position) and about 13F have said that their so%ial position has
deteriorated. 7Table 3.18 ;iven these out%omes) the %omments made by the respondents about
future prospe%ts seem to be based on how things have evolved for them in the past) from so%io/
e%onomi% point of view.
Management of Micro-Credit *eceived by ;omen
Bf the ,)61, female borrowers interviewed in the present survey) only about 1-F have said that
they run with full authority the e%onomi% a%tivities underta+en using mi%ro/%redits they re%eive.
*ut) almost 9-F have said that they either manage the a%tivities in %onsultation or partnership with
their husbands or other members of the family or husbandsRother members manage the a%tivities
and they do not parti%ipate at all. It has not been possible to get) from the data %olle%ted) a
brea+down between those female borrowers who parti%ipate 7with husband or another member of
34
the family8 in managing the use of %redit and those who do not at all parti%ipate. This issue remains
grey and needs further probing. 9owever) there is definitely a large Cuestion mar+ relating to the
women borrowers being in %ontrol of the management of mi%ro/%redit they re%eive from MCIs.
Cegative Impact
&-ysical'Mental "orture Inflicted on t-e ?emale Borro7ers
(s+ed as to whether any member of a female borrower's family infli%ts physi%al or mental torture
on her) about ,1F have replied in the affirmative and about ,F in the negative. It appears that a
notable proportion of the female borrowers are sub2e%ted to family torture) physi%al or mental.
Is physi%al or mental torture meted out to female borrowers from one or another member of their
familiesU
#hysi%al or mental torture "reCuen%y F
Jes 09, ,.1
:o 1)1 1.
:on/response 1, -.4
Total ,)61, 1--.-
The 09, female borrowers) who said that they were sub2e%ted to physi%al or mental torture by one
member or another of her family) were further as+ed as to who was the main %ulprit. The usual
response is the husband. &emand for dowry and his ego and per%eived superiority in the %ase
differen%es of opinion relating to family matters have been suggested to be among the triggers of
torture infli%ted by the husband. (s+ed further whether or not torture has in%reased or de%reased
sin%e enrollment) about 0-F of them have said that the intensity of torture has in%reased sin%e
enrollment) while for about ,F it is about the same as before. Bnly 13F have said that it is
somewhat less than before.
Has t-e intensity of torture increased or decreased since enrollment
Intensity of torture sin%e
enrollment
"reCuen%y F
In%reased sin%e enrollment 61, 49.4
(bout the same as before 91 13.,
Somewhat less than before 119 ,.3
Total 09, 1--.-
Do7ry
30
"inally) about 1,F of the female respondents have said that e.%hange of dowry has in%reased in the
families of mi%ro/%redit re%eivers sin%e enrollment. This is indeed unfortunate that su%h a so%ial
mena%e has in%reased so mu%h in the families of mi%ro/%redit re%eivers. This has been so it would
seem that mi%ro/%redit re%eiving families are per%eived to be able to pay dowry more than others.
5.%hange of dowry in the families of Mi%ro/%redit re%eivers sin%e enrollment.
&owry status "reCuen%y F
In%reased sin%e enrollment ,)-30 1,.-
&e%reased sin%e enrollment 0- ,.6
Same as before 36 14.1
:on/response 1, -.4
Total ,)61, 1--.-
*ecapitulating t-e Major ?indings
Bnly about 1-F of all female respondents 7numbering ,)61,8 have said that they are in full
%ontrol of running the e%onomi% a%tivities underta+en using mi%ro/%redits they re%eived. The
other 9-F run them either in %onsultationRpartnership with their husbands and other members of
their respe%tive families or they do not parti%ipate at all. ( brea+down between the two
%ategories %ould not be obtained from the data generated.
(bout ,F of the female respondents are now always or o%%asionally given more
importan%e in family de%ision/ma+ing %ompared to the situation before enrollment. Bbviously)
whether or not the female borrowers are in %ontrol of the use of mi%ro/%redits they re%eived)
their importan%e in the family has gone up as they %an now bring in money to the family
through mi%ro/%redits from MCIs. This %ertainly is an improvement but a lot more needs to
happen regarding their empowerment in%luding in relation to de%ision/ma+ing %on%erning and
management of e%onomi% a%tivities underta+en with mi%ro/%redits re%eived.
(bout ,1F of the female respondents still fa%e physi%al or mental torture from one or another
member of the family) usually the husband. The intensity of torture has in%reased in the %ase of
0-F of these respondents) while in the %ase of 6-F it's about the same or somewhat less than
before.
It is very unfortunate that e.%hange of dowry has in%reased in the mi%ro/%redit re%eiving
households as reported by 1,F of the female respondents. This is a so%ial mena%e against whi%h
3
there is strong opinion among the so%ial reformers. *ut) it seems that sin%e women are now able
to se%ure some money though mi%ro/%redit) their families are more pressured than before to pay
dowry to marry off women from their families.
!valuation of t-e Micro credit for t-e !conomic development$
"rom the different point view mi%ro %redit plays a vital role in the so%io e%onomi% development in
*angladesh .Sin%e mi%ro %redit is related with the root level of an e%onomy) so it is so important for
the finan%ial mar+et of any %ountry.
V Mi%ro %redit helps to remove the poverty. It always helps the poor and in%reases their in%ome
level. When the poor people get mi%ro %redit they %an %reate the business opportunity whi%h results
the e%onomi% solven%y of the poor.
V They %an pay for their all basi% needs. Whi%h is the first step to brea+ the poverty %y%leU
Mi%rofinan%e helps to ta+e initiative for the parents to send their %hildren to s%hool. When they get
money as %redit they %an spend money behind their basi% needs.
V In order to wor+ s+illfully wor+ers should be fit physi%ally. The mi%ro %redit %lients are more
solvent than the non/ mi%ro %redit %lient. The mi%ro %redit %lient %an ta+e nutritious foods and %an
go to do%tor if they feel si%+. Bverall they %an ta+e proper health %are. Some of the mi%ro finan%e
institute also provides health edu%ation .The institutes give advi%e to the rural people to drin+ safe
water) pre natal and post natal %are) sanitation and housing. NIn *angladesh) a study of *<(C
%lients found that fewer members suffered from severe malnutrition than non/%lients and that the
e.tent of severe malnutrition de%lined the longer %lients stayed with *<(C.D
Some of the mi%ro %redit institutes have partnership with the insuran%e to the %lients. *y this
way the %lients may get the insuran%e fa%ility.
In *angladesh most of the organizations are giving emphasis on the rural poor women. (ll
of the organizations thin+ that women are more responsible than the men to repay their
loans. It is also found that women are more interested to in%rease the house hold in%ome and
family well being. Su%h type of thin+ing ma+e the mi%ro finan%e institutes interested to
provide loan to the women rather than men. *y this way women be%ome more %onfident
31
more assertive more li+ely to parti%ipate in family de%ision. 5ventually finan%ial support
ma+es the women powerful. *ut we should not thin+ this as gender dis%rimination. #ositive
programme designed for the women owing more assets having a more a%tive role for the
family de%ision and in%reasing investment in the family welfare.
Micro credit programmed success in Banglades-
The Millennium &evelopment ;oals in%ludes that more than 1., billion people live behind the
poverty line in *angladesh. (fter then some of the mi%ro %redit programmes are su%%essful in the
sense that poor %lients ta+e smaller loans. "or that reason the %redit size be%omes smaller. Then
%osts seem to be harder to a%hieve .Then some of the institutes design programmes to redu%e the
%ost pressure. *y the %ost effe%tive ban+ing system some of the organizations rea%h to the root level
and still try to eradi%ate the %osts. In *angladesh (S( is one of the organizations whi%h provide
su%h types of opportunity. *y the dint of mi%ro %redit poli%y all most the poverty problem in
*angladesh has been solved. *efore the availability of the mi%ro %redit the people in *angladesh
should depend for their %apital on the ri%h people. In every system they must pay a high interest
against their loan. (fter the introdu%tion of the mi%ro %redit su%h type of problem has been solved.
The mi%ro %redit system was supported by all %lass of the people. The poor people %an do business
with the money. (fter earning profit they %an return their loan to the mi%ro finan%e providing
organizations.
&roblems of t-e micro credit$
Though mi%ro %redit is wellbeing for our whole so%iety but it has some problems. We %an organize
the problem as followE
1. The important problem of the mi%ro %redit is to turn the profit in to the loans. In this %ase the
borrowers should bear the %ost of the loan as well as the interest .Some time investment does
not bear the profit then the borrower should redu%ed %onsumption and loan money from
other sour%e to pay the installment.
,. (nother problem is that all most all the mi%ro %redit providing organizations give lone to the
women with a less interest rate. "or that reason the male relatives use the female borrowers
in front to get the low interest bearing loan. These types of loan may or may not be useful to
the family. Most often the women should bear the responsibilities.
39
3. Some of the mi%ro finan%e providing organizations imposes high interest for the short term
loan. Sin%e the poor people have no alternative they have to dependent on those
organizations. ConseCuently they are not able to pay the high interest and supposed to be a
loan defaulter. @nless in%rease their in%ome they are permanently dependent on the mi%ro
%redit
*ecommendations for Success
?ocusing support on M?Is$ "irst of all) mi%rofinan%e donors should fo%us their support on 7and
en%ourage8 M"Is who operate in %ountries who are ma+ing %onsistent efforts to improve regulation)
institutions) and legal systems. If governments of developing %ountries are loo+ing to lead their
%ountries out of poverty) perhaps this might %reate in%entives for governments to in%rease
transparen%y and regulatory systems.
*et-in2 t-eir target recipientsE Se%ondly) M"Is need to rethin+ their target re%ipients this is a
more diffi%ult way of handling mi%rofinan%e. (t first glan%e it may seem unfair to stop lending to
poorest people who need it the most) but at a %loser loo+ it be%omes %lear that these people are not
benefiting from their loans long term) or ma+ing business ventures that are sustainable. The more
well off) who %an still benefit from a mi%ro%redit loan to e.pand their business) buy more
eCuipment) and employ more people) should be the main re%ipients of loans. These types of
enterprises have the %apa%ity for self/sustainability and revenues. *usinesses under this %ategory
in%lude 7but is not limited to8 those that have steady mar+ets) some +ind of offi%e to operate out of)
and room for e.pansion. More formal se%tor businesses su%h as these will %reate more growth and
development than loans to informal se%tor businesses will.
Increment of 5ccessibility$ Thirdly) using mi%rofinan%e to in%rease a%%ess to publi% goods is an
innovative and new way of improving Cuality of life for people. "or instan%e) M"Is %ould offer low
interest rates on village loans that will be used to build a well or a small s%hool. While these loans
would be larger and probably ris+ier) the %ondition of group lending ma+es it feasible.
(rrangements %ould be made for urban distri%ts interested in publi% good improvements. &efault
would %ause the village or distri%t to forego monies for future improvements. With this in%entive)
members of the group are +een on monitoring their fellow members and ensuring that everyone
involved ma+es their repayments. While) su%h pro2e%ts would %ertainly be more %ompli%ated than
basi% mi%rofinan%e loans) perhaps that is the +ey to paving the way toward growth.
6-
Comparison bet7een co-operative credit union 7it- Micro credit institutions
Credit union$
Credit unions serve many poor people) but even middle in%ome %ustomers are also among the
members. Mi.ed types of members allow them to provide finan%ial servi%es to the poor to a
greater e.tend than spe%ialized mi%rofinan%e institutions 7Cuevas) "is%her) ,--08. In %ountries
with high level of finan%ially e.%luded population) li+e post/%ommunist :MS) %redit unions
or other member/based institutions shall play important role in redu%ing finan%ial e.%lusion.
(s we will present in this paper) in many %ases they have not a%hieved to do that either due to
their low share in the mar+et or due to more %ommer%ialized approa%h towards finan%ial
servi%es provision.
"-e regulatory structure
The legal framewor+ is one of the most important fa%tors for the development of %redit unions.
Membership %riteria) limitations for the size of the loan) types of %ollateral reCuired to grant the
loan) li%ensing reCuirements 7if any8) initial %apital) initial membership > all those %riteria are %ru%ial
for the development of %redit unions. In some %ountries the ris+ of the %redit unions is limited very
stri%tly 7e.g. in Aithuania %redit unions have to meet liCuidity and %apital adeCua%y reCuirements)
that are even higher than for the ban+ing se%tor8 and this is one of the fa%tors that limits the
development of %redit unions) but in other %ountries 7e.g. #oland8 the regulations regarding their
a%tivity are more liberal than for the ban+ing se%tor) what allows C@s for easier growth on the
%ompetitive mar+et. Credit unions in general serve only their members of the definite %ommon
bond) whi%h may be defined as followsE
W territory prin%iple / people who live) have property or underta+e entrepreneurship on definite
territoryM
W employment prin%iple / people who wor+ with the same employerM
W Common interest prin%iple / people from the same professional group 7farmers) students) do%tors)
et%.8
W prin%iple of belonging to the same organization > people who are members of the same
organization. This rule is %onfirmed in legal a%ts regarding %redit unions' in analyzed %ountries.
61
Aimitation of %ommon bond helps to de%rease ris+ of lending and in%rease safety of the small Co/
operative. In general %redit unions serve individuals 7physi%al persons8 and mi%ro orRand small
enterprises.
Micro credit institutions
The word Gmi%ro%reditG did not e.ist before the seventies. :ow it has be%ome a buzz/word among
the development pra%titioners. In the pro%ess) the word has been imputed to mean everything to
everybody. :o one now gets sho%+ed if somebody uses the term Gmi%ro%reditG to mean agri%ultural
%redit) or rural %redit) or %ooperative %redit) or %onsumer %redit) %redit from the savings and loan
asso%iations) or from %redit unions) or from money lenders. When someone %laims mi%ro%redit has a
thousand year history) or a hundred year history) nobody finds it as an e.%iting pie%e of histori%al
information.
Mi%ro %redit is based on the premise that the poor have s+ills whi%h remain unutilized or under/
utilized. It is definitely not the la%+ of s+ills whi%h ma+e poor people poor. Mi%ro %redit believes
that the poverty is not %reated by the poorM it is %reated by the institutions and poli%ies whi%h
surround them. In order to eliminate poverty all we need to do is to ma+e appropriate %hanges in the
institutions and poli%ies) andRor %reate new ones. Mi%ro %redit believes that %harity is not an answer
to poverty. It only helps poverty to %ontinue. It %reates dependen%y and ta+es away individualOs
initiative to brea+ through the wall of poverty. @nleashing of energy and %reativity in ea%h human
being is the answer to poverty.
Mi%ro %redit brought %redit to the poor) women) the illiterate) and the people who pleaded that they
did not +now how to invest money and earn an in%ome. Mi%ro %redit %reated a methodology and an
institution around the finan%ial needs of the poor) and %reated a%%ess to %redit on reasonable term
enabling the poor to build on their e.isting s+ill to earn a better in%ome in ea%h %y%le of loans.
If donors %an frame %ategory wise mi%ro %redit poli%ies they may over%ome some of their
dis%omforts. ;eneral poli%y for mi%ro%redit in its wider sense is bound to be devoid of fo%us and
sharpness.
Conclusion
6,
*efore seventies *angladesh was suffering from the %urse of poverty. #eople were not %ons%ious for
the edu%ation and health. (fter the liberation war when the mi%ro %redit introdu%ed by some non
government organizations then poverty level redu%ed su%%essfully. The ;rameen ban+ was in the
leading role. "ollowing the path of ;rameen ban+ some of the :;B started to provide mi%ro %redit.
(s a developing %ountry mi%ro %redit plays an important role. Mi%ro %redit still fighting against
poverty. Though there is no single intervention against poverty. *y the help of the mi%ro %redit
people be%ome more solvent. The unemployment problem in *angladesh has been de%reased. It has
multiple effe%ts. (s the mi%ro %redit program approa%h finan%ial sustainability) they %an rea%h far
beyond the limits of the s%ar%e donor resour%es.
63
Chapter Four
5uditor ?indings
"-e financial statement of t-e Morning Star Co-operative Credit Union
,1 B%tober ,-11
C-airman
*oard of &ire%tors
The Morning Star "amily Welfare Centre
0,0R1) *aro Magh *azar
&ha+a > 1,1
66
Subject$ Management *eport on t-e ?inancial Statements of t-e Morning Star ?amily
;elfare Centre for t-e year ended une ,=4 +=(()
&ear Sir)
We are pleasure to en%lose here with Management <eport on (udited (%%ounts of The Morning Star
"amily Welfare Centre for the year ended ?une 3-) ,-11.We have %ondu%ted our audit on test basis.
But of su%h test %he%+ this report has been generated.
&uring the %ourse of our audit some dis%repan%iesR irregularities %ame to our noti%e) whi%h are
given in the following pages for the attention of the management.
Summary of the management report is as underE
Sl) Co) "itle of ?indings &age Co)
=( #ur%hase in Cash Instead of (%%ount #ayee CheCue :D
=+ 5.penditure e.%eeds the approved budget :8
=, 5.penditure without approved budget 1=
=: <evenue stamp was not affi.ed with payment vou%her 1=
=1 <e%eivers' a%+nowledgement was not found in Salary Sheet 1,
=< Salary paid in Cash Instead of (%%ount #ayee CheCue 1,
=9 Misallo%ation of e.penditure 11
=D Aist of parti%ipants R supporting papers were not available 1<
=8 <e%eivers' a%+nowledgement was not found in sleep with vou%her 1<
(= Signature of depositors were not found in <e%eived $ou%her 1D
(( $ou%her no. were not re%orded properly in Membership form 1D
(+ &ate of supporting were after the date of vou%her 18
(, $ou%her no. were not re%orded in vou%her <=
64
(: &ate were not re%orded in vou%her <=
(1 "orged note written off were found <(
(< Irregularities in "i.ed (ssets Management <+
(9 Irregularities in &ividend 7In%ome &istribution8 #oli%y <,
(D Suspense (%%ount Shown in <e%eipts X #ayments (%%ounts <:
(8 Irregularities in &aily Cashboo+ <:
+= 5.pense o%%urred without any approval <1
+( Ta. was not dedu%ted at sour%e from salary <1
In fine) we wish to re%ord our appli%ation for the sin%e %o/operation e.tended to us by the staff
members of the organization.
Than+ing you.
Jours sin%erely)
5BiB Halim 6-air C-oud-ury
Chartered (%%ountants
"-e Morning Star ?amily ;elfare Centre
?or t-e year ended ,= une +=((
?inding H =(
&urc-ase in Cas- Instead of 5ccount &ayee C-eGue
?act$
While %he%+ing the vou%her we found that in some %ases %ash payment ware made instead
of a%%ount payee %heCue. Some instan%es are given belowE
Date
#ouc-er
no)
5mount
."2)/
Head of 5ccounts *eceivers Came
-9.-,.,-11 -,/-,3
16)-- #rinter toner ?.(.: (sso%iates AT&.
3-.-1.,-1- -1/-91
6)4-- Sto%+ of stationary The #aramount #rinters
3-.-1.,-1- -1/-91
1)4-- Sto%+ of stationary Sapid Computer X printing
,3.-0.,-11 -0/-,
,1)---
Sto%+ of printing
materials
The #aramount #rinters
14.11.,-1- 11/-40
13)4-- "i.ed (sset almirah MRS =usum Metal Industries
1-.11.,-1- 11/-31
)6-- Bffi%e <enovation A.<.* "urniture AT&.
1-.11.,-1- 11/-30
1)4-- Bffi%e <enovation A.<.* "urniture AT&.
60
-1.11.,-1- 11/-,6
1-)---
Cash %ounting
ma%hine
San2it Shar+ar
3-.1,.,-1- 1,/1-1
,0)394 Sto%+ of printing The #aramount #rinters
-0.1,.,-1- 1,/-,-
1-)--
Computer
(%%essories
?.(.: (sso%iates AT&.
Implication ' *is2
Misuse of fund may o%%ur due to su%h types of transa%tion.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H =+
!Apenditure eAceeds t-e approved budget
?act$
While %he%+ing the finan%ial statements we observed that in some %ases a%tual e.penditure
e.%eeded the budget limit and no prior approval was ta+en from the higher authority.
Some instan%es are given belowE
&articulars
Budgeted
5mount ."2)/
5ctual
5mount ."2)/
#ariance
5mount ."2)/ @
Water and ;as bill 14)6-- 30)04 ,1)304 131
"i.ed (ssets 3--)--- 363)11- 63)11- 16
(;M 5.pense ,-)--- ,)013 )013 31
;et > Together program 1-)--- 1,1)919 61)919 4,
5ntertainment 13-)--- ,41)316 1,1)316 93
"orged :ote written off 0)--- 9)0-- 3)0-- 0-
Stationary 1-4)--- 1,6)9,1 19)9,1 11
Bffi%e <ent 30-)--- 34)0-- 14)0-- -6
&epre%ation 11-)--- 10),93 4),93 4,
Implication ' *is2$
6
It indi%ates non/%omplian%e with poli%ies and instru%tions of the Morning Star "amily Welfare
Centre.
*ecommendation$
Management should ta+e prior approval from higher authority for e.penditure e.%eeding approved
budget.
?inding H =,
!Apenditures 7it-out approved budget

?act$
While %he%+ing the finan%ial statements we observed that in the following %ase
e.penditure have no prior approval was ta+en from the higher authority. &etails are given
belowE
&articulars
Budgeted
5mount
."2)/
5ctual
5mount
."2)/
#ariance
5mount
."2)/
@
Internet X &ish 5.pense / 6)04- 6)04- 1--
Implication ' *is2$
It indi%ates Misuse of fund.
*ecommendation$
Management should follow approved budget for e.penditure.
?inding H =:
*evenue stamp 7as not affiAed 7it- payment vouc-er

?act$
61
&uring the %ourse of our audit) it was observed that in some %ases revenue stamps were
not affi.ed with payment vou%her. Some instan%es are given belowE
Date
#ouc-er
no)
Head of accounts
5mount
."2)/
*eceivers
name
,3.-,.,-1
1
-,/-04
(nnual pi%ni%
materials
13- Shahi Cro%arig
,3.-,.,-1
1
-,/-04 (nnual pi%ni% 7gift8 ,)0-
<idoy gift
%orner
,3.-,.,-1
1
-,/-04
(nnual pi%ni%
7Chador8
6)6-- #roma *ording
,3.-,.,-1
1
-,/-04
(nnual pi%ni%
7Trey8
6),--
#a%ifi% Cro%arig
Corner
,3.-,.,-1
1
-,/-04
(nnual pi%ni%
75le%tri% Materials8
1)634 Mayer &oa
-9.-,.,-1
1
-,/-,3 #rinter toner 16)--
?.(.:
(sso%iates AT&.
-3.-,.,-1
1
-,/--
Software
Maintenan%e
,)---
( to Y %omputer
Servi%e
19.-6.,-1
1
-6/-41/
(
Spe%ta%les #ur%hase 36)14- Bpti%al *azar
1-.-6.,-1
1
-6/-, Stationeries e.p. 094 ?a%+ <izario
1,.-1.,-1
-
-1/-6 Stationeries e.p. 1)0-
(di *i+rompur
*oo+ 9ouse
1,.-1.,-1
-
-1/-60 5ntertainment e.p. 1)3- <ony
11.-1.,-1
-
-1/-34
Software
Maintenan%e
,)---
( to Y %omputer
Servi%e
-1.-1.,-1
-
-1/-,9 5ntertainment e.p. 1)131 <ony
-4.-1.,-1
-
-1/-,3 "uel X ;as 5.p. 6)3,- <ony
-6.-1.,-1
-
-1/-19
;enerator
Maintenan%e
,)1-- Sohel
-1.-1.,-1
-
-1/--6 offi%e Maintenan%e 1)3,9 <ony
69
-1.-1.,-1
-
-1/--3 5ntertainment e.p. 4)41, ?a%+ <izario
3-.-0.,-1
1
-0/1-9 5ntertainment e.p. )10 Staff
3-.-0.,-1
1
-0/1-1
Sto%+ of printing
Materials
3)---
The #aramount
#rinters
3-.-0.,-1
1
-0/-9 Conveyan%e 3)30 Staff
,1.-0.,-1
1
-0/-11 Training e.p. 1,)6-- Staff
,3.-0.,-1
1
-0/-,
Sto%+ of #rinting
Material
,1)---
The #aramount
#rinters
14.-0.,-1
1
-0/-61 "uelR;as 5.p. 3)1--
Sayeb
5nterprise
1,.-0.,-1
1
-0/-34 Bffi%e rent ,4)--- 9arun ur <ashid
,,.11.,-1
-
11/-06
Cash Counting
Ma%hine
1--)--- 5le%tro plus
11.-6.,-1
1
-6/-43 5ye %amp 4)---
?anoni
#harma%y
3-.-1.,-1
-
-1/-91
Sto%+ of #rinting
Material
13)---
The #aramount
#rinters X
SapiC Computer
X printing
,,.-1.,-1
-
-1/-93
Software
Maintenan%e
9)--- (fzal 9ossain
Implication ' *is2$
It indi%ates the non/%omplian%e of Stamp (%t) 1199.
*ecommendation$
Management should follow the national Aaws) <egulation and (%t.
?inding H =1
*eceiversE ac2no7ledgement 7as not found in Salary S-eet
4-
?act$
&uring the %ourse of our audit) we observed that in some %ases <e%eivers'
a%+nowledgement were not found with salary sheet. Some instan%es are given belowE
Mont- *eceivers name
5mount
."2)/
Designation
?une'11 Sebastias <odrigues ,0)39- #rogram offi%er
?une'11 Mrs. Mahmuda *egum 1-)03- "ield Supervisor
?une'11 Mrs. Sungida 9)1- "ield Supervisor
Implication ' *is2$
Misuse of fund may o%%ur due to su%h types of transa%tion.

*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H =<
Salary paid in Cas- Instead of 5ccount &ayee C-eGue

?act$
We found that in some %ases %ash payment ware made instead of a%%ount payee %heCue.
Some instan%es are given belowE
Came Designation Mont-
5mount
."2)/
Mr. (lphonse ;omes Manager ?une 63)19-
Mr. =arti% Ch. Shil "inan%e Bffi%er
?une
,6)6-
Md. 9ossain
*ran%h
Manager
?une
31)41-
Mr. Chan%hal <'
;omes
(%%ountant
?une
,1)9-
Mr. Sebastias
<odrigues
#rogram offi%er
?une
,0)39-
41
Mr. *i2oy &as Internal (uditor
?une
,1),9-
Mr. (tul Shar+ar Aedger +eeper
?une
,,),--
Mrs. Sufia *egum
"ield
Supervisor
?une
13)-3-
Mr. Saline &' Costa
"ield
Supervisor
?une
14)11-
Mrs. Mahmuda
*egum
"ield
Supervisor
?une
1-)03-
Implication ' *is2$
i8 It indi%ates non/%omplian%e with poli%ies and instru%tions of :;B*.
ii8 Misuse of fund may o%%ur due to su%h types of transa%tion.
*ecommendation$
Management should follow the :;B* guideline.
?inding H =9
Misallocation of eApenditure
?act$
&uring the %ourse of our audit) we observed that in some %ases e.penses were not %harged in
proper head of a%%ounts. Some instan%es are given belowE
4,
Date
#ouc-er
no)
&articulars
5mount
."2)/
5ppropri
ate Head
of
5ccounts
C-arging
Head
,.-,.11 -,/-9
;ift of
festival
1)-4- &onation
;R" 7offi%e
%lean8
1.-,.11 -,/-46 #ro+ashana ,6-
#rinting X
*inding
Stationary
e.p.
1.-1.1- -1/-46
Mobile
pur%hase
,)4--
"i.ed
(sset
Maintenan%e
-1.-.1- -/-,1
*oo+
binding
,)0--
#rinting X
*inding
Stationary
e.p.
-,.-9.1- -9/--4 "ood items 431
5ntertain
ment
Bffi%e
maintenan%e
1-.1-.1- 1-/-33 <i%+shaw 4-
Conveyan
%e e.p.
;asR fuel e.p.
16.-.1- -/-6, %leaner fee 4-
offi%e
maintenan
%e
Stationary
e.p.
14.-.1- -/-64
=hata
binding
1,-
#rinting X
*inding
Stationary
e.p.
Implication ' *is2$
It indi%ates the wea+ness of the finan%ial %ontrol system.
*ecommendation$
5.penses should be %harged in proper head.
?inding H =D
0ist of participants ' supporting papers 7ere not available
?act$
While %he%+ing vou%hers) it was observed that list of parti%ipants supporting #apers were
not available with vou%her. &etails are given belowE
Date
#ouc-er
no)
5mount ."2)/ &articulars *eceiver
,4.-0.,-1 -0/-11 13)--- Training Cost Staff
43
1
-9.11.1-1
-
11/-33 10),4- Staff training e.p (lphonse ;omes
14.1,.,-1
-
1,/-46 916 Staff training e.p <ony
Implication ' *is2$
i8 It indi%ates wea+ness of a%%ounts department of the Morning Star "amily Welfare
Centre.
i8 "inan%ial anomalies may o%%ur due to su%h types of transa%tions.
*ecommendation$
Management should ta+e ne%essary steps in this regard.

?inding H =8

*eceiversE ac2no7ledgement 7as not found in sleep 7it- vouc-er

?act$
&uring the %ourse of our audit) we observed that in some %ases <e%eivers'
a%+nowledgement ware not found in sleep with vou%her. Some instan%es are given belowE
Date
#ouc-er
no)
5mount
."2)/
&articular *eceivers name
,3.-,.11 C/-,/04 6),--
(nnual #i%ni%
7 tray8
#a%ifi% Cro%aring
Cornar
,3.-,.11 C/-,/04 ,)0-
(nnual #i%ni%
7;ift8
<idoy ;ift Cornar
,3.-,.11 C/-,/04 1)634
(nnual #i%ni%
75le%troni%
goods8
Mayer &oa
5le%troni%
,3.-,.11 C > -,/06 106 Stationary Taranga Tele%om
1-.-,.11 -, > ,9 3--
Bffi%e
Maintenan%e
$ai $ai #rint
46
1-.-,.11 -, > , 3- Stationary $ai $ai #rint
19.-6.11 -6 > 49 1- 5ntertainment
*angladesh home
Servi%e
1,.-6.11 -6 > 63 19 5ntertainment
*arisal ;eneral
Store
-1.-0.11 -0/-, ,-1 5ntertainment <ony
14.11.1- 11/41 619
5ntertainment
5.pense
<ony
3-.1,.1- 1,/19 60- 5ntertainment ;rand Sweet
Implication ' *is2$
ii8 It indi%ates wea+ness of a%%ounts department of the Morning Star "amily Welfare
Centre.
iii8 "inan%ial anomalies may o%%ur due to su%h types of transa%tion.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H (=
Signature of depositors 7ere not found in *eceived #ouc-er
?act$
&uring the %ourse of our audit) we observed that in some %ases signature of depositors were
not found in re%eived vou%her. Some instan%es are given belowE
Date
#ouc-er
no)
Came of
Member
Members-ip
no)
5mount
."2)/
13.1-.11 4301 ?osna (+ter 11/3,6/, 4--
13.1-.11
4111 #apia Sor+er 11/361/9 4--
13.1-.11
41111 <o+sana *egum 11/36,/0 44-
13.1-.11
4191 (mina =hatun 11/34/1 1)-4-
13.-0.11
633-4 <ehena *egum -1/06/0 1)---
13.1-.11
1,60- :oor *egum 1/3,/1 3)44-
13.1-.11
1-949 Salma *egum ,/616/, 4)4--
44
Implication ' *is2$
It indi%ates the wea+ness of the internal %ontrol system.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H ((
#ouc-er no) 7ere not recorded properly in Members-ip form
?act$
&uring the %ourse of our audit) we observed that in some %ases vou%her no. were not
re%orded properly in membership form. Some instan%es are given belowE
Came of
Member
*ecorded
#ouc-er no)
5ppropriat
e #ouc-er
no)
Members-ip
no)
5mount
."2)/
Salina *egume 669-01 69-01 11/30-/1 64-
Aebo *egum 69-3 69-31 11/34/1 ,4-
Samima (+tert 4190 41941 11/369/3 4--
Salina (+ter 00 0- 14/3,6/4 4--
Implication ' *is2$
It indi%ates the wea+ness of the internal %ontrol system.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H (+
Date of supporting 7ere after t-e date of vouc-er
?act$
&uring the %ourse of our audit) we observed that in the following %ases date of supporting
were after the date of vou%her. &etails are given belowE
#ouc-er Co) Date of Date of 5mount *eceiver &articulars
40
#ouc-er Supporting
. "2)/ '
Came
name
-6/-10 ,1.-6.11 3-.6.11 64
$ai $ai
store
5ntertainme
nt
1,/-,1 -1.1,.1- 1-.1,.1- 1)---
9arun or
<ashid
9ouse <ent
79ead
offi%e8
Implication ' *is2$
i8 It indi%ates wea+ness of a%%ounts department of the Morning Star "amily Welfare
Centre.
"") "inan%ial anomalies may o%%ur due to su%h types of transa%tion.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H (,
#ouc-er no) 7ere not recorded in vouc-er
?act$
&uring the %ourse of our audit) we observed that in some %ases vou%her no. were not
re%orded in vou%her. Some instan%es are given belowE
Date &articulars
5mount
."2)/
5ppropriat
e #ouc-er
Co)
*eceiver
,1.-,.11
S%hool
#rogram
,6- -,/11
MRS. Moni general
store
,1.-,.11 Stationeries 1)31 -,/1
Tele%om) stationary
X #aper bill
-.-,.11
$oluntary
Servi%e
14)--- -,/10 Members
-0.1,.1- Computer 11)1-- 1,/,- ?.(.:. (sso%iates
4
(%%essories Atd.
Implication ' *is2$
It indi%ates the wea+ness of the internal %ontrol system.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H (:
Date 7ere not recorded in vouc-er
?act$
&uring the %ourse of our audit) we observed that in some %ases date were not re%orded in
vou%her. Some instan%es are given belowE
Date &articulars 5mount ."2)/
#ouc-er
Co)
*eceiver
....R11R1-
5ntertainment
5.pense
1)419 11/-09 <ony
....R1,R1-
Bffi%e Maintenan%e 1- 1,/-61 <ony
......R9R1- 5ntertainment
5.pense
,)439 -9/-,, <ony
......R4R11
Bffi%e Maintenan%e 4- -4/-03 <ony
Implication ' *is2$
It indi%ates the wea+ness of the internal %ontrol system.
*ecommendation$
Management should ta+e ne%essary steps in this regard.
?inding H (1
?orged Cote 7ritten off 7ere found

?act$
&uring the %ourse of our audit) we observed that in some %ases forged note were found.
Some instan%es are given belowE
41
Date &articulars Identified by
#ouc-er
Co)
5mount . "2)/
3-.-0.11 "alse :ote *<(C *an+ -0/1-6 1),--
-,.-0.11 "alse :ote *<(C *an+ -0/--0 1)---
-3.-1.11 "alse :ote *<(C *an+ -1/--4 1)1--
11.-4.11 "alse :ote *<(C *an+ -4/-1 1)---
It also mentions that forged note found every year respe%tively and it is enlarging year to
year. Snap is given belowE
&articulars
+=(=-+=((
5mount ."2)/
+==8-+=(=
5mount ."2)/
+==D-+==8
5mount ."2)/
"orged note written
off
9)0-- 0)0-- 3),--
Implication ' *is2$
i8 It indi%ates the wea+ness of the finan%ial transa%tion related personnel of the
Morning Star "amily Welfare Centre.
ii8 "inan%ial anomalies may o%%ur due to su%h types of transa%tion.
*ecommendation$
Management should ta+e ne%essary steps in this regard X arrange training program
respe%tively for in%rease effi%ien%y of finan%ial transa%tion related personnel.
?inding H (<
Irregularities in ?iAed 5ssets Management
?act$
&uring the %ourse of our audit) we observed that some %ases ;uideline of "i.ed (ssets
Management of Morning Star Clause , X 6 not followed.
We found the following irregularitiesE
i8 MS" %ode number was not used in fi.ed assetsM
ii8 #hysi%al verifi%ation of "i.ed (ssets were not %ondu%ted by managementM
iii8 &epre%ation was %harged redu%ing balan%e method instead of straight line methodM
49
iv8 (%%umulated &epre%iation "und did not %reate but "i.ed (ssets were shown in
finan%ial statements at written down value.
Implication ' *is2$
It indi%ates non/%omplian%e of "i.ed (ssets Management.
*ecommendation$
Management should follow the poli%yRguideline in all %ases.
?inding H (9
Irregularities in Dividend .Income Distribution/ &olicy
?act$
&uring the %ourse of our audit) we observed that as per 5.e%utive Meeting held on ,3
:ovember ,--0.
The dividend poli%y of Morning Star stated as hereunderE

Clause ,E (fter &istribution of the member's savings interest) if the in%ome of e.penditures is
surplus balan%e then 14F will be transferred to <eserve "undE 1-F to 5du%ation X
5.tension "und and 4F will be transferred to Sustainable "und from the surplus.
Clause 3E If any surplus balan%es after %lause 1 X , then the balan%e will be transferred to *R" to
ne.t year.
We found the following irregularities of In%ome &istribution
&articulars
*ate of
Distribution
+=(=-+=(( +==8-+=(=
<eserve "und 14 313)366 101)39,
5du%ation X 5.tension
&evelopment "und
4 1-6)661 40)131
0-
Sustainable "und 1-
1)01)10
1
191)-11
Implication ' *is2$
It indi%ates non/%omplian%e of &ividend 7In%ome &istribution8 #oli%y.
*ecommendation$
Management should follow the &ividend 7In%ome &istribution8 #oli%y as per 5.e%utive
Committee Meeting.
?inding H (D
Suspense 5ccount S-o7n in *eceipts I &ayments 5ccounts
?act$
&uring the %ourse of our audit) we observed that suspense a%%ounts were shown in the
following heads in the #ayments side X re%eipts side of <e%eipts X #ayment a%%ount.
&etails are given belowE
Head of 5ccounts 5mount ."2)/
Side of *eceipts I
&ayments account
Suspense (%%ounts of loan 1,)990 #ayments
Suspense (%%ounts of
savings
663)399 <e%eipts
Implication ' *is2$
It indi%ates miss preparation of "inan%ial Statements.
*ecommendation$
Management should ta+e remedial measures in this respe%t) so that the above short%omings
may not o%%ur further.
?inding H (8
Irregularities in Daily Cas-boo2
01
?act$
&uring the %ourse of our audit) we observed the following irregularities in daily %ashboo+E
i8 &aily balan%e of %ash and ban+ were not maintained separatelyM
ii8 Cash were not verified by authorized personM
iii8 Bverwriting was made.
Implication ' *is2$
It indi%ates la%+ of a%%ounts personnel who maintained the %ash boo+.
*ecommendation$
Cash boo+ should be maintained properly.
?inding H +=
!Apense occurred 7it-out any approval
?act$
&uring the %ourse of our audit) we observed that e.pense has been o%%urred without prior
approval. &etails are given belowE
&articulars 5mount ."2)/
Telephone) Mobile X #ostage
e.pense
1,)-01
Implication ' *is2$
It indi%ates misuse of fund.
*ecommendation$
Management should ta+e remedial measures in this regard.
?inding H +(
"aA 7as not deducted at source from salary
?act$
Se%tion 4-) of In%ome Ta. Brdinan%e) 1916 stated that NIn%ome Ta. shall be dedu%ted from
Salary #ayment where appli%ableD
&uring the %ourse of our audit) we observed that Ta. was not dedu%ted at sour%e from salary
by The Morning Star Welfare Centre. &etails are given belowE
Came of employee Desig) "otal Income "otal "aA Mont-ly "aA
0,
incom
e ."2)/
after
!Aemption
."2)/
liability
."2)/
."2)/
Mr. (lphonse ;omes Manager
406)-1
-
316)-1- 31)6-1 3),-1
Mr. =arti+ Chan. Shil
"inan%e
Bffi%er
3,0)-1
-
160)-1- 16)0-1 1),1
Mr. (tul Sar+er
(ssistan
t
(%%ount
,19)0-
-
1-9)0-- 1-)90- 913
Implication ' *is2$
It indi%ates non/%omplian%e of the ITB/1916. So the responsible person may fall in legal
%omple.ity at any time due to above reason.

*ecommendation$
Management should ta+e ne%essary steps in this regard.
03