Impact of Microfinance on Women Empowerment in

Bangladesh
Assignment

Khondokar Sabera Hamid,

Master in Development Studies (MDS),
United International University, Dhaka, Bangladesh

 Abstract:
Microfinance has evolved as a potent driver of financial inclusion in Bangladesh with much
positive impact on poverty alleviation and other social development indicators. Despite massive
success in terms of outreach, employment generation and empowerment of millions of poor, a
large number of low-income poor people have remained excluded from the network of the
financial services. The article examines achievements of microfinance industry in Bangladesh;
its present challenges and prescribes policy measures to bring more unbanked poor people in
the fold of financial services.
Bangladesh is one of the high density countries of the world. 40% of its population lives below
the poverty level of which rural women are poorer. The rise of the Micro Credit Institution in
the global context is identified as an important phenomenon which has implication for the
development prospects of the poor. Microfinance, a proven tool for empowering poor women
by mitigating their extreme poverty to uplift them from vulnerable condition to some extent a
better living atmosphere, has brought great changes in the womens living standard, has
created an individual identity for the moderate poor women in the society and has given a
freedom to live the life according to their choice. The paper is designed to identify the role of
microfinance and to analyze rural womens economic empowerment as the outcome of
microcredit interventions.

Key Words:
Bangladesh, Microfinance, Microcredit, Women Empowerment.

Introduction:
The unique feature of microfinance programme is that it focuses on women for development.
There are more than ninety per cent women clients under this programme. The basic idea is to
empower women by providing them financial assistance and allowing them to earn an
independent income, contribute financially to their households and generate self-employment.
This economic independence is expected to generate increased self-respect, self-esteem, selfconfidence and other forms of empowerment for women participants of the programme. The
process of empowerment of the beneficiaries of the programme is not automatic, but depends
upon many factors. These factors may be abilities, environment, initiative and status of women
as group.

There is no dearth of studies which show that with the help of microfinance the status of a
woman improves in the family; she earns greater respect in the family than before; she
participates in the decision-making and community meetings; and she gets freedom to move
for the betterment of the micro-business. It may be due to the fact that women become able to
contribute financially to the family. In fact, microfinance programme increases economic,
social, and political empowerment. Microfinance programme may be an important programme
but not a panacea to end all the problems that poor face. Hence, the programme beneficiaries
must efficiently use the financial support to start small businesses that will help in uplifting
standard of life and empowerment of women.

Background of the Study:

Access to financial institutions and to credit is a necessity when it comes to poverty reduction
and development. Without access to financial services, it is often impossible for the poor to
make the necessary investments to improve their situation. A large share of the poor in
developing countries, like Bangladesh can be found in the rural areas, whereas the formal
banking sector mostly locate their branches in urban areas.
The rural credit market can be divided into two main sectors: the formal credit sector and the
informal credit market. The formal sector includes the governmental banks as well as the
commercial banks. A special branch of the governmental banks are often specializing on
agricultural loans and offering credit in poor rural areas. However these banks often lack the
insight and knowledge of specific needs of the clients in these kinds of areas. This might for
example regard repayments that consider time of harvest when setting up a repayment
scheme, with limited installments before the crop has been sold. Even though the rural banks
often offer loans with low interest rates, other costs regarding paper work and visits to the
bank, might also be hindering factors for the poor to access credit.
Another important aspect of the formal banking sector is the demand for collateral. Many of
the formal banks, also the rural branches, require some form of security such as property or
asset, when issuing a loan- something most poor, for obvious reasons, cannot present to the
banks. The formal banks demand for collateral is connected to the concepts of asymmetric
information and adverse selection. Lending money to the poor borrower with no previous
credit- history includes a risk for the banking institutions, as they do not have any information
on the potential borrower and can thus not make a secure judgment of the riskiness of the
borrowers project or whether he or she is capable to repay the loan. Requirement of collateral
can therefore compensate for the risk that the asymmetric information gives rise to.

The existence of asymmetric information, adverse selection and the requirement of collateral
force many of the rural poor to turn to the informal credit market to access credit. The informal
credit market consists of lenders, usually wealthier villagers, offering loans, often with extreme
interest rates. Informal lenders do not have the same requirements on collateral as the formal
banks: a small plot of land or labor is often accepted as security making it possible for the
borrower to work off his or her debt. Obviously these informal loans includes a bigger risk for
the borrower, but due to the difficulties in accessing credit from other formal sources, turning
to the informal credit might be the only alternative.
Where the credit markets has failed to meet the poors need and inversely, where the poor fail
to meet the credit markets requirement, microfinance has been developed as a source of
credit for the poor in developing countries. Through group lending techniques where the group
jointly responsible for the management and repayment of each others loans, it has been
possible for the poor, with no earlier credit history or collateral to access credit.
In recent years, womens empowerment has been acknowledged as a key variable of
development in less developed countries. Focusing on womens empowerment in development
is not only expected to benefit the women themselves, but is also believed to improve, through
positive externalities of womens empowerment are: higher education levels, higher awareness
of health issues, lower fertility rates and higher political awareness- all of these being important
positive factors for development. It has thus been recognized that the interrelation between
womens empowerment and development makes it difficult to proceed in one area without
making corresponding changes in the other area, and also that neglecting womens
empowerment and hindering women from reaching their full potential is consequently
hindering economic and political development.
A potentially effective way to empower women is through access to credit. Giving a woman
access to credit increases her opportunities to reach a higher level of empowerment through
the possibility to obtain her own source of income and create a sense of security.

Problem Statement:
According to the World Banks gender statistics database, women have a higher unemployment
rate than men in virtually every country. In general, women also make up the majority of the
lower paid, unorganized informal sector of most economies. These statistics are used to justify
giving priority and increasing womens access to financial services on the grounds that women
are relatively more disadvantaged than men.

Empowerment of women and gender equality are prerequisite for achieving political, social,
economic, cultural and environmental security among people. (Beijing,1995). As it has been
cited earlier, access to credit is an important mechanism for reducing womens poverty and to
empower them. Both the Convention on the Elimination of Discrimination Against Women
(CEDAW) and the Beijing Platform for Action (BPFA, 1995) address womens access to financial
resources. For example, BPFA includes thirty five references to enabling poor women to gain
access to credit.
As stated by Narayan (2002), in most poor countries, mens domination of women is strongest
within the household. Access to credit and participation in income-generating activities is
assumed to strengthen womens bargaining position within the household thereby allowing
them to influence a greater number of strategic decisions.
This study looks into microfinance institutions as contributing to womens knowledge and selfconfidence by widening their social networking. It also gives women the tools and skills they
need to participate more effectively and successfully in formal politics and to informally
influence decisions and policies that affect their lives. Generally, this study deals with the role
of microfinance in creating employment and income opportunities to women and subsequently
in empowering them to play an active role in the economic, political and socio-cultural sphere
in the study area. The economic empowerment approach attributes womens subordination to
lack of economic power. It focuses on improving womens control over material resources and
strengthening womens economic security. Women may work in a range of areas, including
savings and credit training and skills development, new technologies or marketing as well as
provide such supports as child care, health services, literary programs and legal education and
aid. The consciousness raising approach asserts that womens empowerment requires
awareness of the complex factors causing womens subordination.

Objectives of the Study:

The study generally attempts to find out the impact of micro financing on empowerment of
women particularly those in the rural areas.
Specific objectives
1. To identify various determinants of women empowerment.
2. To identify some of the microfinance products (facilities or interventions) and specific
packages available to small scale enterprises run by women in the rural areas.
3. To find out the impact of microfinance interventions/packages on the enterprises run by
women entrepreneurs.

4. To examine the impact that microfinance interventions/packages for women have had on
the families of these women.

The study mainly aims at assessing the extent to which microfinance contributes to women
empowerment in economic, socio-cultural at household level, political, knowledge, selfconfidence and use of time. The study was designed in such a way that comparison of clients
empowerment levels before and after the intervention of microfinance is made.

Significance of the Study:

Due to the wide acknowledgement of womens empowerment as a key for development, it is of
interest to find out how women are empowered. The empowerment of women is one of crucial
development issues. This is due to the fact that women appear to form the largest of the poor
and vulnerable group. In this regards, microcredit program has been argued to be potentially
effective for poverty alleviation and lifting the poor, particularly women, out of poverty. The
impact of microcredit program, however, is not limited to improving income of poor women.
What is more important is that microcredit program has received widespread recognition as a
viable strategy for empowerment of women, i.e. greater capabilities, choices and freedom in
decision making. The study seeks to examine the impact of microcredit program on women
empowerment in Bangladesh.

Literature Review
Microfinance:
For commercial reasons financial services have historically been targeted to the richer
proportion of society who have a greater capacity to repay loans and maintain savings.
However the poor remain typically either un-served or offered inappropriate financial services.
Poor farmers and landless laborers have extreme difficulty accessing financial services from
conventional financial institutions such as commercial banks. To overcome these obstacles, a
new approach to provide appropriate financial services to poorer clients has emerged in the
past decades this approach is called microfinance

Microfinance is the provision of a broad range of financial services such as deposits, loans,
payment services, money transfers and insurance products to the poor and low-income
households, for their microenterprises and small businesses, to enable them to raise their
income levels and improve their living standards.
According to Otero (1999, p.8) microfinance is
The provision of financial services to low-income poor and very poor self-employed people.
According to Ledgerwood (1999)
These financial services generally include savings and credit but can also include other financial
services such as insurance and payment services.
Schreiner and Colombet (2001, p.339) define microfinance as
The attempt to improve access to small deposits and small loans for poor households
neglected by banks.
Micro finance encompasses the provision of financial services and the management of small
amount of money through a range of products and a system of intermediary functions that are
targeted at low income clients. It includes loans, savings, insurance, transfer services and other
financial products and services. It thus consists primarily of providing financial services,
including savings, microcredit, micro-insurance, micro-leasing and transfers in relatively small
transactions designed to be accessible to micro enterprises and low income households.
The two main mechanisms for the delivery of financial services to such clients are: (1)
relationship-based banking for individual entrepreneurs and small businesses; and (2) groupbased models, where several entrepreneurs come together to apply for loans and other
services as a group.

Characteristics and Features of Microfinance:

Characteristics

Type of client

Lending Technology

Loan Portfolio

Organizational
Ideology
Institutional
Structure

Distinguishing Features
Low Income
Employment in informal sector; low wage
bracket
Lack of physical collateral
Closely
interlinked
household/business
activities
Prompt approval and disbursement of micro
loans
Lack of extensive loan records
Collateral substitutes; group-based
guarantees
Conditional access to further micro-credits
Information-intensive character-based
lending linked to cash flow analysis and
group-based borrower selection
Highly volatile
Risk heavily dependent on portfolio
management skills
Remote from/non-dependent on government
Cost recovery objective vs. profit maximizing
Decentralized
Insufficient external control and regulation
Capital base is quasi-equity (grants, soft
loans) loans)

Microfinance gives access to financial and non-financial services to low-income people wishing
to access money for starting or developing an income generation activity. As the name implies,
the loans and savings of the individual poorer clients are small. Microfinance came into being
from the recognition that micro-entrepreneurs and some poorer clients can be bankable, that
is they can repay on time both the principal and interest, and also make savings provided
financial services are tailored to suit their needs. Microfinance as a discipline has created
financial products and services that are packaged in a way that enables low-income people to
become clients of a banking intermediary.
Poorer people often require services in addition to credit access. They may also lack access to
secure savings locations that provide interest on their savings, or they may not have access to

relevant and timely information about markets beyond their immediate vicinity. Furthermore
they may not be aware of the range of financial services that would make running their
business more productive.

Microfinance intermediaries can provide a variety of services for their clients. Such services
include:

Credit
Deposit Services (voluntary or compulsory)
Insurance products (health, life, retirement, etc.)
Credit cards
Venture capital
Business development services
Hire-purchase for the poor

Microcredit:
Microcredit is a component of microfinance in that it involves providing credit to the poor, but
microfinance also involves additional non-credit financial services such as savings, insurance,
pensions and payment services.
Micro credit is the extension of very small loans (micro loans) to those in poverty designed to
spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable
credit history and therefore cannot meet even the most minimal qualifications to gain access to
traditional credit. Micro credit is a part of microfinance, which is the provision of a wider range
of financial services to the very poor.
Micro-credit is based on a separate set of principles which are distinguished from general
financing or credit. Micro-credit emphasizes building capacity of a micro-entrepreneur,
employment generation, trust building and help to the micro entrepreneur on initiation and
during difficult times. Micro credit is a tool for socio-economic development. United Nations
former Secretary General Kofi Annan comments Micro credit is a critical anti-poverty tool-a
wise investment in human capital.
When the poorest especially women receive credit, they become economic actors with power,
power to improve not only their own lives but in a widening circle of impact, the lives of their
family, their communities and their nations. Micro credit loan cycles are usually shorter than
traditional commercial loans-typically six months to a year with payments plus interest, due
weekly. Shorter loan cycles and weekly payments help the borrowers may current and not
become overwhelmed by large payments.

 Empowerment:
There is no consensus on the concept of empowerment. It may be because of the fact that
different experts and different disciplines use this concept differently. A brief discussion will be
presented here to clearly present the difference of opinion and making an understanding of the
meaning of empowerment.
The dictionary meaning of the word empower is to give power or authority to someone.
Thereafter, it begins to be used with an infinitive in a more general way meaning to enable or
permit. Both of these uses survive today. The concept is extensively used in politics and
psychology. Its modern use originated in the American civil rights movements during 1960 to
1980 which sought political empowerment for its followers. The concept was then taken up by
the womens movement, conservatives and social reformers.
Empowerment is an intrinsic quality of a person, which cannot be bestowed by a third party. It
is considered that an empowered persons behavior undergoes a change.
In a nutshell, empowerment is a process which enables one to gain power, authority and
influence over others. In the literature published on the subject, the empowerment is
considered to be matching with the following traits or capabilities:

Having decision-making power of ones own

Having access to information and resources for taking proper decision

Having a range of options from which one can make choices (not just yes/no, either/or)

Ability to exercise assertiveness in collective decision-making

Having positive thinking about the ability to make change

Ability to learn skills for improving ones personal or group power

Ability to change others perceptions by democratic means

Involving in the growth process and change that is never ending and self initiated.

Some of the experts explain the concept of empowerment as follows:

Wallerstein (1992) defined empowerment as People assuming control and mastery over their
own lives in the context of their social and political environment.
Some other researchers describe empowerment as a continuous, ongoing and interactive
process that leads to enhancement of abilities and a wider scope for choice and action of an
individual. Thus, empowerment leads to equity and well-being of the individual and the
community.

Batliwala (1994) characterized empowerment as control over resources (both material and
intellectual) and ideology, and an empowered person uses them according to his ideology or
belief. It is a process of challenging existing power relations and of gaining greater control over
the sources of power. The author has described that empowerment is the enhancement of
power.
Rowlands (1997) explained empowerment as a process of enabling or authorizing an individual
to think, behave, and take action and controlling work in an autonomous way. It involves some
degree of personal development. Individuals become empowered when they obtain the right to
determine choices in life and to influence the direction of change through the ability to gain
control over material and non-material resources. The World Bank Empowerment Source
Book also defines empowerment in the same way.
Chambers (1997) defined empowerment as an interactive process, it requires and implies
developmental change in power relations and behavior within the communitys individuals and
institutions. The power relations can, therefore, be analyzed under the institutional,
professional and personal elements of the community.
Page and Czuba (1999) explained that there are three basic components of empowerment multi-dimensional, social and a process. It is multi-dimensional because it occurs within
sociological, psychological, economic and other dimensions at various levels, such as individual,
group and community. It is social because it occurs in relationship to others. It is a process as it
may remain always ongoing without any final goal.
According to Krishna (2003) empowerment means increasing the capacity of individuals or
groups to make effective development and life choices and to transform these choices into
desired actions and outcomes. It is by nature a process and/or outcome.
Kabeer (2001) defined empowerment as the expansion in people's ability to make strategic life
choices in a context where this ability was previously denied to them. This definition contains
two elements, (i) the idea of process, or change from a condition of disempowerment, and (ii)
the idea of human agency and choice. This helps in distinguishing empowerment from other
closely related concepts like womens autonomy, gender equality, gender discrimination etc.
In short, empowerment is a process that allows one to gain knowledge, power, skill-sets and
attitude needed to cope with the changing world and the circumstances in which one lives.
Empowerment helps the person concerned to exploit the economic environment in increasing
the productivity of self, family and the society on the whole.

 Women Empowerment:
The World Bank has made gender mainstreaming a priority in development assistance. In a
policy research report, World Bank (2001) identified both gender equality and women
empowerment as development objectives and means to promote growth, reduce poverty and
support better governance. In the literature available on women empowerment, some of the
concepts like gender equality, female autonomy or women status etc. are referring to as either
similar or different concepts.
As described by Kabeer (2001) there are two essential elements of women empowerment, i.e.,
process and agency. A process is defined as the series of events that produce gradual change.
The process of women empowerment leads to expansion in their ability to have resources and
to make strategic life choices. The agency element of women empowerment describes that
women themselves are the significant actors in the process of change. It is the process through
which choices are made. Empowerment cannot be offered by a third party rather it has to be
claimed by those who would become empowered.
Kabeer (1999) explained that womens empowerment refers to the process by which those
who have been denied the ability to make strategic life choices, acquire such ability. The ability
to exercise choices incorporates three inter-related dimensions:
Resources, which include access as well as future claims to both material and social resources;
Agency, which includes the process of decision-making, negotiation, deception and
manipulation; and Achievements, which refers to the well-being outcomes of choice.
Agency is a central concept used in a study by Sen (1999). Kabeers (2001) understanding of
agency is mainly based upon Sens study. Agency is defined as an actors ability and
involvement to make meaningful choices. It encompasses the ability to formulate strategic
choices, to control resources and decisions that affect important life outcomes.
Different researchers have explained women empowerment by considering its different
aspects. According to Pillai (1995), women empowerment is an active, multidimensional
process which enables women to realize their full identity and powers in all spheres of life.
Power is neither a commodity to be transacted nor can it be given away as alms. Power has to
be acquired and once acquired it needs to be exercised, sustained and preserved.
The World Bank has also identified empowerment as one of the key constituent elements of
poverty reduction, and as a primary development goal (Malhotra et.al, 2000). The promotion of
womens empowerment as a development goal is based on the dual argument that social

justice is an important aspect of human welfare and is intrinsically worth pursuing. A similar
dual rationale for supporting womens empowerment has been articulated in the policy
statements put forth at several high level international conferences in the past decade e.g.
(Beijing Platform for Action,
1995), (Beijing +5 Declaration, 2000), and (CEDAW, 1979). However, no major development
agency has developed a rigorous method for measuring and tracking changes in levels of
empowerment. It is, therefore, difficult for the international development community to be
confident that their efforts to empower women are succeeding (Malhotra et.al, 2000).
The empowerment of women is essential for achieving the goals of sustainable development
centered on human beings (Malhotra et.al, 2000). It also requires appropriate public polices to
ensure that women enjoy all human rights and fundamental freedoms and participate fully and
equally in all spheres of public life including decision making. Public policies to promote
womens economic potential and independence and their full and equal participation in
development are also essential for womens empowerment. Measures are also needed to
ensure womens equal access to education and to training and retraining.
Womens empowerment should also reflect on their sexual and reproductive rights and health.
An empowerment approach to womens health emphasizes womens individual sense of self
worth connecting to the values they attach to their own health (linked to "power within")
womens individual decision making over access to health care ("power to") and womens
collective empowerment through organizing to make health services more accountable and to
increase womens choice decision making and control over their bodies ("power with")
(Cheston and Kuhn, 2002).
Furthermore, links between empowerment and health in general, and specifically for women
are receiving growing recognition. Presentation made by WHO at the Fourth
World Conference on Women at Beijing states that the empowerment of women is a
fundamental prerequisite for their health. This means promoting access for women to
resources, education and employment and the protection and promotion of their human rights
and fundamental freedoms so that they are enabled to make choices free from coercion or
discrimination (WHO, 1995).
Stromquist (1995) wrote that empowerment includes both cognitive and psychological
elements. It involves womens understanding of their conditions of subordination and the
causes of such conditions at both micro and macro levels of society. It involves understanding
the self and the need to make choices that may go against cultural and social expectations.
This means that the whole process of women empowerment requires the ability and active
involvement of women themselves. If it does not include women as the agents of that change
rather than merely as its recipients, it cannot be considered as empowerment. This implies that

women empowerment is a bottom up rather than top down approach. Empowerment

cannot be injected from outside, rather it has to be acquired by the women through their active
involvement in the development process. But it does not imply that all improvements in
women position are brought about by women themselves only. Social and political
environment is also considered to play an important role in the same. It is the responsibility of
the governments and multilaterals to promote policies to set up such type of legal, political and
economic environment which help women to have greater access to resources and promote
gender equality.
In this way, women empowerment is a process of improvement in the existing status and
abilities of women to make them able to lead their lives in an autonomous way. Women
empowerment is a complicated and continuous process, which aims at changing the way of
thinking of the whole society to ensure equal enjoyment of human rights for all. It is a
continuous process of increasing the economic, social, political and psychological strengths.
The supporting agencies, social, political, cultural, financial etc., which are involved in uplifting
the cause of women cannot claim that they have empowered women with their help. One
cannot claim empowerment unless the intervening process involved women as agents of that
change.
Kumar and Paul (2007) wrote, Development agencies cannot claim to empower women rather
they can provide appropriate external support and intervention which can, however, be
important to foster and support the process of empowerment, i.e., act as facilitators.

 Measuring Empowerment: Framework

indicators of Womens Empowerment:
Dimension

1. Economic Empowerment

2. Socio-cultural and Familial

Empowerment

3. Political Empowerment

4. Education, Skill and Training

Empowerment

of

dimensions

and

Indicators
1.1 Women access to employment
1.2 Women contribution to household income
1.3 Access to and control over household
resources
1.4 Participation in household financial decisionmaking
1.5 Saving in bank account
2.1 Women freedom and confidence of
movement
2.2 Visiting market for purchase of household
goods
2.3 Ability to raise voice against social
exploitation
2.4 Attitude towards the education of Children
2.5 Getting help of other family members
2.6 Participation in the general domestic matters
3.1 Exercising the right to vote
3.2 Awareness of local, state level and national
polity
3.3 Participation in panchayat meetings
3.4 Leadership quality
4.1 Education and ability to read and write
4.2 Having workable knowledge of calculations
4.3 Maintaining records of financial transactions
4.4 Understanding of basic banking process
4.5 Read newspaper/view TV for general
awareness
4.6 Training for job

 Microfinance and Women Empowerment:

Women often marginalized women, especially among the poor are the primary loan
recipients of microfinance. Women are the gateway to household security, as they generally
invest more in the welfare of the family than do men. This includes expenses for education,
health care, clothing, shelter and household items. Women are also more conscientious savers
to protect themselves and their family against times of crisis. Women are thus an appropriate
target group for mitigating poverty and maximizing the social impact of development
strategies.
Seventy percent of the worlds poor are women. Yet traditionally women have been
disadvantaged in access to credit and other financial services. Commercial banks often focus on
men and formal businesses, neglecting the women who make up a large and growing segment
of the informal economy.
Microfinance on the other hand often targets women, in some cases exclusively. Female clients
represent eighty-five percent of the poorest microfinance clients reached. Therefore, targeting
women borrowers makes sense from a public policy standpoint. The business case for focusing
on female clients is substantial, as women clients register higher repayment rates. They also
contribute larger portions of their income to household consumption than their male
counterparts. There is thus a strong business and public policy case for targeting female
borrowers.
Children of women microfinance borrowers also reap the benefits, as there is an increased
likelihood of full-time school enrolment and lower drop-out rates. Studies show that new
incomes generated from microenterprises are often first invested in childrens education,
particularly benefiting girls. Households of microfinance clients appear to have better health
practices and nutrition than other households.
Women workers throughout the world contribute to the economic growth and sustainable
livelihoods of their families and communities. Microfinance helps empower women from poor
households to make this contribution. Microfinance the provision of financial services to the
poor in a sustainable manner utilizes credit, savings and other products such as micro
insurance to help families take advantage of income-generating activities and better cope with
risk. Women particularly benefit from microfinance as many microfinance institutions (MFIs)
target female clients.
Microfinance services lead to womens empowerment by positively influencing womens
decision-making power and enhancing their overall socio-economic status. Microfinance has
the potential to make a significant contribution to gender equality and promote sustainable
livelihoods and better working conditions for women.
Womens empowerment through microfinance is key for promoting the International Labor
Organizations (ILOs) Decent Work Agenda, which acknowledges the central role of work in

peoples lives as a means for achieving equitable, inclusive and sustainable development. By
increasing womens access to financial services, microfinance ultimately contributes to ILO core
values of greater gender equality and nondiscrimination.

Potential benefits of rural microfinance: Development spirals

The expansion of microfinance since the 1990s has significantly increased womens access to
facilities for small loans and savings. This increased access to microfinance has been seen as
contributing not only to poverty reduction and financial sustainability, but also to a series of
development spirals of economic empowerment, increased well-being and social and political
empowerment for women themselves, thereby addressing goals of gender equality and
empowerment. Some of the dimensions, impacts and interrelation among the various spirals
are shown in the figure.
First, increasing womens access to microfinance services can lead to their economic
empowerment (the linkages in the centre of the figure). Womens roles in household financial
management may improve, in some cases enabling them to access significant amounts of
money in their own right for the first time. This might enable women to start their own
economic activities, invest more in existing activities, acquire assets or raise their status in
household economic activities through their visible capital contribution. Increased participation
in economic activities may raise womens incomes or their control of their own and household
income. This, in turn, may enable them to increase longer-term investment in and productivity
of their economic activities, as well as their engagement in the market.
Second, increasing womens access to microfinance can increase household wellbeing (the
linkages on the left in the figure). This is partly the result of economic empowerment, but may
occur even where women use microfinance services for the activities of other household
members, for example husbands or children. Even where women are not directly engaged in
income earning activities, channeling credit or savings options to households through women
may enable them to play a more active role in intra household decision-making, decrease their
own and household vulnerability, and increase investment in family welfare. This situation may
benefit children through increasing expenditure on their nutrition and education, particularly
for girls. It can also lead to improved well-being for women and enable them to bring about
changes in gender inequalities in the household. It is also likely to benefit men as a result of the
increased household income.

Womens
repayment
and premiums

Financial
Services

Womens decision on financial management

Womens
Economic activity

Increased
household income

Womens
Well-being

Childrens
well-being

Household wellbeing
(Nutrition, Health,
Literacy, Happiness)
Mens
Well-being

Poverty
Reduction

Increased
income from
womens
activities

Increased
investment
and
productivity

Womens
economic
empowerment
Increased
control over
income, assets
and resources

Increased
access to
market

Economic
Growth

Increased status
and changing roles

Increased
confidence
and skills

Womens
network
and
mobility

Womens social
and political
empowerment
Power to challenge
and change gender
relations

Womens
human rights

Third, a combination of women's increased economic activity and increased decision-making in

the household can lead to wider social and political empowerment (the linkages on the right in
the figure).Women, themselves, often value the opportunity to make a greater contribution to
household well-being giving them greater confidence and sense of self-worth.
The positive effects on womens confidence and skills, their expanded knowledge and the
formation of support networks through group activity and market access can lead to enhanced
status for all women in a community. In some societies where womens mobility has been very
circumscribed and women previously had little opportunity to meet women outside their
immediate family, there have been very significant changes. Individual women who gain

respect in their households may then act as role models for others, leading to a wider process
of change in community perceptions and mens increased willingness to accept change.
Most microfinance providers can cite case studies of women who have benefited substantially
from their services both economically and socially. Some women who were very poor before
entering the programme have started an economic activity with a loan and have built up
savings, thereby improving their own and household well-being, as well as relationships in the
household, and becoming more involved in local community activities. Some women and many
women in some contexts, show enormous resourcefulness and initiative when provided with a
loan or given the chance to save without interference from family members. Impact studies
that differentiate by poverty level generally find benefits to be particularly significant for the
better-off poor, who have some education and contacts on which to build in conducting a
successful enterprise.
Finally, womens economic empowerment at the individual level (the linkages across the
bottom of the figure) can make potentially significant contributions at the macro level through
increasing womens visibility as agents of economic growth and their voices as economic actors
in policy decisions. This, together with their greater ability to meet the needs of household
wellbeing, in turn increases their effectiveness as agents of poverty reduction. Microfinance
groups may take collective action to address gender inequalities within the community,
including such issues as gender violence and access to resources and local decision-making.
Higher-level organization may further reinforce these local changes, leading to wider
movements for social and political change and promotion of womens human rights at the
macro level. Some NGOs have used microfinance strategically as an entry point for wider social
and political mobilization of women around gender issues. Savings-and-credit groups have at
times become the basis for mobilizing womens political participation.
Moreover, these three dimensions of economic empowerment, well-being and social and
political empowerment are potentially mutually reinforcing virtuous spirals, both for individual
women and at the household, community and macro level.

 Previous Studies on Women Empowerment through Microfinance:

There is plenty of literature about the impacts of microcredit, mostly in the form of case
studies and evaluations of existing microcredit programs effect on income and
consumption. Most of these studies show some evidence that support a positive impact of
microcredit on increasing the household income for borrowers. Hulme and Mosley (1996)
wrote one of the most cited and earliest studies of microcredit and poverty alleviation. The
authors employed a control group approach while looking at the changes in income for
households villages served by microcredit programs and changes for similar households in non
program villages. They conducted the survey in a number of countries including Bangladesh and
Indonesia between 1988 and 1992. A positive impact was found on borrowers, both male and
female, income with an average increase over the control group ranging from 10-12percent in
Indonesia, to around 30percent in Bangladesh (Hulme and Mosley, 1996).
Bangladesh institute of Development studies (BIDS) and the World Bank conducted another
early and significant empirical study in 1991 and 1992. A quasi-experimental household survey
was conducted on 1,798 households, from 87 villages in rural Bangladesh. This survey has
provided data for several analyses (for example Khandker and Pitt 1998).Khandker and Pitt
(1998) focused their research on the following three major microfinance institutions: Grameen
Bank, Bangladesh Rural Advancement Committee (BRAC), and Bangladesh Rural Development
Boards (BRDB). Impact of microcredit on income was assessed using a double-difference
approach between eligible and ineligible households and between microcredit program villages
and non-program villages. After controlling for other factors, such as household characteristics,
any remaining difference was attributed to the microcredit programs. The main conclusion
drawn was that microcredit programs had a positive effect on household consumption,
especially for female borrowers. On average, a loan of 100 taka to a female borrower allowed
for a net consumption increase of 18 taka (Khandker and Pitt, 1998).
Banarjee, Duflo, Glennerster and Kinnan (2010) conducted a more recent study in 2009 in
Hyderabad, the fifth largest city in India. The authors used a randomized evaluation approach
were 52 of 104 villages around Hyderabad were randomly selected for opening of a Spandana
microfinance branch.18 months after the introduction of microcredit in each area, a household
survey was conducted in each village, in a total of 6850 households. The results show a
significant impact on how many new businesses started as well as profitability of preexisting
businesses in the villages that received microcredit (Banarjee etal. 2010).
As shown above, there seems to be some evidence that participation in microcredit programs
has a positive effect on female income and consumption. There is, however, no real consensus

among academics about the impact of microcredit on womens empowerment. Existing

literature suggests that participating in a microcredit program can be both empowering and
disempowering. However, there seem to be a majority that believes that microcredit positively
affects womens empowerment. Hashemi, Schuler and Riley (1996) made one of the earliest
studies on microcredit and its effect on women empowerment in 1996. A longitudinal study
was conducted on 1300 married women in Bangladesh between 1991 and 1994 by comparing
participants of two different microcredit programs, Grameen Bank and BRAC, with a control
group. The control group was divided into a group of women with access to the same banks and
another group with no access to microcredit. Empowerment was assessed via a number of
factors such as womens mobility, ability to make purchase, ownership of assets, and political
awareness. According to their definition of empowerment, they concluded that married women
involved in a microcredit program were more empowered than the women who were not part
of a microcredit program (Hashemi, etal., 1996).
Kabeer (2001) examined the relationship between microcredit and women empowerment by
interviewing both female and male microcredit program participants in two areas in
Bangladesh. She argues that conclusions about the impact of microcredit are reflected by the
questions asked by the evaluator. On that basis, she suggest that womens own testimonies
would give a better picture of the empowerment level than a survey that only measures certain
aspects of their behavior. The conclusion from her study is that women who received
microcredit had a higher self-worth and better access to capital. Even if participating in a
microcredit program in some cases led to a higher workload, the women think positively about
their increased contribution to the household income. Furthermore, she finds that in many
cases microcredit increased womens decision-making ability within the household (Kabeer,
2001).
Health, nutrition, family planning, education etc. are the key areas of social aspects where MFIs
concentrates to develop by means of offering microfinance. Chowdhury and Bhuiya (2004)
assessed the impact of BRACs poverty alleviation program from a human well-being
perspective where they examined seven dimensions of human well-being, such as increased
income, improved womens lives, control over fertility, sustainable environment, decreased
mortality and increased nutritional status. They found that the project was leading to higher
child survival rates, nutritional status, and improvement in the primary level of education.
Children of BRAC members were suffering from less protein-energy, malnutrition than children
of non-members. The rate of enrollment in school also higher than that of children of non-BRAC
households and per capita calorie intake of clients was also significantly higher compare to nonmembers.

On the other hand, a study conducted by the World Bank (1995) in collaboration with the
Bangladesh Institute of Development Studies, which showed that the Grameen Bank have been
able to improve the welfare of participating households by increasing caloric intake and
improving better nutritional status of children that enhanced the households capacity to
sustain their gains over time. A study carried out by the United Nations Population Fund and
Research and Applications for Alternative Financing for Development (2006) in collaboration
with microfinance institutions found a relationship between microfinance and social
performance which was exemplified by the strong positive impact of microfinance on women
empowerment and a less verifiable impact on sexual and reproductive health. However, this
impact was strengthened with a positive impact on both empowerment and sexual and
reproductive health when microfinance was given in conjunction with health education
services containing a component on HIV/AIDS, the study also found.
A study of Zohir in 2002 also shows that in case of income-earning assets, such as, poultry and
livestock, positive impact of microcredit is quite evident. The findings of the study also clearly
reveal that a higher percentage of microcredit borrowers among the eligible households' own
poultry, goat/sheep and cows, when compared with the non-participants. Ownership of such
assets as bicycles, hand tube well and rickshaw/van is more prevalent in microcredit
programme villages, compared with the control villages. He showed that the microcredit
borrowers have greater access to the land rental market, and thereby better ensure
employment (on rented-infirm) and food security from their own production. The study also
estimates about 26% of rice consumption by the land-poor households are met out of their
own production (after sale).
Mamun (2013) provides a case study that gives a clear idea of how effective microcredit has been in
bringing changes in rural areas by interviewing a random sample of 107 women borrowers under
microcredit program in Bangladesh. The case study specifically looked into the effect of micro-credit
on the education, health-care, women empowerment, asset base, and shelter/housing of the
households. The study notes that microcredit plays an extremely crucial role in helping borrowers
for their childrens education and in continuing their education further. The study also examines the
impact of micro-credit on health, sanitation, and land ownership, changes in livestock rearing
techniques, savings and a variety of issues related to women empowerment. The study comes to
the conclusion that the impact that microcredit has on the lives of the studied households is clearly
evident as well as overwhelmingly positive, but that an only commercial micro-credit approach is
not going to bring out the desired result. A welfare approach with proper guideline with constant
mentoring to use the money is equally important.
Jeffery Sachs (2005) in a visit to a BRAC project was amazed to find that women he spoke to had
only one or two children, when he was expecting them to have five or six as he had become
accustomed to for Bangladeshi women. When he asked those with no or one child how many

children theyd like to have, the majority replied two. He calls this a demonstration of a change
of outlook (2005, p.14). He refers to a new spirit of womens rights, independence and
empowerment among clients, showing the positive empowerment effects the project has had
on the women.
Among ultra-poor microfinance beneficiaries of different MFIs in Bangladesh, Alamgir (2006)
found that though credit was the main attraction for joining MFIs, there had been significant
improvement in asset building and positive impact of microcredit was also manifested in better
sanitary and health conditions and increased empowerment of women (Alamgir 2006, 102106.)
A number of studies conducted in India have shown a positive relationship between access to
microcredit and women empowerment (Bali Swain 2007; Holvoet, 2005 and Puhazhendi and
Badatya, 2002). Bali Swain (2007) examined the effect of Self Help Groups (SHG), a group
lending form of microcredit, on women empowerment in five Indian states. First, a household
survey was performed on 805 women who were members of a SHG and on a control group with
156 women who did not have access to SHG or credit in 2000.Three years later, the same
survey was performed on the same respondents as in 2000.The authors then compared the
increase in empowerment for the treatment group and the control group between 2000 and
2003.Empowerment was measured by looking at the value of owned land, the value of owned
assets, whether women were main income earners in the household, literate or not, whether
engaged in wage labor or farm activity, and household income. They found a significant
improvement from 2000 to 2003 for the SHG group, in contrast with the control group were
there were no statistically significant improvements in empowerment (Bali Swain, 2007).
Holvoet (2005) conducted another study of two different microcredit programs in India in
2005.The microcredit participants household decision making ability was examined via a
questionnaire. The microcredit programs examined were the Rural Development Program
(IRDP) and the Tamil Nadu Womens Development Program (TNWDP), which both have female
and male borrowers. The survey was conducted on 497 women who received a loan between
1990 and 1991 from TNWDP, and 200 women who received a loan from TNWDP between 1993
and 1994.The sample also included 420 men and 180 women who received a loan from IDRP,
leading to a total sample of 1297 respondents. Decision making ability was assessed via seven
types of decisions; loan use, expenditures, money management, time and task allocation, family
matters, agricultural business and the cottage industry. The findings suggest that microcredit
has a positive effect on womens decision making ability, but only when it comes to household
decisions regarding loan use and not for household decisions regarding expenditures and family
matters (Holvoet, 2005).

Badatya and Puhazhendi (2002) measured the effects of SHG program provided by the National
Bank for Agriculture and Rural Development (NABARD) on women empowerment in 2002. They
conducted a survey on 115 SHG women participants between 2000 and 2001 both before SHG
membership and during their membership. Empowerment was examined through questions on
self confidence; decision making ability, communication skills and behavioral changes were
each of these dimensions had 2 to 4 sub indicators. They found that, in general, members
increased their self confidence as an effect of SHG membership. Also, positive effects regarding
influence over financial decision making within the household, courage to protest, and mobility
was a result of SHG membership (Badatya and Puhazhendi, 2002).
A study by Khan and Noreen (2012) on the role of microfinance in empowerment of women in
the Bahawalpur district in Pakistan finds that access to credit through microfinance
organizations has a positive impact on womens empowerment and also that loan utilization by
the woman herself is of importance. Khan and Noreen measure empowerment by the
construction of an index from indicators of child health, education, selection of spouse of
children, purchase of basic goods, and decision on the use of loan.
Apart from credit--access (measured in amount of loan), the study finds that age, education of
husband, and number of live sons, marital status, and father inherited assets are factors that
have a positive effect on womens empowerment. Based on these results, Khan and Noreen
conclude that the womens empowerment that emanates from microfinance can be increased
by also increasing the amount of loans.
Showing concern over media reports and research studies on the impact of microfinance, six
internationally notable microfinance practitioners Grameen Foundation, ACCION International,
FINCA, Womens World Banking Opportunity International and Unites recently came up with a
common statement where they claim that many research studies and media reports have failed
to portray the real impact of microfinance in reducing poverty, providing financial services to
the poor and empowering them. In a joint statement published by ACCICON, they claim, as
microfinance practitioners, we have witnessed the positive impact of microfinance first-hand.
For the last four decades, our work has regularly brought us face-to-face with clientsthe
majority of them womenin more than 40 countries across five continents and for these
clients, business loans from microfinance institutions open a world of opportunity previously
closed to them by the formal financial sector. Loans enable them to buy tools and materials to
start an income generating business and/or to increase the productivity of an existing business.
Increased income generated from these businesses allows them to pay school fees to educate
their children, stabilize food sources, and pay for other expenses that lead to the improvement

of the health and well-being of their families. (ACCICON 2010, 1.)

Other studies indicating a positive relation between microfinance and empowerment include
Kato and Kratzer (2013) and Pitt et al. (2006). Using both quantitative and qualitative data on
women in three different regions in Tanzania, Kato and Kratzer (2013) examined how
participation in a microfinance program affected womens control over savings and income
generated from business, participation in household decision-making, household ownership of
properties/assets, self-esteem, self-efficacy and mobility. The results indicate an increase in all
of the areas above for members of a microfinance program compared to non-members. Pitt et
al. (2006) use data from Bangladesh and measure empowerment as a latent variable that
incorporates a number of indicators those proxy womens autonomy, decision-making power as
well as participation in household and societal decision-making. The findings of the study
indicate that microfinance empowers women as participation in a microfinance program makes
women take a greater role in household decision making, have greater access to financial
resources, increase their social networks, increase their bargaining power compared to their
husbands, as well as have a greater freedom of mobility.
In her study, Ackerly (1995) noted that underpinning most credit interventions in Bangladesh
was an implicit model of the empowered woman: Empowered, the borrower wisely invests in a
successful enterprise, her husband stops beating her, she sends her children to school, she
improves the health and nutrition of her family, and she participates in major family decisions.
According to Dunn (2002) and Cohen, M. and Bourjorjee, D. (2003), Impact Assessment (IA) for
microfinance can be carried out at three different levels i.e. household level, enterprise level
and individual level.
The impact assessment programmes should capture the changes in the household level due to
microfinance programme. The household economic positions like income, expenditure, asset
position, livelihood portfolio, etc. may be changed over time due to the increasing access of
households to microfinance products and services. The psycho-social changes can be
experienced at the household level i.e. change in literacy, migration, gender equality, health,
social status, etc.
In general, effective microfinance programmes bring a positive change in individual level. It
develops managerial ability among the beneficiaries and increases status and position not only
in the society but also in the house/family. The increase in capacity development due to
microfinance programmes leads to a change in individual income level, expenditure pattern,
living condition, literacy position, awareness, accessibility, equity and equality to the household
and also in community assets, etc.

Microfinance programmes influence microenterprise operations i.e. change in profits, scale of

operations, diversifications, etc.
Despite the many studies that find microfinance to have a positive effect on womens
empowerment, there are also parts of the literature that are more skeptical. One of the most
frequently cited studies is Goetz and Gupta (1996), a study on women participating in
microfinance programs in Bangladesh. They find that the men often control the loan given to
the women. When it is time to repay the loan, the lack of control has a negative impact on
womens empowerment. Goetz and Gupta also suggest that, in some cases, the woman is in
risk of being exposed to violence when asking the man for money to repay the loan.
Salman Asim, having been based on his empirical research work in the urban slums of LahorePakistan, claims that participation in microcredit program has no effect on women's say in all
but one domain of household decisions, i.e. decisions regarding major household purchases.
He also claims that the link between microcredit and womens empowerment was found to be
rather weak. (Asim 2008, 2.)
Johnson (2004, p.5) states that having women as key participants in microfinance projects does
not automatically lead to empowerment; sometimes negative impacts can be witnessed. She
refers to increased workloads, increased domestic violence and abuse. This leads her to ask a
crucial question of whether targeting women is just an efficient way of getting credit into the
household, since women are more likely than men to be available in the home, attend
meetings, be manageable by field staff and take repayment more seriously, even if they do not
invest or control the loan themselves? Or on the other hand, if such targeting is fully justified
on the grounds of enhancing gender equity. She claims the answer is probably somewhere
between the two alternatives. She argues that MFIs must analyze both the positive and
negative impacts their interventions are having on women, and that MFIs need to work with
men to help pave the way for a change in attitudes to womens enhanced contribution to the
household.

Country Overview: Bangladesh

Bangladesh, officially the People's Republic of Bangladesh is a country located on the fertile
Bengal delta in South Asia. It is bordered by India to its west, north and east, by Burma to its
south-east and by the Bay of Bengal to its south. The country is divided into seven
administrative divisions and sixty-four districts. Dhaka is its capital and one of the world's
largest cities. Bangladesh is also known as "the land of rivers".
Straddling the Tropic of Cancer, Bangladeshi climate is tropical with a mild winter from October
to March, and a hot, humid summer from March
to June.
The population of Bangladesh as of 15 March
2011 is 142.3 million (census 2011 result), much
less than recent (20072010) estimates of
Bangladesh's population ranging from 150 to
170 million and it is the populous nation in the
world. In 1951, the population was 44 million. It is
also the most densely populated large country in
the world, and it ranks 11th in population density,
when very small countries and city-states are
included. Population density (people per sq. km)
in Bangladesh was measured at 1174.33 in 2011,
according to the World Bank.
Bangladesh has the fourth largest Muslim
population
after Indonesia,
Pakistan
and
India. Islam is the largest religion of Bangladesh,
making up 90.4% of population. Hinduism makes
Source: Bangladesh Maps and Satellite Images
up 8.2% of the population, Buddhism 0.7%,
Christianity 0.6%, and others of 0.1% of the population.
The majority of Muslims are Sunni, roughly 4% are non-denominational Muslims.
31.5 percent of the populations were living under the national poverty line (i.e. earning less
than one dollar per day) (World Bank, 2012). The countrys poverty has various dimensions,
which are apparent in terms of inequality in income distribution, dramatic increases in the cost
of living, malnutrition, unemployment and internal migration. The reasons for poverty include:
lack of resources, good governance and infrastructure, high population rate as well as
macroeconomic issues (such as high inflation rate (6.3% as of 2011) and limited employment

opportunities), and natural disasters due to geographical and demographical characteristics,

which make most of its low lying land prone to flood. Poverty is especially persistent in three
areas: the north-west, which is affected by droughts and river erosion; the central northern
region, which is subject to serious seasonal flooding that limits crop production; and the
southern coastal zones, which are affected by soil salinity and cyclones.
However, some positive changes in the economy have been occurring since Bangladesh gained
its independence in 1971. As demonstrated in the Figure, GDP per capita (expressed in constant
2005 international dollar that is, corrected for differences in purchasing power) has more than
doubled in Bangladesh from $677 (in 1980) to $1,488 (in 2010). For South Asia, GDP per capita
(expressed in constant 2005 international dollar) has nearly tripled during the same time period
(starting from $890 to slightly more than $2,800). Largely due to the nearly stagnation in
Bangladeshs GDP per capita during the 1980s, Bangladesh has fallen behind that of South
Asias GDP per capita, while GDP per capita growth has been close to the South Asian average
in the first ten years of this millennium (with an average growth rate of 4.3 percent for
Bangladesh, compared to 5.1 percent for South Asia).

Figure: GDP per capita (expressed in constant 2005 international dollar that is, corrected for
differences in purchasing power)

Bangladesh has maintained an impressive track record on growth and development. In the past
decade, the economy has grown at nearly 6 percent per year, and human development went
hand-in-hand with economic growth. Poverty dropped by nearly a third, coupled with increased
life expectancy, literacy, and per capita food intake. More than 15 million Bangladeshis have
moved out of poverty since 1992.

Looking at life expectancy, Bangladesh has basically caught up with South Asia by 1980, and has
clearly overtaken South Asia since 1990. In Bangladesh, life expectancy at birth (combined for
males and females) has increased from 41.9 years (in 1970) to 66.6 years (in 2010), while that
of South Asia has increased from 48.7 years to only 65.3 years during the same time period.

Figure: Life expectancy at birth

Bangladesh has also made considerable progress in reducing maternal mortality. While the
maternal mortality ratio was 870 deaths per 100,000 live births in 1990, in 2010 it decreased to
190. As Figure shows, today, Bangladesh has a lower maternal mortality rate than that of the
average South Asian country, and the ratio is even below that of India. Bangladeshs progress in
increasing life expectancy and reducing maternal mortality are only two examples of
Bangladeshs overall progress in social development.

Figure: Maternal mortality ratio

Bangladesh aspires to be a middle-income country by 2021. This will require increasing GDP
growth to 7.5 to 8 percent per year based on accelerated export and remittance growth. Both
public and private investment will need to increase as well. Growth will also need to be more
inclusive through creation of productive employment opportunities in the domestic economy.
To sustain accelerated and inclusive growth, Bangladesh will need to manage the urbanization
process more effectively, as well as prepare for adaptation to climate change impacts.
Becoming a middle-income country will require substantial efforts on many fronts. These
include maintaining macroeconomic stability; strengthening revenue mobilization; tackling
energy and infrastructure deficits; deepening financial-sector and external trade reforms;
improving labor skills, economic governance, and urban management; and adapting to climate
change. Bangladesh can become an export powerhouse, with its labor-intensive manufactured
and service exports growing at double digits on a sustained basis, if it speeds up government
decision-making.

 Womens Situation in Bangladesh:

Bangladesh has made important gains in the area of gender equality during the last decade. The
government has made reforms with regards to violence against women; equal pay and
maternity leave rights.
Based on the available economic literature and anecdotal evidence, we show that womens
access to education played a key role in Bangladeshs successful population transition. A
tripartite effort by the government, Non-Government Organizations (NGOs) and donor agencies
has been the key catalyst in educating the female population of Bangladesh. These efforts have
also been extended to making healthcare more accessible for the women in the country.
When it comes to access to employment and earnings, women find better opportunities in
Bangladesh than many of their South Asian peers. This is largely due to, among other factors,
the meteoric rise of microfinance industry in the country that generally offers easy access to
credit for the poorest of the poor. Moreover, the labor-intensive apparel industry absorbs a
large number of young women. As a result, the labor force participation rate of women in
Bangladesh is very high compared to most South Asian economies.
Apart from economic factors, Bangladeshs social and political institutions (such as courts, law
and order, civil society, etc.) play a supportive role in protecting womens rights.
Empowerment of women is a global challenge since traditionally women have been
marginalized and subjected under the control of men. About 70 percent of worlds poor are
women (Khan & Noreen, 2012). Traditionally, women especially those in underdeveloped
countries have been unable to readily participate in economic activity. This social obstacle does
not only impede womens integration in development but also make injustice towards women.
But when Bangladesh is concerned, a modern Muslim dominating country where poor women
having some kind of religion restrictions especially in rural areas are much more empowered
than women of other developing countries. Women in Bangladesh have gained an international
reputation for their excellent performance as microfinance beneficiaries in microfinance
institutions. For this in 2006 Grameen Bank, a well renowned microfinance institution and its
founder Dr. Mohammad Yunus have jointly been awarded Nobel Prize for peace. Some of the
largest microfinance institutions of Bangladesh in the world BRAC, Grameen Bank, ASA
provide access to finance to nearly 20 million poor people. With a population of 165 million of
which 55 % are female and a density of 1127 person per square kilometer, Bangladesh is one of
the most densely populated countries in the world. Poverty, landlessness, unemployment,
malnutrition, rapid population growth and frequent natural disasters are the common endemic
problems of the country. Apart from the problems, Bangladesh has some good news to discuss.
Nobel laureate Professor Amarta Sen (2013) said Immunization rates in Bangladesh are at 96
percent; Bangladesh comprehensively overtakes India in most human development categories
except per capita income; I think womens agency made a big difference in Bangladesh.

Women got involved in family planning, immunization; health care early, those are helping
Bangladesh to improve in some social indicators.
Despite the recent progress, Bangladesh still has several areas where gender equality could be
improved. First, women, especially in the rural areas, are rarely aware of their rights, making it
more difficult to change traditional gender discriminating customs within society (The Asian
Development Bank, 2001). Also, the United Nations estimated that 48percent of all the girls
between 15 and 19 years of age in Bangladesh was either married, divorced or widowed in
2008 (UN,2008).Another gender equality area is womens legal right to own and manage
property. Despite womens significant role in agriculture, social practices and traditional
customs exclude women from direct access to land. It is often the case for women not to claim
her share of the family property unless it is given willingly.

A brief history of microfinance in BangladeshIn 1971 Bangladesh emerged as an independent nation. The independence movement gave rise
to a new generation of young activists who were keen on contributing to the reconstruction of
this war-ravaged country. The new government and a myriad of aid agencies that arrived on the
scene were unable to cope with the scale of destitution and non-governmental organizations
emerged to meet the challenges.
The early years of the NGO movement in Bangladesh focused on relief and rehabilitation with
an emphasis on community development. However, by the mid-1970s, two of the NGOs that
would subsequently expand in scale, BRAC and Proshika, found that elite capture was a
serious impediment to their development objectives. As a result, a separate focus on the poor
through a target-group approach was introduced. Moreover, an ideological debate within
both these organizations began to brew, between those who favored economic tools (credit,
savings etc) to support poverty reduction and those who believed that social mobilization
against existing injustices would suffice and financial services were unnecessary.
The Grameen Bank was started as an action research project in 1976, when a Chittagong
University team led by economics professor Muhammad Yunus began to lend small amounts of
money to poor households in a few nearby villages. Borrowers were mobilized in peer groups
composed of four or five individuals who were jointly responsible for each others repayment.
Several of these small peer monitoring groups were organized into a larger unit which would
meet weekly with the primary purpose of repaying loan installments. The process of trial and
error included combining males and females in the same credit group and then changing this to
separate groups divided by gender. It also included forming occupational groups but this was
dropped in favor of village-based groups. The demand for loans grew rapidly and Professor

Yunus enlisted the support of the Bangladesh Bank and commercial banks to provide the
Grameen Project as it was then called with resources. The success of this experimentation
paved the way for the establishment of the Grameen Bank under a special ordinance in 1983.
In the early 1980s several NGOs experimented with different ways of delivering credit. One
important mode tested was the efficacy of providing loans for group projects compared to
offering loans to individuals with peer monitoring. The broad lesson was that the latter was
more effective due to incentives and free-rider problems compared with lending to a group.
Hence by the late 1980s the predominant model became one of providing individual loans to a
target group of poor households, with peer monitoring and strong MFI staff follow-up.
The Association for Social Advancement (ASA) is a classic example of this shift. Its initial
emphasis was on forming peoples organizations mobilized for social action against oppression.
It changed to the target group approach and then toward the provision of financial services in
the late 1980s. Now ASA is the fourth largest MFI in Bangladesh in terms of clients and its
unique low-cost credit delivery mechanism is being replicated in several other countries. ASA
keeps paperwork requirements to a minimum, has decentralized most decision-making to the
field and overall has a very lean operation.
The 1980s and early 1990s were also important in the development of management capacity
within several of the large MFIs which allowed them to expand their microcredit programs.
What is particularly interesting is that the development of the know-how and confidence to
implement large programs arose, in some cases, from the experience of scaling-up programs
not related to microcredit. For instance in the case of BRAC, the first major experience with a
nationwide program came about when it implemented an oral rehydration program to combat
diarrheal disease. Thirteen million women were trained to use a simple but effective
rehydration solution and BRAC staff were paid based on how many of their trainees used and
retained this knowledge.
The early 1990s was the period of rapid expansion of the Grameen-style microcredit approach
(Ahmed 2003). The growth was fueled largely by a franchising approach whereby new
branches replicated the procedures and norms that prevailed in existing branches. The product
that was offered to the client at the time was fairly narrow, focusing mainly on a standard
microcredit package offered to all clients. The view was that it was easier to recruit new staff
and train them quickly in a simple product during a phase when branches were opened at a
rapid rate. This growth was clearly aided by the high population density and relative ethnic,
social and cultural homogeneity in Bangladesh.

A notable shift that took place during this expansion phase was a greater emphasis on
individual borrower accountability for loan repayment and less reliance on peer monitoring.
Staff follow-up of loans became more rigorous and professional with the use of computerized
Management Information Systems. Donor funds also contributed to expanding the revolving
loan funds for MFIs during this expansion phase. Moreover this period saw the emergence of
PKSF as a wholesale financing institution. Following this expansion, a geographical mapping of
microfinance suggests that all districts in Bangladesh have microcredit services, though there
are many smaller pockets with little or no coverage (e.g. Chittagong Hill Tracts). A closer look
shows that there is somewhat greater coverage of poor households in the central and western
districts. The south-east and pockets of the north-east are areas with room for more expansion
(PKSF 2003).
Feedback from the field, academic research and international experience contributed to an
increasing emphasis on providing diversified financial services for different groups of
households from the mid 1990s onward. The benefits of a narrow focus on microcredit during
the expansion phase was that it kept costs low, operations transparent and relatively
straightforward management oversight. However, it became clear that the standard Grameen
model of providing microcredit with fixed repayment schedules, with standard floors and
ceilings on loans sizes, was not sufficient to meet the needs of the extreme poor or the
vulnerable non-poor group.
Moreover, existing g microcredit borrowers also required complementary financial and nonfinancial services. The standard practice for MFIs until the late 1990s was to collect compulsory
weekly savings from their clients, holding the money as a de-facto lump sum pension returned
when a client left the organization. Access to these deposits was otherwise limited, which
curtailed a potentially important source of consumption-smoothing. Recognizing these
limitations an increasing number of MFIs in Bangladesh have introduced an open access current
account scheme in addition to the fixed deposit scheme. Moreover, many MFIs have life
insurance products whereby outstanding microcredit debts are written off and other benefits
are paid following the death of a borrower. Non-credit services can also take the form of input
supply, skill training and marketing support for micro-entrepreneurs. A complementary package
to microcredit can also take the form of providing education for the children of borrowers.
Grameen Bank for instance has a scholarship program for female secondary education and a
student loan program for tertiary education. Similarly many MFIs have community health
programs, legal literacy training and provide information on accessing local resources. Results
from a survey of 310 NGOs conducted in 2003 shows that the typical NGO provides around four
services but that almost all (92%) provide micro-credit as one of these services the other

common services are health, sanitation, education services that are provided by around half of
the sampled NGOs (Gauri and Galef 2004).
MFIs began to experiment with catering to new niche markets as the traditional microcredit
business became standardized (and horizontal expansion slowed) and required less attention.
For instance several NGOs began providing larger loans to graduate microcredit borrowers
and in some cases to households who were not part of the microcredit system but which
wanted a micro- enterprise loan. These loans typically range from 20,000 taka (around $320) to
200,000 taka ($3,200). Innovative solutions are also emerging to address the problem of access
to finance for the small enterprise sector. For instance, BRAC established a separate financial
institution, BRAC Bank that focuses on lending to the smaller end of the small enterprise
sector, with loans averaging 400,000 taka.
Moreover, evaluation studies pointed out those extremely poor households were struggling to
benefit from the standard microcredit model, even if they joined the programs. The main
reasons were: (i) minimum loan floors for a first loan that sometimes exceeded their own
perceived needs, (ii) fixed weekly loan repayments could be difficult to commit to in light of
sharp seasonality of income, (iii) other members of peer-monitored groups sometimes do not
wish to guarantee loans for extremely poor households etc and (iv) residing in remote or
depressed areas. Programs that have been developed to cater for these constraints include (i)
introducing more flexible repayment schedules such as ASAs Flexible Loan Program, (ii)
lowering first loan floors so that amounts as small as 500 taka ($9) can be borrowed, (iii)
Grameens program that offers zero interest loans to beggars, (iv) the Resource Integration
Centers program that specializes in offering loans to a specific vulnerable group - the elderly
poor, (v) various programs that combine food aid with microcredit and training e.g. BRACs
IGVGD program, and (vi) targeting remote areas through for instance ASAs cost-effective minibranch system and Integrated Development Foundations work in the Chittagong Hill Tracts.

State of Microcredit in Bangladesh:

In the backdrop of global double-dip recession and over-indebtedness crisis in microcredit
sector in several countries, Bangladeshs microfinance sector shows strong resilience and
continues to contribute towards enhancement of macroeconomic growth. Bangladesh
microfinance sector is mature now and its assets constitute around 3 percent of GDP in 2011.
Total outstanding loan of this sector (only licensed MFIs) has increased by 20.0 percent from
BDT 145.0 billion in June 2010 to BDT 173.8 billion in June, 2011 disbursed among 20.7 million
poor people, helping them to be self-employed and accelerating overall economic development

process of the country. The total savings has also increased by 23.25 percent to BDT 63.3 billion
in June 2011 compared to previous year from 26.1 million clients, over 93 percent of them are
women.

TABLE-1: Basic Statistics of NGO-MFIs in Bangladesh (As of 30 June 2011)

Particulars

June , 2009

June, 2010

June, 2011

No. of Licensed NGO- 293

MFIs

419

516

576

No of Branches

15,077

16,851

17,252

18,066

No. of Employees

98,896

107,175

109,597

111,828

No. of Clients (Million)

23.45

24.85

25.28

26.08

borrowers 17.79

18.89

19.21

20.65

Amount
of
Loan 134,680.96
Outstanding (Tk. Million
)

143,134.03

145,022.66

1,73,797.60

Amount of Savings( Tk. 47,386.19

Million)

50,610.04

51,362.93

63,304.44

Total
(Million)

June, 2008

Source: MRA-MIS Database-2011

Table 1 shows the overall trend of microfinance statistics in Bangladesh. This sector has created
direct job opportunities for over 111,800 people; 80 percent of them are male and 20 percent
are female. At the end of June 2011, the sector had outstanding loans of BDT 173.8 billion
disbursed to 20.7 million borrowers, and had accumulated BDT 63.3 billion as savings from
around 26.10 million clients over 93 percent of them are women through more than 18,000
branches, by 576 NGO-MFIs licensed by MRA.

TABLE-2: Size-Wise Loan Outstanding and Savings Compositions (As of 30 June 2011)
No
No
of Total Loan % of Total No
of
Categories Range of
Borrowers of
Borrower Outstanding Outstanding Savers
(BDT
MFIs
Million)
Up
1000

to 85

Total
Savings
(BDT
Million)

%
of
Total
Savings

63973

492.48

0.28

87660

192.20

0.30

10012000

177

244974

1566.68

0.90

351054

741.81

1.17

20016000

120

422745

2914.21

1.68

566864

1282.30

2.03

600110000

46

364848

2987.90

1.72

469938

1128.09

1.78

Small

1000150000

103

2218532

19946.10

11.48

2861318

6738.03

10.64

Medium

50001100000

23

1571226

13805.22

7.94

1875363

4713.86

7.45

Large

1000011000000

19

4600621

39483.64

22.72

5527971

14652.13

23.15

Very
Large

1000001Above

11162371 92601.36

53.58

14274780 33856.028 53.51

576

20649290 173797.60

100

26014948 63304.44

Very
Small

100

Source: MRA 2011

Table 2 shows the market scenario of NGO-MFIs in Bangladesh. The top three MFIs contribute
54 percent of total loan outstanding as well as savings of the microfinance sector in Bangladesh.
Two of the largest MFIs, viz., BRAC & ASA, are each serving over five million borrowers. There
are a few more developing fast. On the other hand the smallest 428 NGO-MFIs have
contributed only 4 percent of total loan outstanding and 5 percent of total savings. Institutional
concentration ratio is highly skewed in favor of large MFIs: just 22 institutions are in control of
76 percent of the market share while three largest organizations have control of over 50
percent in terms of both clients and total financial portfolios.

TABLE-3: Scenario of Micro Enterprise Loan

NGO-MFIs
Total
%
Number of
Borrowers

Total Loan %
Outstanding
(Tk Million)

BRAC

249585

1.30

19128.64

11.27

ASA

140496

0.73

9194.57

5.42

Buro Bangladesh

4857

0.03

187.45

0.11

Jagoroni Chakra Foundation

15008

0.08

1067.96

0.63

Padakkhep Manobik Unnayan Kandra

8570

0.04

561.26

0.33

RDRS Bangladesh

3029

0.02

141.12

0.08

Shakti Foundation

3885

0.02

149.10

0.09

Society for Social Service

15552

0.08

1155.40

0.68

TMSS

8816

0.05

621.12

0.37

UDDIPAN

7310

0.04

663.40

0.39

Top 10 MFIs

457108

2.37

32870.01

19.37

Total 576 MFIs

617706

3.21

40059.84

23.60

Source: MRA 2011

Table 3 depicts the scenario of micro enterprise loan, i.e., loans above BDT 50,000, of different
NGO-MFIs in Bangladesh. It is observed that micro enterprise loan outstanding is BDT 40 billion
which is around 24 percent of total loan outstanding in which the top ten NGO-MFIs
contributed around 19 percent. It also shows that BDT 40 billion is disbursed to around 6 lakh
borrowers which are only 3 percent of total borrowers. The table expresses that only the top
NGO-MFIs are capable to run micro enterprise loan.

Selected Indicators of NGO-MFIs in Bangladesh

It is observed from table 4 that savings per member has been increasing over the years. In 2006
savings per member was Tk. 1,207 which stands at Tk.2495 in 2011 an increase to more than
double within the last five years. The loan outstanding per borrower also increased over the
years and average growth rate of loan outstanding per borrower is around 17 percent in 2011
compared to the previous year. The loan outstanding per borrower has increased by more than
100 percent within the last five years. These two indicators, savings per member (average
saving size) and outstanding loan per borrower (average loan size) increased over time perhaps
due to the increase in the income level of the poor resulting in an increase in their need for
higher amount of loans from the MFIs. The ratio between borrowers to clients (members)
remained steady for the last few years, which is within 70 to 80 percent and the savings to

outstanding loan ratio has also been stable from 2006 to 2011. Since the total number of
branches of MFIs has increased at a much higher rate in 2011 compared to the previous year,
the number of members and borrowers per branch has decreased. Substantial rate of increase
in the sizes of loans per borrower and savings per member has resulted in a rise in the total
loan outstanding and savings in the sector. Consequently outstanding loan and saving per
branch has also increased. The loan outstanding amount per branch which was TK 8.42 million
in 2010 has increased by 14.4 percent in 2011.

TABLE-4: Selected Indicators of NGO-MFIs in Bangladesh

Particulars

June '06

June '07

June '08

June '09

June '10

June '11

Savings
per 1,207.34
member (Tk.)

1,332.66

1,448.36

1,735.52

2,097.83

2494.49

Outstanding loan 4,377.11

per borrower (Tk.)

5,048.38

5,614.55

6,188.01

7,558.92

8807.69

Borrower to client 75.1%

(member) ratio

81.6%

81.2%

78.9%

78.0%

78.8%

Savings
Outstanding
ratio

to 36.7%
loan

32.3%

31.78%

35.5%

35.6%

35.9%

Borrower
Branch

per 1,413

1,484

1,496

1,036

1,115

1093.33

Member
Branch

per 1,883

1,817

1,843

1,312

1,429

1387.87

Outstanding loan 6.19

per
branch
(Million Tk.)

7.49

8.4

6.41

8.42

9.63

Savings per Branch 2.27

(Million Tk.)

2.42

2.67

2.28

2.99

3.46

Source: MRA-MIS-2011

Fund Composition of the Microfinance Sector in Bangladesh

While the fund composition of NGO-MFIs is changing, total fund has increased over time. In
2010, the growth was 10.49 percent, which further increased to 20.6 percent in 2011. Total
fund in this sector was Tk. 152.3 billion in 2010 which rose to Tk.183.6 billion in 2011. Palli

Karma Shahayak Foundation (PKSF), the micro finance wholesale funding agency, provides a
large portion of loan fund at a subsidized rate which has increased from Tk. 24.48 billion in
2010 to Tk. 31.76 billion in 2011. Savings from the clients and surplus income from microcredit
operations appeared as two major sources of fund for NGO-MFIs and are the main strength for
their future growth. The clients savings has increased from 31.11 percent to 34.46 percent in
2011- an indicator suggesting that MRA Rules have a positive impact on savings collections.

TABLE-5: Selected Indicators of NGO-MFIs in Bangladesh

Source
Fund

of Jun-08

Jun-09
(%)

36,397.32

29.66 40,526.91

29.73 47,436.35

31.15 63295.88

34.46

from 22,708.58

18.50 22,666.20

16.63 24,484.12

16.08 31767.84

17.30

Loan from 23,487.03

Commercial
Banks

19.13 23,896.37

17.53 23,006.41

15.11 23577.85

12.84

Donors'
Fund

4,549.07

3.71

3.02

2.70

3.82

Cumulative
Surplus

31,170.02

25.39 36,261.74

26.60 42,339.27

27.80 50298.66

27.38

Other
Funds

4,435.49

3.61

6.49

7.16

4.21

Total

122,747.51 100

Loan
PKSF

4,110.29

8,847.97

(%)

136,309.48 100

(Million
Tk.)

Jun-11

(Million
Tk.)

Clients'
Savings

(Million
Tk.)

Jun-10

4,109.29

10,907.40

(%)

152,282.84 100

(Million
Tk.)

7008.37

7727.32

(%)

183675.92 100.00

Source: MRA-MIS-2011

It is observed that although the commercial banks are recently considered a potential source of
fund of microfinance, their share of the total source of fund did not increase over the last three
years. MRA has been putting in efforts to increase loans from commercial banks to the sector
by introducing the banks to the NGO-MFIs. However, borrowing cost from commercial banks is
very high due to high interest rate charged and inflation which discourages NGO-MFIs to
avail this as a source of fund. Previously donor driven NGOs are now trying to rely more and
more on local sources of fund with the decline in foreign funding, which stood at only 3.82
percent in June 2011 which is around 70 percent higher compared to previous year.

Growth of Top NGO-MFIs in Bangladesh

Figure 1 shows the growth of cumulative disbursement of loans of the top NGO-MFIs in
Bangladesh over the last 5 years. The total disbursement of BRAC and ASA is BDT 1000 billion as
of June 2011. Although their total disbursement is overwhelmingly high but growth rate has
reduced over the last four years. The total disbursement of most of the MFIs has increased
during the last four years but yearly growth rate did not increase except for Shakti Foundation
for Disadvantaged Women (SFDW)
Fig.Cumulative Loan Disbursement of the Top NGO-MFIs

 Hypothesis of the Study:

General Hypothesis:
The main hypothesis stipulates that the microfinance contributes in women empowerment.
Microfinance helps to enhance resource base of women and microfinance institutions can
effectively act as a sub-system of local bodies and commercial banks for conferring inputs and
services on the poor.

Specific Hypothesis:

Savings, credits and family self-sufficiency are among various determinants of women
empowerment.

Microcredit impacts the women development/promotion.

Women contribute in family empowerment through microfinance.

There is significant improvement in overall Economic and Social Empowerment Index of

MFIs Members after joining the microfinance programme.

Data Collection:
Throughout the entire report, the effort will be involved to bring out the scenario regarding the
effect of microfinance only in women empowerment. In this study, several secondary data were
used for describing and demonstrating current profile of BRAC and Grameen Bank
microfinance interventions. The secondary data were collected from different books of
microfinance, journal articles, and official publications of different microfinance institutions,
website, magazines, newspapers, published thesis papers of the scholars, published
dissertation papers of the graduates etc.

 Observation Acquired from Secondary Sources

In this study, several secondary data were also used for describing and demonstrating current
profile of Grameen Bank and BRAC microfinance interventions.

A Study on Grameen Bank and BRAC in Women Empowerment:

Once the beginning of the microcredit programmes that mobilize and organize women at the
grassroots levels and provide access to supportive services, the issue of women's
empowerment started to constitute the cornerstone of any discussions on planned
interventions for poverty alleviation.
Existing gender ratio in demographic structure of the country indicates that women comprise
almost 50% of its total population, of whom almost 75% live in rural areas. Most of the women
in rural Bangladesh treated as vulnerable and the poorest of the rural poor. In such a context,
women must be involved in income-generating activities to promote economic growth and
social transformation; otherwise, no development approach can get its real shape. Over the last
two decades, a number of Non Government Organizations (NGOs) have been emerged in
Bangladesh to support the rural poor women in the country by providing them with collateral
free small loans. Alam and Miyagi (2004) essentially remark that microfinance creates incomegenerating activities, which are accounted as micro entrepreneurships. The NGOs in Bangladesh
provide and organize various services to the rural women through micro credit programs,
including social mobilization, health care, literacy and education, sanitation, water supply,
agriculture, etc. Grameen Bank and BRAC (Bangladesh Rural Advancement Committee) are two
of the most successful and the largest NGOs in Bangladesh that have created opportunities for
the poor women to become micro entrepreneurs. The development of womens micro
entrepreneurship has brought changes in their lives.

Grameen Bank:
Grameen Bank Project was born in the village of Jobra, Bangladesh, in 1976. In 1983 it was
transformed into a formal bank under a special law passed for its creation. It is owned by the
poor borrowers of the bank who are mostly women. It works exclusively for them. Borrowers of
Grameen Bank at present own 95 percent of the total equity of the bank. Remaining 5 per cent
is owned by the government.
GB has reversed conventional banking practice by removing the need for collateral and created
a banking system based on mutual trust, accountability, participation and creativity. GB
provides credit to the poorest of the poor in rural Bangladesh without any collateral. At GB,
credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall
development of socio-economic conditions of the poor who have been kept outside the
banking orbit on the ground that they are poor and hence not bankable.
In 2006, the Grameen Bank and Muhammad Yunus were jointly awarded the Nobel Peace prize.
The organization is built around a group-based credit approach that utilizes peer-pressure
within the group to ensure that the borrowers follow through with their payments. As stated
earlier, the government of Bangladesh has fixed the flat interest rate that microfinance
institutions can charge at 11percent.Grameen Banks flat interest rate is at 10percent, which is
repaid via weekly installments (Grameen Bank, 2013a).

Grameen Bank Microfinance Program for Women:

It targets the poorest of the poor, with a particular emphasis on women, who receive 97
percent of the banks loans. Women traditionally had less access to financial alternatives of
ordinary credit lines and incomes. They were seen to have an inequitable share of power in
household decision making. Yunus and others have found that lending to women generates
considerable secondary effects, including empowerment of a marginalized segment of society
(Yunus and Jolis 1998), who share betterment of income with their children, unlike many men.
The Grameen Bank has a total of 8.39 million active borrowers of whom 97percent are
women. It operates via 2,567 branches in 81,386 villages in Bangladesh (Grameen Bank,
2013b).

Grameen Bank Historical Data

Year

Number of Members

1976

10

Percentage of Women
Members
20

1977

70

14

1978

290

24

1979

2200

41

1980

14830

31

1981

24128

39

1982

30416

39

1983

58320

46

1984

121114

56

1985

171622

65

1986

234343

74

1987

339156

81

1988

490363

86

1989

662263

89

1990

869538

91

1991

1066426

92

1992

1424395

94

1993
1994

1814916
2013130

94
94

1995

2065661

94

1996

2059510

94

1997

2272503

95

1998

2368347

95

1999

2357083

95

2000

2378356

95

2001

2378601

95

2002

2483006

95

2003

3123802

95

2004

4059632

96

2005

5579399

96

2006

6908704

97

2007

7411229

97

2008

7670203

97

2009

7970616

97

2010

8340623

97

Table: Grameen Bank Historical Data (1976-2010)

percentage of female members

120
100
80
60

percentage of female
members

40
20
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010

Fig: Grameen Bank Historical Data (1976-2010)-percentage of female members

Total amount of loan disbursed by Grameen Bank, since inception, is Tk 684.13 billion (US $
11.35 billion). Out of this, Tk 610.81 billion (US $ 10.11 billion) has been repaid. Current amount
of outstanding loans stands at TK 73.32 billion (US $ 968.31 million). From November10 to
October'11) Grameen Bank disbursed Tk. 107.30 billion (US $ 1480.53 million). Monthly average
loan disbursement over the past 12 month was Tk 8.94 billion (US $ 123.38 million).
Projected disbursement for year 2011 is Tk 110.00 billion (US$ 1557.63 million), i.e. monthly
disbursement of Tk 9.17 billion (US $ 129.80 million). End of the year outstanding loan is
projected to be at Tk. 78.00 billion (US $ 1105 million).

Top 25 items in order of loan amounts for which member took loans during the year 2011 (January11 December11) :
FOR FEMALE AMOUNT (ORDER DESCENDING)
Serial
Activity Name
1
Rice/Paddy trading
2
Grocery shop
3
Milch cow
4
Cow fattening
5
Bamboo works
6
Paddy cultivation
7
Paddy husking
8
Miscellaneous business
9
Land lease
10
Farming
11
Vegetables cultivation
12
Cane works
13
Vegetables trading
14
Stationery shop
15
Agriculture equipments making
16
Plantation
17
Cloths trading
18
Fish trading
19
Bullock raising
20
Pisciculture
21
Pottery products
22
Garments making
23
Betelleaf cultivation
24
Poultry raising
25
Land cultivation

Female No
636,406
371,682
531,334
528,492
407,736
407,736
398,562
216,167
213,870
240,187
226,999
136,003
140,935
109,327
147,860
140,327
79,176
100,365
117,935
88,361
104,959
59,000
90,837
90,005
87,534

Female Amount
7,693,442,823
7,654,724,649
7,260,011,818
6,489,622,030
6,073,933,971
6,072,882,230
4,455,664,125
3,193,543,920
2,924,261,759
2,744,607,284
2,634,354,945
2,221,682,644
1,967,415,621
1,750,552,783
1,650,402,353
1,598,912,337
1,541,939,831
1,528,974,029
1,480,442,837
1,345,733,448
1,325,309,371
1,202,182,481
1,163,616,628
1,159,658,197
1,038,831,677

Micro Enterprise Loans

Many borrowers are moving ahead in businesses faster than others for many favorable reasons,
such as, proximity to the market, presence of experienced male members in the family, etc.
Grameen Bank provides larger loans, called micro-enterprise loans, for these fast moving
members. There is no restriction on the loan size. So far 3,590923 members took microenterprise loans. A total of Tk 105.96 billion (US$ 1540.58 million) has been disbursed under
this category of loans. Average loan size is Tk 29,507 (US $ 389.69).

Disbursement of Microenterprise Loans during January to December, 2011 (Listed under

broad categories of business activities)

Items

Landless (Male)
Landless (Female)
Total
No.of Loans Amount Loans No.of Loans Amount Loans No.of Loans Amount Loans

Processing
6,257
& Manufacturing
Agriculture
& Forestry
Livestock
& Fisheries
Services
Trading
Peddling
Shop keeping
Total :

223,385,337

174,852

5,891,103,792 181,109

6,114,489,129

3,445

131,451,393

189,377

5,046,698,188 192,822

5,178,149,581

3,214

117,681,936

196,755

5,139,031,674 199,969

5,256,713,610

333
5,147
159
4,729
23,284

9,730,501
241,679,248
9,903,430
219,724,515
953,556,360

19,413
212,746
14,926
117,856
925,925

603,043,975 19,746
6,962,906,512 217,893
320,067,561 15,085
4,589,870,610 122,585
28,552,722,312 949,209

612,774,476
7,204,585,760
329,970,991
4,809,595,125
29,506,278,672

Scholarship Programme for Members Children:

In order to facilitate better educational opportunities for the children of Grameen members,
Grameen Bank launched a scholarship programme for talented students, in 1999.
To encourage schooling of Grameen children, Grameen Bank introduced scholarship
programme, so that, children from the poor families stay in school, and complete in both
academic and extracurricular activities. Priority is given to girls. At least 50% of the scholarship
must go to girls and the remaining 50% will be given to both boys & girls based on overall
performance.
Scholarships are given annually. Up to December, 2012 scholarships to the extent of BDT
309.01 million (USD 3.87 million) were offered to 189,962 students.

Scholarship: 1999-2012
Categories

Number

Total

Girls

Boys

Primary

16566

11454

28020

Junior Secondary

23831

15845

39676

Secondary

33289

28678

61967

Higher Secondary

26745

23015

49760

Cultural

7430

3109

10539

Total:

107861

82101

189962

Higher Education Loans:

The higher Education Loan Programme was introduced in 1997 for the children of Grameen
families so that they can pursue education at the highest level. Since its inception, the
programme has distributed 51,698 loans worth BDT 2945.40 million (USD 41.73 million). In
2012 alone, 1,521 students were sanctioned loans.

Higher Education Loan (Cumulative) as of December 2012:

No. of Female Students

11,962

No. of Male Students

39,736

Total :

51,698

Amount Disbursed (Female)

770.94

Amount Disbursed (Male)

2,174.47

Total :

2,945.41

Village Phone Program:

The bank has diversified among different applications of microcredit. In the Village Phone
program, women entrepreneurs can start businesses to provide wireless payphone service in
rural areas. This program earned the bank the 2004 Petersburg Prize worth EUR 100,000, for its

contribution of Technology to Development. In the press release announcing the prize, the
Development Gateway Foundation noted that through this program:
Grameen has created a new class of women entrepreneurs who have raised themselves from
poverty. Moreover, it has improved the livelihoods of farmers and others who are provided
access to critical market information and lifeline communications previously unattainable in
some 28,000 villages of Bangladesh. More than 55,000 phones are currently in operation, with
more than 80 million people benefiting from access to market information, news from relatives,
and more.
The concept of Village Phone is an idea which caught peoples imagination. Grameen Bank
members have entered the age of information technology by leasing and purchasing cellular
phones. The mobile phones not only create a new business opportunity for the poor, but also
bring access to information, market, health and other services to the remote rural areas of
Bangladesh. This was a major innovation; placing modern cell phones in the hand of the woman
from poorest households in remote villages, something that no telecom operator had dared to
do in the past.
With Grameen Bank financing a Grameen Bank borrower buys a mobile phone to become the
Telephone Lady of the village. She provides the telecommunication services to the village while
earning profits for herself. By the end of 2012, there were about eight hundred forty one
thousand village phone ladies who have together taken loans amounting to BDT 2.68 billion.
The demand of the Village Phone services is increasing day by day. During the year 2012 nearly
377,429 new phones were distributed. Grameen Bank, in collaboration with Grameen Telecom
(The company which was incorporated as a not-for-profit venture under the companies act of
1994) has made a plan to finance nearly 205,000 new phones to its members during the next
year. The additional income by selling telephone service and internet based facility through
electronic recharge system (ERS, EDGE, /GPRS) of village phone ladies is almost double that of
the national per capita income.

Struggling [Beggars] Members Programme:

To reach out to the beggars, Grameen Bank has taken up a special programme, called Struggling
Members Programme which started from July 2002. Begging is the last resort for survival for a
poor person, unless he/she turns towards crime or other forms of illegal activities. Among the
beggars, there are disabled, blind, and retarded people, as well as old people with ill health.

The objective of the programme is to provide financial services to the beggars to help them find
a dignified livelihood; send their children to school and to make them graduate into becoming
regular Grameen Bank members. We wish to make sure that no one in the Grameen Bank
villages has to beg for survival.
Basic features of the programme are:

Existing rules of Grameen Bank do not apply to beggar members; they make up their own
rules.
All loans will be interest-free. Loans can be of a very long term, in order to make repayment
installments very small. For example, for a loan to buy a quilt or a mosquito-net, many
borrowers are paying BDT 2.00 (3.4 cents US) per week.
Beggar members are covered under life insurance and loan insurance programmes without
incurring any cost.
Groups and Centers are being encouraged to become patrons of this type of members.
Each member receives an identity badge with her picture and name, and Grameen Bank
logo.
She can display this as she goes about her daily life, to let everybody know that she is a
Grameen Bank member and this national institution stands behind her.
Members are not required to give up begging, but are encouraged to take up an additional
income-generating activity like selling popular consumer items door to door, or at the place
of begging.

As of 31st December, 2012 cumulative members under this programme reaches at 110,188
out of them 108,833 are women. All the zones have already come under this programme. By
this time 2,567 branches of 266 areas have implemented the programme. So far BDT 165.37
million has been disbursed and BDT 136.27 million has already been repaid. The Struggle
members saving balance stood BDT 8.77 million.

BRAC:
BRAC is as of November 2012 the largest non-governmental organization in the world,
measured in the number of people it has helped. It was established in 1972.
BRAC started its rural development program in 1986 and its rural credit program came into
operation in 1990. Both programs cover four major activities:
1. Institution Building,
2. Sector Programs,
3. Credit Operations and
4. Support Services.
BRAC currently serves 4.39 million Bangladeshi individuals, most of who are women, via
2,150 branch offices with microcredit (BRAC, 2013a). BRAC has a repayment rate of 99.36%.
In 2013, BRAC held USD 373 million in savings for 5.6 million members, 90per cent of whom
are women.

Different Types of Credit Extended by BRAC:

BRAC since its establishment in 1972 has been conducting various social welfare activities to
generate income and employment of the poor people, including extending credit facilities to
them. Overall credit facilities of BRAC can be classified into the following categories:
1.
2.
3.
4.

Simple Credit,
Program Credit,
House Loan,
Enterprise Credit.

Simple Credit:
In this type of credit facilities only credit is supplied to the borrower. No technical assistance is
provided. The borrower utilizes this credit according to his/her necessity. This credit is given is
for one year and the credit is repayable in 46 weekly installments. No service charge is taken on
this type of credit. The main feature of the credit is that the borrower himself is responsible for
utilizing, investing and managing the credit. Simple credit is generally used in the following
activities:
Small business

Rice cultivation,
Rickshaw/Van,
Handloom etc.

Program Credit:
This type of credit is extended for a specific program to the members of a village committee.
The borrowers are provided with various technical and managerial assistance, in some cases
they are also provided with various inputs necessary for implementing the program. The
borrowers are required to pay service charge at a certain rate. This credit is also given for one
year and repayable in 46 weekly installments. Following activities are considered suitable for
program credit:
Fish cultivation,
Sericulture,
Poultry,
Vegetable Cultivation,
Housing program etc.

House Loan:
This type of credit is given to build and repair house of the borrower. No service charge is taken
and the credit is repayable within two years in 92 weekly installments. The features of this
credit are as follows:
This credit is given only for house building/ repair purposes.
Only outstanding borrowers can take this credit. This loan is not given anyone as the
first loan. Those borrowers who have taken other credit can qualify to receive this
credit. That is only BRAC members can take this loan.
Members who have tin-shaded house will not be considered to receive this loan.
If a borrower does not build or repair his/her house with this credit, it will be converted
to simple credit after three month from the date of this credit sanctioned.
The borrower has to build a slab latrine as a part of this credit.

Enterprise Credit:
This type of credit is given to the small entrepreneurs to start or expand new business. This
credit is given for 12, 18 and 24 months period and is repayable in monthly installments.
A comparative picture of the above mentioned credit activities of BRAC are depicted in the
table:
Types of
Credit
Simple Credit

Maturity
12 months

Interest(flat
rate)
15%

Program
Credit
House Loan

12 months

15%

24 months

10%

Enterprise
Credit

12, 18,
months

24 15%

Repayment

Security

Service Chare

Weekly
Installments
Weekly
Installments
Weekly
Installments
Monthly

Not Required

Not taken

Not Required

Taken at a
certain rate
Not taken

Not Required
Required

Valuation fee
at 0.5%

Focus on empowering poor rural women:

From the beginning, BRAC has recognized that destitute rural women, while being the worst
affected by poverty, can play a crucial role as agents of change. Rural women are placed in a
vulnerable position as employment opportunities are limited and they lack health care services,
receive less nutrition, and are less educated than their male counterparts. Also the growing
number of female-headed households, as a result of the death of the male earner, divorce,
desertion and male migration, has left many women at the helm of their households. With all
these factors in mind, BRAC focuses mainly on rural women, giving priority to their needs,
bringing about meaningful transformation in their lives by making small loans available to them
for income generating activities.
BRAC Economic Development Programme provides the cornerstone for all of BRACs
development work. It uses a participatory, peer supported and multi-sectoral strategy to offer
poor rural women the skills and opportunity to achieve sustainable improvement in their
livelihoods, and attain dignity and self-reliance. This programme covers microfinance,
institution building, income generating activities and programme support enterprises.

 VILLAGE ORGANISATION: Linkage to the Poor:

BRAC focuses on institution building to bring the rural poor into the mainstream of
development. BRAC believes that a common platform created and owned by the poor
themselves is a crucial prerequisite whereby the poor can make themselves count in the
development process. The Village Organization (VO) is an association of poor, landless people
who come together with the help of BRAC to improve their socio-economic position.
The VO promotes a structured organization of the rural poor with particular emphasis on
womens participation. The main goal of the VO is to strengthen the capacity of the poor for
sustainable development and enable the poor to participate in the national development
process. The VO is also the link between rural people and BRAC. Service delivery, institution
building, public sector mobilization, and wider social mobilization are the four key interrelated
strategies of BRAC towards the social and economic development of the poor, especially
women. The VO plays a central role and is often a starting point for all these strategies.
BRACs core competency is the delivery of health, education, micro-finance, and microenterprise services on a large scale to poor rural women. BRAC has developed and trained local
women to deliver these services and organized local groups to receive the services. VOs are also
meant to develop the social capital of BRAC members. The groups gradually begin to address
various social issues in the locality such as child marriage, polygamy, illegal divorce and
domestic violence. BRACs microfinance staff meets VOs once a week to discuss and facilitate
credit operations. The social development staff and health staff meet VO members twice a
month and once a month accordingly to discuss various socio-economic, legal and heath issues.

BRAC Microfinance Program for Women:

Lack of access to reliable financial services is an important constraint for the poor women in
their efforts to lift themselves out of poverty. The goal of BRAC microfinance program is to
provide banking and other services to the poor, which are specifically designed to meet their
particular needs.
The objectives of the microfinance program are:

To make credit available to poor women, especially in rural areas.

To provide credit at a reasonable price.
To involve poor women in income generating activities through providing credit
provision.
To promote economic development of the country by increasing the income level of
the rural poor.

To operate self-sustaining credit activities.

98% of BRACs microfinance members are women and these members belong to 170,000
Village Organizations (VO) that BRAC has created to serve as a forum where the poor can
collectively address the structural impediments to their development, receive credit, mobilize
savings and build upon their social capital.
BRAC has two forms of microcredit. These are:
1. Dabi and
2. Progoti.

BRAC offers two different microfinance products: microloans (group-based, exclusively for
women) and microenterprise loans (individual loans for both men and women) under two
different schemes which are Dabi, and Progoti. Group based small loans are particularly
designed for the lower end poor to assist them in undertaking income generating activities.
Microenterprise loans are available for small entrepreneurs to offer scope for expanding their
businesses and capital base.

Microfinance Dabi:
DABI (Microloans): These loans, which range from USD 100 1000, are given exclusively to
individual women who are serviced in a group setting, namely the Village Organization (VO).
Village Organizations (VOs) serve as platforms for various financial and non-financial
development activities including savings, credit, health, education, social development and
livelihood support. The VO acts as an informal guarantor by creating peer pressure for timely
repayment. Borrowers repay through weekly installments and deposit savings during VO
meetings, held every week in a borrowers courtyard. Microloans are generally used for small
operations in poultry, livestock, fruit and vegetable cultivation, handicrafts or rural trade.
In 2013, USD 810 million was distributed in loans among four million borrowers.

Microfinance Progoti:
PROGOTI (Microenterprise Loans): These loans, which range from USD 1000 to 10,000 are given
to both male and female entrepreneurs to support and expand existing small enterprises which
are too small to qualify for credit from commercial banks. Borrowers generally use
microenterprise loans to finance shops and small-scale manufacturing activities and repay on a

monthly basis. In 2013, a total of USD 668 million was distributed in Progoti loans among
300,000 borrowers.

Empowering Adolescent
BRAC has developed a specialized microloan scheme to encourage the financial empowerment
of adolescent girls, to help them continue their education and prepare for future financial
responsibilities. Under this program, small loans, starting from USD 40, are coupled with savings
facilities and livelihood training, to help girls start small home-based enterprises.
BRACs Employment and Livelihood for Adolescents (ELA) programme caters to girls and young
women. The approach is two-pronged. The programme runs various courses in vocational skills
and supports participants with credit as well as savings services. The idea is to help some
230,000 participants to start small home-based businesses to boost their families standard of
living.

Rural Enterprise Project (REP):

As rapid population growth of Bangladesh is narrowing the scope of employment and income
earning sectors, and thus new livelihoods are essential for reducing rural poverty. Rapid
urbanization and globalization has opened new opportunities, but the poor may not be able to
gain access to these opportunities. Realizing this, BRAC initiated the Rural Enterprise Project
(REP) to encourage employment and income generation through entrepreneurship. REP was
formed in 1985 to find and test new opportunities for rural development. The primary objective
was to experiment with various income generating enterprises that can be owned and
managed by rural landless women.
REP mostly initiates BRACs non-farm activities. Some of BRACs most successful enterprises
have emerged from testing carried out by this unit. In order to develop entrepreneurs among
women, REP has created opportunities for them in non-farm activities such as iodized salt
production, hybrid paddy cultivation, handmade paper production, garbage collection for
fertilizer production, garment waste processing etc. The major programmes under REP are Nonfarm Enterprise Extension and Reinforcement (NEER) Programme and Micro Enterprise
Development (MED) Programme.
This programme has encouraged VO members to take non-traditional roles in creating and
managing small enterprises like restaurants, grocery stores, tailoring, carpentry workshop and
laundry. These initiatives were once tested successfully under REP. At present, NEER

programme works separately to improve and expand those enterprises. The women-owned
restaurants called Shuruchi (good taste) and women run grocery stores called Shuponno
(quality goods) are two projects of NEER that deserve special mention. Major activities under
NEER include: i) Shuruchi (Small Hotel) ii) Shupannya (Grocery Shop) iii) Shucharu (Laundry) iv)
Shubesh (Tailoring) v) Api-Culture vi) Srijoni (Carpentry Shop).

BRAC Microcredit Program on Women Entrepreneurship:

BRAC has been launching its micro credit program with a view to helping the rural poor women
from its inception. BRAC has been advancing its micro credit to the poor rural women to
generate income by creating self-employment in various sectors of economic life. BRAC has
been able to create confidence among the rural women and keep positive impact upon the
entrepreneurial development of women folk in rural Bangladesh.
PROGOTI (Microenterprise Loans), which are given to both male and female entrepreneurs to
support and expand existing small enterprises.
BRACs programme offers a secure means of borrowing as a pose to local moneylenders often
used by people from poor communities. Borrowers, most of whom are women, use the loans to
engage in various income generating activities to build a livelihood for themselves and for their
families.
The women Aarong employs are among the countries most disadvantaged. Through Aarong
they have been offered a way out of destitution and degradation where before they had none.
And the benefits that they receive extend well beyond simply the wages they earn for their
products, since every single woman who works in Aarong-owned production facilities is also a
beneficiary of BRACs multifaceted development programmes. As a support entity of BRAC, a
significant portion of Aarongs earnings go directly into financing the NGOs development
programmes in healthcare, education as well as economic and social development.
BRAC enterprises strive to offer solutions to social problems and opportunities to poor
women so that they can invest with confidence and create a road to self-reliance.
For example, Aarong today supports the lives and livelihoods of nearly sixty five thousand
rural artisans and handicraft producers, 85% of whom are women. More than forty thousand
of these women work directly for Aarong in its 13 production centers in Baniachong, Gorpara,
Jamalpur, Jessore, Kushtia, Manikganj, Rajbari, Sherpur, and Pabna, Pollobi, Kurigram,
Nilphamary, Jhenaidah and 653 subcentres spread across Bangladesh. Aarong Bangladesh has
a long history of folk arts and crafts and women in village communities are especially familiar
with these traditional techniques. Realizing the potential for generating incomes for poor rural

women, we initiated Aarong in 1978 as a fair trade organization to sell and promote local arts
and crafts.
Twenty five thousand independent cooperative groups and traditional family-based artisans
also market their crafts through Aarong. Potters, Brass Workers, Jewelers, Jute workers,
Basket Weavers, Handloom Weavers, Silk Weavers, Wood Carvers, Leather workers and
various artisans with specialized skills from all over the country come to Aarong for marketing
and support services.

Integrated dairy Businesses:

In 1990, BRAC began making microloans to poor women who wanted to raise milk cattle. But
when Sir Fazle Hasan Abed, founder of BRAC, met with one of the programs borrowers, she
revealed that she was having a hard time getting the milk to market, and that even when she
could, she received only one-third of the price that milk sellers received in Dhaka, Bangladeshs
capital. As a result, BRAC initiated BRAC Dairy & Food Project (BDFP) in 1998 to serve as a
market for dairy farmers throughout rural Bangladesh.
When BDFP first started, it produced 140,000 liters of milk per day. As of now, it has the
processing capacity of 170,000 liters of milk per day engaging 1500 employees. Today, BDFP
holds 22 percent of the national market share. It is also one of the largest BRAC enterprises,
making profits of over BDT 220 million.

Poultry and Livestock:

In Bangladesh approximately 70% of landless rural women are directly or indirectly involved in
poultry rearing activities. The Poultry and Livestock Programme is composed of several
components: poultry and livestock extension programme, poultry farms and hatcheries, feed
mills and feed analysis laboratories, bull station, and the disease diagnosis laboratories.
The key people under the poultry and livestock extension programme are i) Poultry and
Livestock Extension Workers ii) Chick Rearers iii) Key Rearers iv) Cage Rearers v) Broiler Rearers
vi) Egg Collectors vii) Model Cow Rearers viii) Model Goat Rearers and ix) Artificial Inseminators.
BRAC started its livestock programme in 1983 to protect livestock from disease by developing
skilled village level Para-veterinarians, and improving local cattle breeds by providing credit and
appropriate technical support. These measures are expected to increase the productivity of the
livestock sector, and provide a steady source of income for the landless. The government has
taken up BRACs livestock development model for widespread implementation. The objectives
of the poultry-livestock programme are to create employment opportunities and to increase
the beneficiaries income within a short period of time.

 Reaching the Most Poor Group through IGVGD Programme:

The Income Generation for Vulnerable Group Development (IGVGD) programme covers the
poorest women who own no land, have little or no income, are widow and or divorced. The
objective of the IGVGD programme is to alleviate poverty of the hard core poor by providing
long-term sustainable income and employment opportunities through food assistance, training
and access to credit facilities.
Initiated in 1985 IGVGD is a collaborative programme involving three partners between
Government of Bangladesh, World Food Programme and BRAC to serve the ultra poor. In 1985
BRAC approached the WFP for food assistance under its Vulnerable Group Feeding (VGF)
programme to implement a new model for 750 VGF card holders. These women were
organized into groups and provided with skill development training in the areas of poultry,
sericulture, embroidery, health, nutrition and functional literacy. In addition to training, BRAC
provided a package of basic health care services and intensive follow-up and supervision to the
participants during the 24 months of WFP wheat transfers. The VGD cardholders receive a
monthly ration of 30 kg of wheat per month for 24 months. With skill training, VGD women
become eligible for credit support where no collateral is required.
The key features of VGD programme are:

The IGVGD program thus designed to link extreme poor vulnerable poor women to
mainstream development activities.
Under this initiative extreme poor are organized into groups and provided with skill
training in various sectors where BRAC has expertise.
They are also brought under BRAC health services and network
During the time of food transfer a saving scheme was developed and later a small
amount of credit provided to them so that the training they received could be more
meaningfully used for a more secured livelihood
The IGVGD program was focused on developing a systematic approach to take
advantage of the windows of opportunity in the lives of the extreme poor while they
received food transfer and short-term security.
To provide support on solid ground once the food transfer period is over.
An independent study by the WFP found that through these strategic linkages more than three
quarters of those who receive the IGVGD card in every cycle ends up becoming the regular
clients of BRAC Micro Finance program.
Through IGVGD programme BRAC provides the following services:

Skill development training

Credit support
Technical assistance
Essential health care
Social development programme
Training

Figure : BRAC Model for Development: IGVGD

IGVGD
Programme
Participant
Selection and VGD
Card Distribution

Enrollment into
VOs.

Food Assistance:

Collection
savings

of

(30 Kg wheat per

month)
Credit Assistance

Training on:
Graduation to
BDP MF

Enterprise
Developmen
t

Poultry and Livestock, Fisheries,

Sericulture, Agriculture, Social Forestry,
REP etc.

Input Supply:
The representatives of local government select the
VGD cardholders and distribute the wheat
while the rest of the programme is implemented Day
by BRAC.
AtDFL,
firstSeed,
VGD
women are organized
old chick,
Medicine,
Vaccine
etc.
into village organizations (VO) with assistance from the BRAC PO-microfinance. Later these
women receive training in various income generating activities. The Area Coordinator (AC)
supervises the entire process. In each area there is a VGD PO to help the AC. Together they
attend a monthly meeting with the Union VGD committee.

Targeting the Ultra-Poor (TUP):

BRAC Annual Report 2010 reveals that Targeting the Ultra-Poor (TUP) program works closely
with individuals and families to begin the process of livelihood strengthening, asset building and
income generating activities, to create a pathway out of extreme poverty. They plan to reach
300,000 households and 1,500,000 people through their Ultra-Poor program by 2016.
The following figure shows that 54,500 women are given with assets while 76,000 women
received subsistence allowances and 76,000 women were given skill development training.

80000
70000
60000
50000
40000
30000
20000
10000
0
Assets

Allowance

Training

Fig: Assets, Allowance & Training facilities given to women

Social development:
In 1996, BRAC started a programme in collaboration with the Ain O Shalish Kendra (ASK) and
Bangladesh National Women Leaders Association (BNWLA) to empower women to protect
themselves from social discrimination and exploitation of which dowry, rape, acid throwing,
polygamy, domestic violence and oral divorce are common in rural Bangladeshi communities
and to encourage and assist them to take action when their rights are infringed. The
programme has two components: the Social Development component and the Human Rights
and Legal Services component.
The Social Development component focuses on building human and socio-political assets of the
poor especially women through microcredit programs, institution building, and awareness
raising, training and collective social mobilization. The Human Rights and Legal Services
component seeks to empower the poor by increasing their awareness of their rights (legal,
human and social) and entitlements through participation in activities like the Popular Theatre
and through Human Rights and Legal Education (HRLE) classes arranged by BRAC for its Village
Organization members. BRAC also offers external services such as access to lawyers or the
police either through legal aid clinics, by helping women report cases at the local police station
or when seeking medical care in the case of acid victims.

 Gender Justice and Diversity:

BRAC has worked for decades to integrate gender justice into its programmes and eliminate
gender inequality from the society. The gender justice and diversity programme (GJD) works
simultaneously within the organization and with the communities. It strives for equality,
diversity and inclusiveness within BRAC; improves gender relations and empowers women at
the household level across many of BRACs programmes such as microcredit programs; and
works to ensure that girls and boys are equitably nurtured to their full potential from preprimary through secondary school. They also promote gender equality and work to prevent
violence against women at the national level by influencing government policies and agendas,
organizing public forums and events, and leveraging national and international alliances for
gender justice.
The number of community-based gender equality promoters has slightly increased from 10,200
in 2011, to 11,409 in 2012. However, these promoters have had a considerable influence in
promoting gender equality, increasing womens mobility and decision making in the household
from 16,200 in 2011 to about 65,000 in 2012. Similarly, 32,090 students were reached through
our interventions in 2012, an improvement from 2011, when we reached 28,800 students.
70000
60000
50000
40000
2011

30000

2012

20000
10000
0
No of community-based No of women with increased No of students covered with
gender equality promoter mobility and decision making awareness on violance
with increased capacity
ability
against women

Fig: Change in gender equality, decision making ability and awareness scenario in 2011 and 2012

Case Studies from Secondary Sources:

Case# 01:
Akhteri Begum Munni sits with a warm smile and her healthy little baby radiating success.
Munni Akhter, along with her husband owns and runs Tumpa Biscuit Factory where they make
moa, a local type of biscuit. It all began in 1988 when they used to make the biscuits by hand.
In 2006 she joined our Dabi scheme, through the Microfinance programme, and took out her
first loan of 5,000 taka for materials for making biscuits. In 2008 she applied for our Progoti
scheme and was granted a loan of 100,000 taka to put towards machinery for her factory. She
will soon take her last loan of 500, 000 taka to expand and invest in better, faster machinery.
Today, her biscuit factory is continuously expanding to meet a high demand with a huge
increase in production. Munni and her husbands income has sky rocketed to 150,000 taka a
month and now they are selling their biscuits across all of Bangladesh. They are hoping to
expand to India and Burma. From making their biscuits by hand, they have expanded to beyond
anything they could have imagined, and believe this is just the start. Today they have not only
established a factory but have created employment for 17 people. Munni says,
I have always had potential and dreamt of living a better life. BRAC has been a helping hand in
achieving it.

Case# 02:
Nargis is an artisan at one of BRACs numerous production centers around the country. She puts
intricate hand embroidery on clothes that are sold at BRACs chain of trendy handicraft stores,
Aarong. The wife of a landless farmer and mother of two school-going children, Nargis is in
charge of managing her familys finances. The regular income she receives from her job at the
nearby production centre and the money brought in by her husband by working at others
farms help to meet the day-to-day expenses of her family. However, every so often Nargis is
inevitably faced with the need to make lump sum payments. It is during these times that her
money-management skills are stretched to their limit.
Under different circumstances, she could have accessed credit and savings facilities at any
microfinance institution in the area. However, the hours at her job means that she is not able to
regularly attend the group meetings microfinance institutions require, which limits her access

to formal financial services. Thus, she would often borrow from relatives or neighbors, or be
forced to borrow from one of the local informal money-lenders at times of crisis. That was until
BRACs microfinance programme started a special scheme at Rajbari districts Heuli Keutil
production centre where she works, allowing Nargis and many others like her to do their
transactions at their workplace. A few months ago, Nargis took a loan of BDT 12,000 from BRAC
and used it to install an electricity connection in her house. Nargis has big plans for her son and
daughter and is determined to give them a good education. They need electricity to study in the
evenings, which is why it was so important for her to get a line installed.
Now, I can pay the installments on the loan from my income from the production centre, and I
am saving some money with BRAC as well. After all, who knows when one of us will fall ill again,
and we will need to spend money to buy medicine. The fact that a BRAC programme organizer
comes to our production centre to collect our savings and loan installments has made it very
convenient for us to access affordable financial service. It has also made me a more disciplined
saver, says Nargis. If it was not for this scheme, I doubt I would have been able to save the
BDT 10-12,000 necessary to get the electricity connection all on my own, but look how much it
has changed our lives.

Case# 03:
Chitra was only six months old when her father, Naresh Sarker, passed away leaving them
literally in the lurch. Her distraught mother found herself thrown in the wilderness of
widowhood barely three years into her marriage with Naresh. She could foresee a bleak future
for her and her little girl in an environment not conducive for a widow, least of all a young
widow. In desperation she, with little Chitra in tow, took refuge in her parents house. As ill luck
would have it, her parents too were of small means. Chitras young but widowed mother did
not relish the prospect of becoming a permanent burden on her parents. She braced herself to
fight the odds to eke out a modest living for her and little Chitra. She began her struggle by
enrolling herself as a member in 45/ M Centre of Grameen Banks Komarganj Nababganj Branch
under Narayanganj Zone. With loans from GB in phases she took up embroidery alongside
rearing of mulching cow. The modest income from the sale of milk and embroidery work has
sustained her for nearly a decade and half.
Despite the financial hardships that plagued their lives almost on a daily basis, poor Chitra
developed a strong eagerness to study from an early age. With assistance from her teachers in
the school, she pursued her studies and came out with flying colours in every examination. Her
talent and hard work were rewarded when she got a scholarship in the Junior Scholarship

examination. However, she faced the grim prospect of dropping out of the school due to
financial constraints. Recognizing her talents and future potential, Grameen Banks Komarganj
Nababganj Branch, threw in a helping hand to continue her studies. At the behest of the Branch
she was awarded a scholarship by the GB Head Office as the best student at the Lower
Secondary level. She was overwhelmed with joy when she heard this news; a few drops of tears
of joy trickled down the cheeks of her elated mother too.
It also strengthened Chitras resolve to carry on her studies with renewed zeal.
As of now, Chitra has been nurturing a big dream to become a doctor to rid free of the shackles
of poverty and to serve the society at large. Grameen Bank is proud to stand by her with
financial and moral support and wishes her success to realize her dream.

Case# 04:
Hosneara is the name of an ill fated woman. Nobody chronicles the birth of her kind but she
conjectured that she was born in 1971. Hosneara grew up in the midst of extreme poverty and
had no opportunity to receive even a minimum of education. Her emaciated look and financial
constraints of her father turned out to be another negative factor to find someone to marry
her. In desperation, her father married her off to an old man of 70. It was not long before her
husband turned her away from his house. She did not find any welcoming hand in her fathers
home too. Fate had inevitably thrown her in the undignified world of beggars.
Not long thereafter she heard about the Grameen Banks scheme for what the Bank called
struggling members. She joined the scheme in 2004 at the North Shuhilpur branch in BBaria.
To a beggar, accustomed to counting bits and pieces and small changes, BDT 500 interest free
loan provided by the branch was a big amount. The repayment terms were set to suit her
convenience and capacity. She used the money to peddle betel leaves and other small items
while carrying on with her old profession of begging. She also invested some money for rearing
ducks and chickens. The income from these little ventures made her conscious of the indignity
of begging. As ill luck it would have it, a sudden flood washed away her small business. After the
flood Hosneara rebuilt her business of peddling. In the meantime, she repaid her loan and
collected a new loan from the Bank. She crowned her relentless struggle by giving up the
ignominious profession of begging. Poverty has not still altogether left Hosneara but she draws
satisfaction that she no longer carries the stigma of a beggar. She can now walk with her head
high.

Case# 05:
Fuljan Beowa epitomizes the plight of countless poverty stricken widows in Bangladesh who live
on the edge of perpetual penury and deprivation. Forsaken by her offspring, she took to
begging as a last resort to eke out a bare living. Not that she, now aged more than 70 years,
considered begging as a dignified profession but there was nothing else she could do to keep
her body and soul together.
The turning point in her life came when, in 2006, she enlisted herself as a Struggling Member
of the Grameen Bank Ghorashal Jhenaidah Branch, Centre No.21/M of Miakundu village and
started the dream of giving up the profession of begging. She drew several installments of loans
from the Bank under the Banks special scheme for interest free loans for the beggars. She used
the money to peddle bread and betel nuts and betel leaves alongside begging. Gradually, she
could give up begging and shifted to rearing a small herd of 5 goats in addition to plying her
trade in bread and betel leaves and nuts. When the field staff of Bank visited her modest
thatched house they found her tending the goats with care and attention like a surrogate
mother. Her life in fact now centers round these little critters. They not only give her company
but provide the strength and inspiration to play out the remaining part of her desolate and
mundane existence.
GB has not made Fuljan Beowa rich but its assistance has given her an opportunity to erase the
stigma of beggar that bedeviled her life for a long time. When the GB personnel visited her she
minced no words to express her sincere gratitude to the GB for the assistance to rescue her
from the abyss in which fate had thrown her at this old age. She profusely showered her
blessings on the GB and prayed for its continued success to provide succor to the destitute
people like her.

Case# 06:
The story of Hira Mia, who is currently studying in Rangpur Medical College for the MBBS
degree, is not yet a story of rags to riches but he can certainly look forward to join an elite
profession in the not too distant future
Although born to an impoverished family drawing its sustenance from the meagre income of his
father engaged in a lowly profession of carpentry, Hira Mia showed signs of talent in the school.

He earned the affection of his teachers who provided guidance in his studies. He secured GPA 5
Grade in the SSC examination but the family did not have the wherewithal to send him to a
reputable college. However, help came in the shape of moral and financial support from
Grameen Bank. His mother, Fuljan Begum, was a member in Centre 25/M of GBs Durkuti
Lalmonirhat Branch. The Manager and other people in the Branch not only provided
encouragement but also arranged a scholarship on a monthly basis for his education. Hira Mia
lived up to their expectation and secured GPA 5 in the Higher Secondary examination.
The successes achieved by Hira fuelled the aspirations of his parents to send him to a medical
college. He also succeeded to gain admission in Rangpur Medical College but did not have the
money to defray the expenses in the college. GB once again came to his rescue with a loan
under its program for higher education.
Hira realize that he is on course to overcome poverty only because of the generous assistance
of Grameen Bank. He, however, does not wish to bask in the glory that a medical degree brings
but wants to realize his cherished dream of serving the ailing humanity belonging to the
underprivileged sections of the society.

Findings:
1. At first from the above analysis it is proved that the microfinance beneficiaries specially the
targeted women have been encouraged a lot by the microfinance institutions working in the
research area through the MFIs innovative approach to motivate the rural backward
women who had earlier nothing or had no courage to change their life style to make them
economically to some extent solvent, self-confident.

2. It is found that the beneficiaries have expressed their satisfaction in respect of their income
that increased and changed financial condition in the family level after joining microfinance
institutions.

1. It is seen that most of the respondents could take decision on using micro-credit. They
expressed that their husband gave importance of their opinion, so they can take a little
decision on using micro credit.

2. As a densely populated country in the world where 80 percent people having minimum
education level live in village, microfinance institutions have made a good attempt to make
them conscious to use tube well water for drinking and contraceptive for avoiding
unplanned extended family.

3. It is found that microfinance improved the literacy level of rural women improved
awareness on children education to high level of respondents.

4. It is noticed that all the respondents agreed that micro finance brought courage and self
confidence and improved their skill and self worthiness.

5. Our study on BRAC microcredit clients found that fewer members suffered from severe
malnutrition than non-clients and the extent of severe malnutrition declined significantly
while the clients stayed with BRAC. Average per capita calorie consumption and total food
and non-food expenditure are significantly higher for BRAC member households. Ratio of
non-food to total expenditure is also higher for BRAC, which mainly increases with increase
in the household income. BRAC members are found significantly better off than the
comparison households in term of value of their dwelling places and per capita floor space
utilization. Level of education, adult literacy and primary school enrolment of the group
members has significantly improved after joining BRAC.

6. There was a moderate increase of income, enhanced savings, undertaking income

generating activities, reduced dependency on money lenders, ability to deal with the

financial crisis and women moved independently to other places without the support of
male members of the family.

Problems being Faced by Microfinance Programs in

Bangladesh:
Microfinance is the provision of financial services (Loans, savings, insurance) to people on a
small scale, such as businesses with low or moderate incomes. Despite good intentions,
microfinance still has several hurdles to cross over:
1. Multiple borrowing or overlapping:
Overlapping or multiple borrowing by an individual borrower or household is considered as an
alarming issue or problem, according to the respondents.
2. Misuse of credit by borrowers:
As in most of the cases MFIs do not review what is the borrower doing with the money
borrowed. Misuse or unproductive use of credit is a usual practice.
3. Lack of innovation:
From almost the beginning till today almost every MFI follow Grameen Model of micro
financing.
4. Severe lack of training and education:
The research and training capability of MRA is poor. MFIs are facing many emerging issues to
meet the present and future challenges.
5. Reaching economically backward region:
MFIs/ NGOs could not effectively reach the people of economically backward regions of the
country. As a result, MFIs showed poor performance in economically backward areas.
6. Higher interest rate:
High cost involved in small loan transactions for Microcredit providers. Higher interest rate is a
financial disadvantage of microfinance.

7. Less attention to ultra poor:

Micro financing is to deal with poor, so does it. But there are not much significant interventions
for the ultra poor segment.
8. Lack of capital:
Although the microfinance sector has reported an impressive growth, there is a lack of capital
for some of the microfinance institution in the country.
9. Insufficient repayment time by the microfinance institution to the borrower:
Most of the micro-loans are given for the start of micro-enterprises for a short Period and the
loan would have to be rapid from the cash flows generated from the business.
10. Regulation and supervision:
The MRA is now the sole watchdog of vast microfinance market of the country. As a new
organization it is growing day by day. The present capacity of this regulatory organization
seems to be insufficient in terms of manpower, resource base and geographical concentration
(only in Dhaka).
11. Major obstacles of womens micro entrepreneurship:
Microfinance has an important impact on the lives of the poor women in Bangladesh; however,
they have been encountering some problems in conducting their micro enterprises. Successful
entrepreneurship depends on good communication and access to new information. Interaction
with other businesspersons can help to initiate proper strategy and prevent misguidance. The
study explores the following important problems of micro entrepreneurship in rural Bangladesh:

Exercise of patriarchal norms and values

Social customs and religious beliefs

Lack of education among large number of rural women

Lack of communication and entrepreneurial skills of the rural women

Less opportunity to access to market

Lack of infrastructural facilities for marketing products

Inadequate access to micro credit service for the extreme poor

 Recommendations:
Microfinance institutions have been viewed as an important tool in poverty alleviation. It is an
important sector which would improve the living conditions of the poor and lead to the
development of the country. Some of the issues are hinted below:
1. Higher operational costs are the major reason for the higher interest rates of the MFIs. The
operational costs could be reduced by the use of technology.
2. The microfinance institution should ensure that the loans are given for useful purpose
which would earn a living for the household and not for uneconomic purpose.
3. To enhance the outreach in remote area and provide fast services to existing customers,
MFIs need cost effective mode. In this case, mobile financial services are the best options.
MFIs may establish partnerships with mobile phone operators and banks to reach the
unbanked low income people.
4. Rate of interest should be decreased. The interest rate is high as compared to that of
commercial banks. NGOs charge such interest rate to cover operational cost with a view to
achieving sustainability and attracting huge commercial funds into microfinance industry by
improving the technology model used by microfinance institutions.
5. Central Data Base should be provided. NGOs must have a central data base covering major
data, which will ensure accountability and transparency in microfinance operation.
6. Multiple borrowing or overlapping should be restricted by the borrowers. Central data base
will remove the overlapping problems.
7. Research and training program should be extended. To meet the present and the future
challenges it is necessary to strengthen research and training capability of NGOs.
8. An independent arrangement should be made to develop association between local MFIs
and international MFIs.
9. Loud and clear message should be communicated to the people to adopted MFIs services
because rate of return is greater than traditional banks.

10. Reasonable funds by Government and State Bank of Bangladesh should allocate for
microfinance programmed, specifically for the poor needy and business oriented women.
11. Gender discrimination should be removed through the legislation and level play opportunity
in employment and microfinance should be given to women.
12. A policy should be frame to have an access and control over physical and financial assets
like credit, innovation and technology.
13. Effective initiative should be taken to eradicate all types of internal and external violence
against female.
14. Managers should have adequate knowledge about multiple performance criteria.
15. Continuing search for customer-friendly products, innovations, and cost-effective
operational strategies must be ongoing for greater impact and sustainability of microfinance
programs.
16. Governmental and non-governmental organizations need to take more initiatives to
increase womens participation in the credit-based small businesses. Women should have
easy access to loans, suitable business and the market. They should also be provided with
basic education and training to create awareness, increase knowledge on business and the
market, build capabilities and to promote business environment and facilities for them.

Conclusion:
The main cause of poverty in Bangladesh is the lack of productive employment opportunities
for the huge number of unemployed and under employed work force which is tremendously
increasing and posing serious problems for the country. Nearly half of the populations in
Bangladesh are women and most of them are living in the rural area of the country. They need
to have engaged in income generating activities. So creating self-employment for women in the
rural areas can play a vital role in reducing the rural unemployment and acute poverty. It can be
made through micro credit which will empower them too. The micro credit program has
benefited the poor women in more than one way. These programs enhanced their security
giving them access to assets and rights and augmented their self-respect providing them choice
and independence. Micro credit has enabled the poor women to undertake diversified
economic activities which generate flow of stable income round the year and thus has

strengthened survival strategy of the poor women. With micro credit, the poor households now
own assets can use to meet contingencies without having to sacrifice their independence,
security and peace of mind by getting into debt.
Micro credit program has also empowered the beneficiaries by raising their social
consciousness which is reflected among others in their increased participation in local
government elections and social mobilization activities. Participation also has a beneficial effect
on womens welfare since it increases their total employment time by reducing their other
work responsibilities. Participation of women in micro credit program has also increased their
mobility.
In spite of having such positive impact of micro credit on poverty alleviation and womens
empowerment, the overall condition of the poor women in rural Bangladesh is not at a
satisfactory level. The credit institutions are not much care about the extreme poor. Moreover,
there exists a number of other problems, including the exercise of patriarchal norms, values
and social customs; lack of education and business skills of the women; less opportunities to
access to the market and lack of infrastructural facilities that hinder the womens micro
entrepreneurship in rural Bangladesh. Therefore, the study suggests that governmental and
non-governmental organizations need to take more initiatives to increase womens
participation in the credit-based small businesses. Women should have easy access to loans,
suitable business and the market. They should also be provided with basic education and
training to create awareness, increase knowledge on business and the market, build capabilities
and to promote business environment and facilities for them.

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