Impact of Micro Enterprise Loan of Developments of Micro Enterprises in Bangladesh

control board of Contents 1Introduction6 1. 1Objectives6 1. 2Scope of the field of analyse7 1. 3 methodology and Data Collection8 1. 4Limitations11 2 nominate of littlefinance (InM)13 2. 1Vision13 2. 2Mission13 2. 3G overnance14 2. 4 brass be14 2. 5Current Governing lugg mount up com wear outment of InM14 2. 6 ecumenical Body15 2. 7 achievementivities of the Institution16 2. 8 investigate16 2. 9 readinesss17 3Evaluation and organic evolution of less(prenominal)enedfinance Sector20 4The microfinance Sector In Bangladesh25 4. 1The Microfinance Regulation26 4. 2The Microfinance Institutions28 4. 3Microfinance Delivery Mechanism29 4. 4Microfinance Products30 Tr polish offs and Growth of Microfinance broadcast of MFIs35 5. 1 usance and Gender35 5. 2appendageship in MFI-non regimenal organizations37 5. 3Trends in loaning Behavior39 5. 4 inspiration in Number of contri howeveres41 5. 5 im art objects Disbursement41 5. 6 middling Size of brings Disbursed41 5. 7Re secretey Rate42 5. 8 im dissolves superior44 5. 9Trends in Savings Mobilization46 5. 10Net Savings per element46 5. 11Savings sepa dimensionn Rate49 5. 12Financing of contri barelyes contribute Revolving Fund50 6Micro opening move in Bangladesh54 6. 1Definition of Micro go-ahead54 6. 2Role of Microenterprise in the look Context of Economy55 Microenterprise contributeword Demand Side psychoanalysis59 7. 1Education59 7. 2Sources of finances59 7. 3Number of Employees or Labor60 7. 4Business Plan61 7. 5 disposalal Aids and Regulations61 7. 6 m acetary Institutions61 8Microenterprise give Supply Side analytic thinking64 8. 1Major Providers of Microenterprise Loan69 8. 1. 1Bangladesh Extensions Education Services69 8. 1. 2Objectives69 8. 1. 3Achievement70 8. 2BURO Bangladesh72 8. 3Grameen argot73 8. 3. 1Eligibility74 8. 3. 2Terms and conditions74 8. 3. 3Sectors covered74 8. 3. 4Overview of littleenterprise add of Grameen marge74 8. ASA Bangladesh76 8. 4. 1Sm any Business Loan syllabus76 8 . 4. 2Small Entreprenuer Lending76 9Impact of Microenterprise contribute on Income generation78 9. 1Impact of Micro source bring on the r horizontalue of the littleenterprises78 9. 1. 1Hypothesis78 9. 1. 2 poser78 9. 1. 3 analytic thinking78 9. 1. 4Findings79 9. 2Impact of Loan Amount on the Microenterprise R flatue80 9. 2. 1Hypothesis80 9. 2. 2Model80 9. 2. 3Analysis80 9. 2. 4Findings81 9. 3Impact of dressing on the revenue of the smallenterprises82 9. 3. 1Hypothesis82 9. 3. 2Model82 9. 3. 3Analysis82 9. 3. 4Findings84 10Case Study86 0. 1Success Story86 10. 2Failure Story91 11Conclusion and Recommendations97 listen of tabularises and foresees Table 1 mental faculty Strength and Growth of MFI-non political sympathiesal organizations35 Table 2 Growth of elementship38 Table 3 Borrower and Member Ratio (%)39 Table 4 Average Loan Size (Tk)41 Table 5 Loan Portfolio feature with with(predicate) recuperation Rate41 Table 6 Loan Portfolio Quality imputable in Loans smashin g42 Table 7 Loan Per tropeance with salient Loan Size (Tk. )43 Table 8 Net Savings Performance46 Table 9 Savings Withdrawal Rate (%)48 Table 10 dispersal of additive Loan Fund by Sources50Table 11 Sources of Finance of Microenterprises58 Table 12 statistical distribution of Loan by stated train63 Table 13 Change in the Distribution of Loan by state Purpose64 Table 14 Micro Enterprise Loan in Various Sectors (July 2008-June 2009) by BEES71 Table 15 Loan Disbursements by BURO72 Table 16 Microenterprise Loan by GB73 Table 17 Loan Disbursed to Male Borrower by GB74 Table 18 Loan Disbursed to Fe potent Borrower by GB74 Figure 1 sh argon distribution of picture of MFI-nongovernmental organizations by gender 200935 Figure 2 Percent distribution of supply of MFI-nongovernmental organizations by gender 200835Figure 3 Trend in character cater of MFI-NGOs36 Figure 4 Percent Distribution of Membership in MFI-NGOs by arcadian and Urban Areas in 200936 Figure 5 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 200836 Figure 6 Trend in Membership by post of MFI-NGOs37 Figure 7 Distribution of Growth of Membership37 Figure 8 Loan Outstanding43 Figure 9 Loans Outstanding Per Borrower by Gender44 Figure 10 Loans Outstanding Per Borrower by kettle of fish45 Figure 11 Trends in Net Savings per Member by Gender46 Figure 12 Trends in Net Savings per Member by Location47Figure 13 Percent Distribution of Loans by decl ard Purposes in 200965 Figure 14 Percent Distribution of Loans by state Purposes in 200865 Figure 15 Percent Distribution of Loans by Stated Purposes in 200766 Figure 16 Percent Distribution of Loans by Stated Purposes in 200666 Figure 17 Trend of Microenterprise Loan Along with tot up Loan67 Figure 18 Microenterprise Loan as fortune of Total Loan68 Introduction The magnitude of micro-entrepreneurial activities plays a crucial billet in the economic conjure up of the sylvan livelihoods, e spargonly in third world countries .Micro-entrepreneurship has always been considered as a proven operator to fight privation in an effective manner. As a consequence, beggary alleviation through art little centric microentrepreneurship breeding has been foc harbor for to a greater extent than the last thirty five stratums in Bangladesh. This developing of micro- reference book rating programs and micro-enterprise in Bangladesh has emerged as a major(ip) st tempogy for the alleviation of poverty and un manipulation that hold on to pose problems to the economic and complaisant evolution in the country.Government and non-governmental transcriptions (NGOs) waste adopted some(prenominal) approaches and strategies to overcome these issues. Relying on peer pressure from borrower throng members sort of than on substantiating for refund, micro- point of reference operation in Bangladesh has been a continue success story, economically recycling alter resources with increasing spendings, high recover y and a low rate of late compensation, making a material contribution to micro-enterprises with income and employment generation, and private welkin enterprise development.The objective of the relieve oneself is to examine the impact of micro- confidence on micro enterprises and provide an overall compendium of the micro recognition program in Bangladesh and their grapheme in develop microenterprises in Bangladesh. The micro- extension programs progress to been unquestionable with the aims of the formulation of trust to the wretched and the development of micro-enterprises through uncouth women, with the ultimate goal of the alleviation of poverty in the country. Objectives The main(prenominal) concern of the study is to develop a clear fellow feeling ab prohibited the role of microfinance ecesiss in developing microenterprises in Bangladesh.So, the study in the main centralisees on the microenterprises & vitamin A microfinance institutions of Bangladesh and how the MFIs ar functioning to develop the microenterprise of Bangladesh. To find show up this the paper allow look into the unlike aspects of the microenterprise and microenterprise contributewords and the providers of ofttimes(prenominal)(prenominal) give. This study impart try to fulfill the following objectives. 1. To contain an overview of the history of microfinance in Bangladesh down the stairs this objective I allow for try to gain understanding slightly different development phases through which the microfinance bena of Bangladesh has reached to genuine position. . To develop a clear insight ab proscribed the microfinance field of the Bangladesh In this part I entrust centralize on various institutional frameworks of microfinance area, its rules and regulation, microfinance mechanism and various institutions working in this orbit. 3. To analyze the recent development of the microfinance sector of Bangladesh This part of the study leave behind focus on the recent development of microfinance sector found on selective information from 2007-2009. The part leave alone try to unveil recent status of microfinance sector by evaluating various aspects. 4.To study the market and reveal the actual direct scenario for microenterprise impart. An overview of the prerequisite scenario of the microenterprise bring departing be presented in this part, this give focus on the sources of microenterprise corking to carry conduct scenario of microenterprise loan. 5. To investigate the current supply scenario of the microenterprise loan By analyzing previous and current info a brief scenario of the supply condition of microenterprise loan allow be do in this part. A study on the major providers of microenterprise loan bequeath similarly e done. 6. To exhibit the impact of microenterprise loan on the income of the borrower A statistical analysis volition be do to find out the impact of microenterprise loan on the borrowers income and consumption. Scope of the Study As the title of the study suggests, the study leave evolve almost the microfinance sector of the Bangladesh as wellhead as their role in providing finance to microenterprises. So, it hindquarters be said that it will cover the consentient microfinance sector of Bangladesh with emphasis on microenterprise loan.A thorough analysis will gillyf dismountamentally cover * The emergence and development of microfinance sector in Bangladesh * Its various aspect, rules & regulation * Procedure and mechanism for providing microfinance * Recent development, present scenario and skip in microfinance * Sector extraneous comparisons on various aspects * Opportunities for development * Major providers of microfinance and their role in providing microenterprises loan, * Demand side and supply side analysis of microenterprise loan * Impact of microenterprise loan on the income and consumption of the microenterprise owners. * Case studyMethodology and Data Co llection Both the qualitative and quantitative analysis will be done in the study. For selecting methodology I divided the whole report into six major parts. Each part will buzz off depending on different methodology. In the following part I will key out the methodology for each part in parasiticly. Part 1 Analysis of the Microfinance sector of Bangladesh This part will sum of moneyly done by analyzing lowly data. In the depression segment of the part the history of microfinance will be described and a brief overview of the development of microfinance sector from the beginning to the twenty-first century will be do.In this segment I will mainly focus on the 4 development phase of microfinance sector namely consummation enquiry phase in the 1970s, micro credit development phase in the 1980s, consolidation phase in the mid-nineties and expansion phase from 2000 onwards. In the next segment I will describe the microfinance sector with an overall description virtually the micr ofinance regulation, the microfinance Institutions, microfinance delivery mechanism and microfinance harvest-times. In the last and final segment of this part I will show the course of study analysis of the microfinance sector for the last troika years.I will use extensive table, charts and graphs to explain the trends that were prevailing in the sector. I will cover the following countrys in the trend analysis part employment and gender, social station in MFI-NGOs, trends in loaning behavior, trends in nest egg militarisation, financing of loans, loan revolving fund etc. Part 2 Microenterprises in Bangladesh This part is similarly depended nitty-grittyly on secondary sources of data. The central flow of this part is microenterprises in Bangladesh. Here I will provide the description of microenterprise in Bangladesh and the role of microenterprises in present economic context.Part 3 Demand Side Analysis This part will use aboriginal data to collect information about the de mand side of the microenterprise loan that is owner of microenterprises. For the analysis data are collected from the primary sources. For the study cxx owner of micro enterprises are selected from different areas of Bangladesh. Out of these 120 businessmen 30 are collected from Dhaka City, 30 from C pass onpur and Comilla District, 30 from Chittagong City and 30 from Sylhet city. The businesses which have capital up to $10,000 are selected for this study.For discontinue analysis of true picture of micro enterprises, businesses that are started at heart 5 years are selected. Most of the selected businesses are grosser shop (50), readymade garments shop (30), extensive poultry shops (10), libraries and gentilityal shops (30). Data are collected by cardinal ways questionnaire and personal interview. Part 4 Supply Side Analysis Secondary information from various printed materials i. e. publications and websites are used to collect data for this part. In this part I will provide segment wise microfinance distribution by the MFIs of Bangladesh for the last three years.I will also provide the trend of microenterprise loan and changes in the get along of loan disbursed by the MFIs from year to year. In this part I will also provide information about the big four institute of microenterprise loan providers with a descriptive analysis of their microenterprise loan scheme. Part 5 Impact Analysis of Microenterprise Loan These parts will analysis the impact of microenterprise loan on the income and consumption of the borrower. For the analysis I will use Ordinary Leas square toes Method for analyzing impact.The data will be collected from the survey data provided by objectt of Microfinance to me for this purpose. In the data set I have information about both the borrower and non borrower of microenterprise loan. So I have dogged to define sits for impact assessment. Effect of Borrowing In the first model I want to use Income from the microenterprise as a depe ndent varying and starting assets of the microenterprise (i. e. land, building etc. & borrower or non-borrower as dependent protean to find out whether the borrower has more(prenominal) capacitance to generate more income. HypothesisH1= Borrower of microenterprise loan are able to generate more income than non-borrower H0= Borrower of microenterprise loan are non able to generate more income than non-borrower Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5bri Here, I= Income from the Microenterprise l = Land e = Equipment b = Buildings o = Others assets br = Borrower or Non-borrower (dummy variable) Effect of Loan Amount On the different hand I also want to find out is the amount of microenterprise loan effect the income of the borrowers. For this I want to use income from microenterprise as dependent variable and starting assets and amount of loan s independent variable. Hypothesis H1 = Loan amount has a positive effect on borrowers income H0 = Loan amount has a negative effect on borrowers income Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5 lni Here, I= Income from the Microenterprise l = Land e = Equipment b = Buildings o = Other assets ln =Borrowed amount Effect of instruct To find out if breeding has any impact on the earnings of the microenterprise owners I hither develop a model where I tried to figure out the relationship amid cooking and income of the microenterprises.In this purpose I used the same model used for loan amount but I imply one more independent variable that is nurture (dummy yes or no). Hypothesis H1 = Training has positive effect on borrowers income H0 = Training has negative effect on borrowers income Model Ii =? + ? 1li + ? 2ei + ? 3bi + ? 4oi + ? 5 lni + ? 6 ti Here, I= Income from the Microenterprise l = Land e = Equipment b = Buildings o = Other assets ln =Borrowed amount t = Training (dummy) Part 6 Case Study In this part I will describe two successful and two unsuccessful fount of microenterprise loan.I wi ll provide will brief description of the project and reasons for success or failure will be provided. Limitations Paucity of resources and lack of capacity were the main limitations for the study. However, continuericted by these limitations I have tried to give my best effort to prepare the report. Overview of the Organization &8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212- Institute of Microfinance (InM) Institute of Microfinance (InM) is a non-profit organization established primarily for meeting look for and training aims of issue as well as global microcredit programs.It endeavors to call down and improve the microfinance-related investigate and training climate particularly in Bangladesh. The Institute is contemplating a mutation to a much broader center of excellence in the area of microfinance, enterprise development, poverty reduction and associate areas at the national and international levels through collaborative approach to l ook, knowledge management, training and education, and participation of reputed institutions and scholars in its programs.The Institutes main focus is on developing itself as a center of excellence with emphasis on research, training, academic and knowledge management. However, research is the most prominent among all the activities and its research activity centers near microfinance, poverty and development issues. InM was initiated and promoted by the Palli Karma-Sahayak Foundation (PKSF), and is now registered as an independent non-profit institution under the Societies Registration Act 1860.InM is currently funded mainly by UKs Department for International maturation (DFID) through its Promoting Financial Services for destitution Reduction Program (PROSPER). InM is prudent for developing overall capacity in the microfinance sector and to achieve knowledge public, management and spreading in the area of microfinance and poverty. In addition to aggrandiseing the research, t raining and consultancy go for microfinance practitioners, PROSPER has been providing assistance to modify microfinance institutions to access demanded training and consultancy services from accredited providers.InM is also committed to animation interested institutions to straits long-term microfinance courses. Vision Towards establishing a poverty unbosom world, InM sees itself as a frontline center of excellence in knowledge mental institution and management. Mission Firstly, InM will contribute to the capacity building of the microfinance sector in Bangladesh through training and academic programs for human resource development, conducting research studies and dissemination of findings, regular dissemination of new knowledge and technology, for the proceedss of the sector.Secondly, the institute should emerge as a center of excellence in microfinance, poverty, enterprise development, and an opposite(prenominal) allied areas at the national and international levels thro ugh building network with microfinance institutions, sector stakeholders, reputed researchers, thinkers and professionals, and exchange of ideas and experiences. Governance Institute is governed by a two-tierGoverning Body and General Bodygovernance corpse. The basic governance lies with the Governing Body. It comprises of seven members, including the Executive theater director of the Institute as an ex-officio member.The General Body is the Institutes highest authority. It is responsible for the overall policy counselling and direction for efficient functioning of the Institute. Total fare of members of the General Body is 8, including 7 (seven) members of the Governing Body. Governing Body The Institute is governed by a two-tiergovernance kindly organization-Governing Body and General Body. The basic governance lies with the Governing Body. It comprises of seven (7) members, including the Executive Director of the Institute as an ex-officio member. Current Governing Body of InM Chairmanprof Wahiduddin Mahmud motive Advisor to the Caretaker Government of Bangladesh, and Member of the United Nations Committee for Development Policy (UN CDP) Members Dr. Iqbal Mahmud professor Emeritus Chemical technology Department Bangladesh University of Engineering & Technology (BUET) Dr. Quazi Mesbahuddin Ahmed Managing Director Palli Karma-Sahayak Foundation (PKSF) Ms. Rasheda K. Choudhury Former Advisor to the Caretaker Government of Bangladesh, and Executive Director Campaign for Popular Education (CAMPE) Dr. Pratima Paul-Majumder Senior inquiry FellowBangladesh Institute of Development Studies (BIDS) Dr. Toufic Ahmad Choudhury Director General Bangladesh Institute of Bank trouble (BIBM) Dr. Md. Mosleh Uddin Sadeque Executive Director (Interim) Institute of Microfinance (InM) General Body The General Body is the Institutes highest authority. It is responsible for the overall policy guidance and direction for efficient functioning of the Institute. Total me mbers of the General Body is bakers dozen (13) including seven (7) members of the Governing Body. Other members of the General Body are as follows Mr. Khondkar Ibrahim KhaledChairman Bangladesh Krishi Bank (BKB) Professor A. K. M. Nurun Nabi Department of Population Sciences University of Dhaka Dr. Jadab Chandra Saha Former Managing Director Bangladesh Krishi Bank Ms. Parveen Mahmud President Institute of Chartered Accountants of Bangladesh (ICAB) Dr. M. A. Hakim Professor & Chairman Department of Business Administration University of Development preference (UODA) Dr. Jashim Uddin General Manager (Administration) Palli Karma-Sahayak Foundation (PKSF) Activities of the Institution The Institute has a plan to work with three divisions Research and Knowledge Management * Education and Training * Administration and Accounts Research Research is the most prominent among the InM activities. The major focus of its research is on microfinance, poverty, and development issues. InM condu cts research studies independently and/or collectively with distinguished researchers and institutions from home and abroad. The underlying objective of the research schedule is to chafe insights into the problems of poverty and development and also to assess the impact of different incumbrances. On-going Research Projects Multiple Memberships (Overlapping) in Microcredit Program. * Strategic Behavior of NGOs/MFIs in Bangladesh * Health and victual among the Beneficiaries of Microfinance Institutions (MFI) in Rural Bangladesh. * Microinsurance, Poverty and Vulnerability in Bangladesh (Phase-I) * Searching for an write up of Differences in Poverty Levels and Trends at Sub-National Levels. * Understanding the Poverty and Resource Dichotomy- An inquiry into the Livelihood of any Backward Community in Resource-Rich Areas of Bangladesh. * Access to Financial Services (Phase -1) Poverty ei in that locationviation through Enhanced Usage of unsettled Remittance * Assessment of the Impact of PKSF Interventions on Sustainability of Partner Organizations (POs) * Impact of Microcredit on coarse Farm Performance and nourishment security in Bangladesh. * infixed Female Migration in Rural Bangladesh An Effective Household Coping Strategy. * place Corporate Governance and MFI Performance in Bangladesh. * Poverty Dynamics in Rural Areas of Bangladesh Phase-I * Designing Appropriate Microinsurance Products for the Low Income Households Completed Research Projects baseline Study of Food Security for Vulnerable Group Development and basal Poor Beneficiaries Project (Sponsored by PKSF) * Identification of Appropriate Micro redress Approach for Ultra Poor of Bangladesh. (Sponsored by UNDP) * Urban Microfinance in Bangladesh * Monga in greater Rangpur Intensity, Coping, Vulnerability, and the Impact of Mitigating Strategies. * Impact of Cash for Work Program under PRIME in Lalmonirhat Districtct. (PKSF & InM) * Overlapping in Microcredit Programs in Patrail Union, Tangail. PKSF & InM) * Impact of PRIME Interventions on Monga Mitigation in Greater Rangpur Region PhaseI Trainings at that place is a growing demand to expand the InMs activities to support training programs to build the capacity of the MFIs so that practitioners posterior gravel tangible efforts towards building a sustainable microfinance sector. The institute intends to embark upon providing training to the development practitioners, journalists, editors, senior executives of different MFIs, policymakers, regulators, government officials and international agencies.In addition, it will act as a facilitator in capacity building of the animated training institutions. InM has a future plan to organize training programs for the participants even from outside Bangladesh. InM wants to put special thrust on-need-based training that requires customized, standard and structured training modules for the training programs. Furthermore, the institute is mandated to play fighting(a) role to capacity building of the institutions in the microfinance sector in Bangladesh. Module DevelopmentInM has interpreted initiative to prepare standardized training module for the MFIs as per suggestions of the training expert committee. InM wants to put special thrust on training rather than prototype training which needs customized, standard and interconnected training module for the training courses. Initially the following modules are developed by InM. * Microfinance trading operations and Management. * Basic Book property and Accounting Management for MFIs. * Improving participatory Managerial Skills and Management Style. * Monitoring and Evaluation of Microfinance Program. Legal restrictive constitution and Governance. Training Conducted by InM * March 27-31, 2011 Pilot Training Program on Microfinance Operations and Management with PMUK * February 07-11, 2011 Participatory Monitoring and Evaluation training at ELD, Thailand * December 5-15, 2010 Training of Master T rainers with AIT, Thailand * July 25-29, 2010 Participatory Rural Appraisal (PRA) * whitethorn 9-20, 2010 Training program for officials of Microcredit Regulatory Authority (MRA) * March 8, 2010 Training on Effective Time Management March 7-11, 2010 Basic Book property and Accounting Management at UDDIPAN, Dhaka * February 8, 2010 Pilot Training on Microfinance Operations and Management (MOM) at CDF * January 24-28, 2010 Pilot Training Program on Basic Book retentiveness and Accounting Management for MFIs with BRAC * January 17-21, 2010 Pilot Training Program on Basic Book Keeping and Accounting Management for MFIs with YPSA * January 10-14, 2010 Pilot Training Program on Basic Book Keeping and Accounting Management for MFIs with CDF * October 25-29, 2009 TOT on Basic Book Keeping and Accounting Management for MFIs * October 11-15, 2009 PRA Training for Dhaka City Corporation (DCC) / JICA Participants * appalling 16-20, 2009 TOT for Dhaka City Corporation (DCC) / JICA Participant s * July 19 29, 2009 TOT on Microfinance Operation and Management for Service Providers * December 26-28, 2006 Training program coroneted Poverty, Microfinance and Development for Journalists of both Newspapers and Electronic Media. Evaluation and Development of the Microfinance Sector in Bangladesh &8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212-Evaluation and Development of Microfinance Sector The development of MFIs took place in several distinct phases over the last four decades. Micro credit was developed in the 1970s as a response to the relief and replenishment needs of post- independent Bangladesh when the government and private initiatives were focused on restoring livelihoods through income generating activities. The development of the microfinance sector has undergone four distinct phases in the past four decades I. Action research phase in the 1970s II. Micro credit development phase in the 1980s III. Consolidation phase in the 1990s I V. Expansion phase from 2000 onwardsIn the 1970s, development organizations including topical anesthetic and international NGOs were involved in relief and rehabilitation. In addition to partnership development, health, literacy, agricultural sector development programs and food relief programs, some initiated income generation activities to help the landless sorry, particularly women earn supplemental income. A major constraint approach by the population was the lack of access to capital for investment in income generating activities, so few could actually start enterprises. In the mid 70s, Grameen Bank initiated its Jobra experiment using the solidarity free radical-based credit delivery system using peer pressure and root procure to check up on timely quittance.The project achieved a high rate of success and it was formalized as Grameen Bank, with a special manifest obtained from the Bangladesh Bank. Grameen Bank remains the only argot with a poverty alleviation bank license. The license is of particular observation as it allows Grameen as a licensed and regulated bank to twit nest egg legally, from members and non-members. Also in the 1970s, the Bangladesh Bank initiated the Dheki Rin Prokolpa in collaboration iwth an NGO Swanirvar Bangladesh. Several separate NGOs were also trying out various micro credit mechanisms and soon micro credit programs became a part of all companionable development NGO, even if it was not a major part of the program. The 1980s is known as the accomplishment of microfinance program development.The success of Grameen Bank began to motivate social development NGOs to expand their economic development programs, with a particular emphasis on microcredit. The availability of donor grants resulted in the creation of revolving loan bullion to make loans to NGO members for various income generating activities. NGOs began to expand their micro credit programs and some like ASA took a decision to shift focus from soci al and familiarity development work to minimalist micro credit intermediation. In the 1990s, the Palli Karma-Sahayak Foundation (PKSF) was established as the promoted apex wholesaler financed with government specie and the World Bank.As a result, NGOs providing pecuniary services had the benefit of relatively low cost refinancing along with technical assistance to enhance their institutional infrastructure and management information systems to expand outreach, improve dexterity and increase self- sufficiency to reduce dependence on grant monetary resource. The first NGO to achieve full operational self- sufficiency and monetary self-direction was ASA. In the late 1990s, ASA was able to move away from donor grants and engross its microcredit portfolio through earned income, savings, and law converted from the grants received previously. ASA became the givingst borrower of PKSF funds and was desirable for loans from commercial banks. Soon other NGOs like BRAC and Proshika began to scale up their micro credit programs, although their continue focus in their social and union development programs delayed their fall guys for pecuniary self-sufficiency.Towards the end of 1990, the microfinance sector was well established with the heroic quaternary namely, Grameen Bank, ASA, BRAC and Proshika who in daily round promoted smaller NGOs providing refinancing as well as technical support in their respective development methodology and microfinance practices. Although the orotund mass of NGOs adopted the Grameen style of conclave lending and focused on verdant areas, in that location were some new initiatives. For instance, in the primeval 90s, an NGO named Shakti Foundation took on the challenge of providing microfinance services to urban women living in the Dhaka slums who had limited literacy and numeracy skills and no permanent address, as slum evictions were common. The NGO Asharai promoted a savings based self-help group model of microfinance combined with community development services for tribal communities in the northwest part of Bangladesh.RDRS, an integrated service provider focused on micro credit initiatives along with agricultural interventions to increase the food sustainability of the drought affected population in the northern villages of Rangpur and Dinajpur districts. BURO Tangail, with its centre in the highly productive townspeople of Tangail, started with a modified Grameen type methodology, but used action research and archetypeing of products to develop a range of credit and savings products, including conciliatory savings and term deposits. TMSS based in Bogra started with an integrated community development approach, using micro credit as a means to ensure sustainable development of the sylvan economy with a focus on social forestry, water resource management, agricultural and livestock management, fisheries and health, and now has big(p) into one of the top 10 MFIs in the country.Safe Save, a p ilot project that took on the legal framework of a savings and credit cooperative started as a Lilliputian provider amongst the giants however, has attained international fame for its success in innovating a savings based individual lending model in urban Dhaka, in contrast to the dominant Bangladeshi model of a credit-led group- based lending model for hoidenish lymph nodes. The fourthly phase was one of professionalization and expansion of microfinance portfolios, and moving towards commercialized funds to enhance sustainability. In the late 1990s, with the increasing threat of declining donor funds NGOs began to experience the need to enhance management capacity and develop action plans to access loans in lay out to expand outreach to attain scale and sustainability. In the last decade a be of NGOs have experienced direful expansion, with at least a dozen succeeding in attain over one million nodes.Bilateral donors and international development agencies have contributed s ignificantly to this harvest-home in the sector by providing technical assistance support, financing technical support and institutional development and sponsoring training within and outside the country to introduce the sector to international experiences. PKSF and a number of commercial banks have contributed to the expansion and outreach by refinancing microfinance portfolios to respond to increasing need for loan funds from real and new customers. The support of action research and pilot testing of new products has added rigor and vitality to the sector. Expansion of microfinance portfolios has continued to the end of the 1990s and many MFIs are s bowl experiencing high rate of evolution with continued availability of commercial funds, increasing income from the loan portfolio, and member savings. The current phase is formalization and transformation.The bigger and medium coatd NGOs will prepare to transform into formal financial institutions in accordance with the impertin ently established Microfinance Regulatory Authority Act, with the objective of integrating into the formal financial sector to gain access to additional sources of capital and equity as well as mobilize savings from the public. Smaller NGOs that are unavailing to transform due to low levels of equity and light scale or performance whitethorn consider mergers to consolidate portfolios and combine their strengths to overcome weaknesses. legion(predicate) of the smaller MFIs that have not been able to attain the adequate levels of sustainability and proceed a committed customer base in competitive markets may be forced out of business.The sector will be faced with some new challenges, including intensified competition in some of the rural and urban markets where market saturation is already evident, and innovating mechanisms to service the markets that remain unbanked, including the uttermost(a) despicable or hard core poor and the populations in strange areas that remain beyo nd the reach of either the formal banks or NGO MFIs. The Microfinance Sector of Bangladesh &8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212- The Microfinance Sector In Bangladesh The microfinance sector in Bangladesh consists of the following stakeholders who are categorized as the micro, micro and macro instruction levels.The micro level consists of the existing clientele and the potential target client group who remain unserved or underserved. The micro level also consists of the different kinds of providers, including the formal, semi-formal and informal providers such as moneylenders, pawnbrokers and rotating credit and savings associations. The micro-level consists of the financing partners, including donors, refinancing partners, development finance institutions, three-party and bilateral aid agencies, commercial banks, specialise banks, development banks, as well as government agencies. Private investors are new comers in the micro-level pro viding equity and capital to MFIs.The micro level also includes technical support providers including training institutions, networking institutions, microfinance associations, rating agencies, audit firms, consulting firms, independent consultants and academic or research institutions. The macro level consists of the regulatory bodies including the Central Bank or Bangladesh Bank and the Ministry of Finance. A principal player within the macro level is the NGO affairs Bureau (NGOAB) which governs and finagles the NGO microfinance providers, including local and international NGOs with programs in Bangladesh. About 62 portion of the borrowers live below the poverty line. The vast majority of these clients do not have physical collateral to secure loans and need selection collateral mechanisms. The 2005 World Bank report states that a integrality of 9. 6 million family lines are being served by MFIs.The total number of clients served by microfinance sector is approximately 24. 2 5 million with effective coverage to about 17. 32 million clients showing a substantial gap amid demand and supply. Microfinance institutions, including Grameen Bank, collectively service more than 60 part of the demand, with Grameen help about 20 per centum of the total. Women constitute 90 share of the clientele. Average loan sizes are well-nigh Tk. 4000 (US$60). In 2006, micro credit loans effected about 44 percent of the total disbursements in the credit sector. The microfinance providers are primarily MF NGO and a few non-bank financial institutions (NBFIs), and one specialized microfinance bank, namely Grameen Bank.Some of the ministries or divisions of the Government of Bangladesh support large micro credit projects and some of the commercial banks have established windows for microfinance loans. Microfinance NGOs cover the largest share of the microfinance market. A report published by the Micro credit Regulatory Authority (MRA) reveals that up to June 30, 2006, state s that the volume of loans cracking for the 651 major NGO- MFIs is US $1105. 86 million and CDFs statistics for 2006 show that up to December 2006, accumulative disbursement of 611 major MFIs was approximately US$8,171. 71 million. Grameen Bank is the only MFI with a specialized bank license. The MF NGOs are led by three very large organizations namely ASA, BRAC and Proshika which represent 94% of the total sector, in terms of numbers and more than 73% of the savings.The remaining part of the sector is comprised of 332 small & very small organizations. The Government of Bangladesh is a major stakeholder. The Microfinance Regulation Most of the NGOs providing financial services were established as development organizations, and registered as LNGOs or INGOs. Most of the microfinance portfolios were grown on grant funds from distant sources. With the increasing inflow of external resources, the government concerned with foil and accountability created the NGO Affairs Bureau (NGOA B) in 1991. NGOAB played the role of the primary regulator of the development NGOs supported by foreign funds, providing microfinance services in the country.The fact that MFIs remained unregulated for the past four decades has had an impact on their substantial growth in outreach and sustainability as well as promoted innovation. However, as the sector has acquired significant scale particularly in terms of deposits there is a concern regarding depositor security and the interests of poor clients. They can easily be exploited by microfinance providers, especially as many providers are motivated more by the potential for profit rather than to achieve social development objective. Recent reform measures include the reformation of previous acts creating the Micro extension Regulatory Authority Act 2006, building on the revious acts such as the Societies Registration Act 1860 (the same as in India) Companies Act 1913, Trusts Act 1882, Charitable and Religious Trust Act 1920 and Coope rative Societies mandate 1984 that have created the regulatory framework for the constancy in the past. The Bangladesh Bank in coordination with NGOAB and in consultation with the microfinance NGOs represented by CDF and PKSF have established the Microfinance Regulatory Authority and created the Micro Credit Regulatory Authority Act 2006. All NGOs providing micro credit have to register with both the NGOAB if they are receiving foreign funds as well as the Microfinance Regulatory Authority if they craving to continue providing financial services. In time it is expected that all MFIs will apply for license, and be formalized and integrated into the formal financial sector. in that location are some in the industry who feel that it is essential to have a regulatory framework to protect the sustainability of the sector, foster innovation and nurture growth, and most heavyly to protect the interests of the clients patch there are others who venerate that regulation could strangula te growth and innovation. The MRA Act requires all MFIs to register with the MRA in order to operate legally in the country in the provision of microfinance services. The MRA will issue and cancel licenses for micro finance operators, oversee, supervise and drive the entire range of activities of MFIs. The MRA will establish a depositors insurance fund to ensure safety of the depositors and to secure all MFI deposits.All MFIs will be required to maintain a reserve fund which cannot be worn-out(a) without prior permission of the authority. MFIs will not be allowed to take deposits from persons other than their members (i. e. no mobilization of deposits from the public who are not members of the MFI). MFIs that deviate from the norms will be subject to punishment of not more than one year of imprisonment or a fine of not more than Tk. 500,000 (US$ 7143). Furthermore, the MRA will keep a watch over the MFIs in Bangladesh in order to safe guard the interests of microfinance clients, a s well as ensure the security department of microfinance customers against overpricing. Price setting will be judged by the government in keeping with guidelines and regulatory provisions.Resources will be allocated from the commercial banks and formal financial sector to meet the demand for micro credit. The MRA will be responsible for supervise and evaluation of performance. The Act is a fairly recent intervention in a sector that has grown and developed and come of age over a period of four decades. It will take time for the stakeholders to get accustomed to the new regulatory framework and in turn for the regulatory authority to work out the existing areas of weakness or gaps in the Act and in the systems that are being established for registration, appraisal, licensing, monitoring and supervision. The present framework is a starting point. There will be modifications and amendments in the future.At present the legal frameworks do not include the option of a microfinance bank, as there is a fear of attainable financial mismanagement resulting from limited controlling capacity of the newly organise MRA however, in future this option may be provided based on the demand from MFIs for this particular legal framework and the capacity of the MRA to license and supervise these entities. Another critical concern is the exclusion of foreign microfinance institutions that are promoted by international NGOs. Local MFIs are concerned that these provides will have an inequitable advantage as they will have continued access to financial resources from external sources which could result in negative competition. Domestic MFIs feel powerfully that the MRA should establish a policy that monitors the cash flow into foreign MFIs and about monitors their expansion strategies.Although insurance is an essential product to provide a social safety net to protect vulnerable populations from the impact of death, disease and other shocks and emergencies, the MRA has not include d microinsurance as part of the products of MFIs. Insurance is a specialized financial product and is not within the purview of the Central Bank. At present, micro insurance products commotioned by both insurance providers and microfinance institutions are inadequate to meet the needs of microfinance customers. The sector will have to focus its efforts on action research and pilot testing with the government impart to providing a social safety net for the vulnerable segments of the population. The Microfinance InstitutionsThe first generation MFIs that emerged in the 1970s had an explicit social agenda and their focus was on poor segments of the population particularly women. The geographic focus was primarily in the rural areas, but as migration created urban poverty, microcredit programs began to shift their focus to urban lending programs. While some NGOs render an integrated development approach, including some community development, most NGOs have transformed into microcredi t focused NGOs. MFIs are categorized into four major groups, including NGO MFIs, which constitute the large proportion of MFIs, commercial banks with microfinance windows, and government line ministries that have promoted micro credit projects and programs. There is one specialized microfinance bank, namely Grameen Bank.The Grameen Bank established in 1983 under a special law with the initial support from the Bangladesh Bank is the only MFI that has been awarded a license to operate as a specialized bank for microfinance. All the other MFIs are NGOs that are registered with the NGOAB and now with the MRA. The MFIs including Grameen Bank include the Big cardinal that have outreach to over 3 million clients. A handful of large MFIs reach over 1 million clients. Another 20 scratchy MFIs are categorized as medium sized institutions with outreach to less than 100,000 clients. The rest are small and very small MFIs, with about 20,000 clients. The smallest have less than 5000 borrowers.M ost of these institutions operate in the rural areas, although several of the larger institutions are now lending in both rural and urban areas. A few institutions specialize in urban microfinance. The Government promoted micro credit programs are substantially large. About thirteen ministries and fifteen divisions of the government of Bangladesh allocate with microfinance activities with a cumulative disbursement of US$1238 million at the end of December 2006. The government programs are less efficient with recovery place of about 84 percent as compared to the NGOs that have repayment judge over 90 percent. The 2005 World Bank Report indicates that a total of 9. 6 million (out of 14. million households) or 37 percent of all households in the country are currently served by microfinance services. The Big Four Grameen, ASA, BRAC and Proshika collectively account for 86 percent of the 14. 3 million active borrowers. Collectively they have more than US$1249 million in loans outsta nding and over US$402 million in savings. Microfinance Delivery Mechanism Bangladeshi MFIs are best known for large-scale provision of microfinance services to the poor women using non-traditional collateral mechanisms. With more than 90 percent of clients being rural women, MFIs have demonstrated repayment rates of over 90 percent in comparison with the formal banking sector. The number loan size of MFIs is around Taka 4000 (US$60).Microcredit is provided to poor or low income households through groups. Loan contracts are made in the name of individuals, but the group is an essential mechanism in the delivery and recovery process. Depending on the provider, the group performs different functions, including providing a cost-efficient mechanism for client screening, loan appraisal, disbursement, collection, monitoring, supervision and the mechanism for delivering non-financial services. Some MFIs are now making loans to individuals as in formal banking practices, without requiring membership in a group. The main feature of Bangladeshi microfinance is the provision of loans without demanding traditional collateral as security.The solidarity group concept is embedded in the social structure of Bangladesh which consists of virtually knit groups at the village level who in the absence of external mechanisms provide essential social safety net for poor households. More importantly, the Bangladesh group model was developed according to the precepts of group solidarity. An MFI organizes a joint liability group of up to 5 members who then form peer pressure groups of as many as 30 individuals or 6 joint-liability groups. The primary use of the group in the Bangladesh microfinance model is to offer alternative collateral mechanisms for the target client group that is unable to offer physical collateral to secure loans. Solidarity groups provide group guarantee by using joint liability and peer pressure principles to enforce repayment from individuals within the grou p. In almost all the microfinance models, loans are further secured through the collection of compulsory savings that are deposited in a loan security deposit account. The loan security deposit helps when joint-liability and group guarantee mechanisms either are inadequate or fail. Microfinance Products The traditional microfinance loan product is normally called the General Loan. This is a small loan with a chapiter that is under US$100 (at present the average loan size is US$60). Loan ceilings are based on the expressed demand from members as well as the fund availability the MFI to meet the demand for loans.When members reach the maximum loan size, they have the option of applying for a larger enterprise loan if the MFI offers this product at different rates and repayment terms and conditions, or has to consider moving to another provider that offers the sought after product. The General Loan is provided in cycles of up to 12 months with about 45 monthly installments consistin g of equal amounts of principal and interest. Loan installments are calculated based on the average household income of the target client group, allowing the vast majority of clients to repay without undue stress however, most clients find repayment during the early years a struggle given their lack of adequate income and financial management capacity, and clients taking larger loans can also find installments uncontrollable to handle if household income is not sufficient to manage essential expenditures. stakes charged by MFIs varies and is calculated on a flat or declining basis depending on the operational efficiency, cost of funds, inflation and other factors precise to the institution such as fees to cover non-financial inputs to the business or social development services. Upon the successful repayment of a loan, the client is eligible to apply for a larger loan in the next cycle, where the ceiling is increase automatically by Tk. 500 (US$7). Currently, loan ceilings for the General Loan are as high as Tk. 50,000 (US$700). Clients can borrow as much as they want within the ceiling of their loan cycle. In principle there is no pressure for clients to borrow the maximum amount and can opt to take smaller amounts based on their need and their repayment capacity. In case of arrears MFIs have policies regarding penalties.In case of default, the client is closely monitored and there is some grace period to recover outstanding amounts over the subsequent installments. In case of a loan default, the MFI follows its recovery procedures, depending on the terms and conditions contract in the loan contract. In the case of collection terrible debt, the first step is to work with the group members of the joint- liability group to analyze the reasons for default in consultation with the client and the family and identify options for recouping the loan outstanding. The next step is to discuss the situation with the larger peer group to identify the best strategy to recoup the loan.Depending on the situation, either the client will take responsibility to repay the entire amount or in other cases, the group members will help by contributing from the group fund to repay the outstanding amount to keep the group in good standing with the MFI. In situations where the client is not at fault, and the reasons for default is due to death, illness or business failure due to external factors, the interest may be waived, the entire loan may be rescheduled or even waived and covered by the loan red reserve fund of the MFI. As microfinance loans increase in size, the exposure to peril inhibits group guarantee through the group fund as a reliable or viable means of recovering losses.Therefore, in the case of larger loans, a client is eligible for larger micro enterprise loans, but must maintain membership in the group and accept with all the group requirements, including regular meetings, compulsory deposits, and deposits in the voluntary savings account. Although the group must continue to assist in the collection of bad debt, the loans are secured through the loan security deposit of the individual client as well as the attachment of secondary assets that the client can liquidate if faced by income loss causing repayment problems. In a few cases, such as ASA, loans are being made to individuals outside the group mechanism to attract a different target group of clients, including men and women with established microenterprises who are not interested in group mechanisms but are interested in borrowing from an MFI as they are not eligible for commercial bank loans.The General and Micro Enterprise Loans are generally provided for many different purposes including investment in business activities including investment in productive assets such as agricultural land, equipment, machinery, electricity connection and inventory. Microfinance clients can obtain sector programme loans for micro enterprise development in areas such as trading, service sector, food production, poultry, livestock, agriculture, sericulture, fisheries and social forestry. Some NGOs offer clients enterprise development training, technical assistance for specific sub-sectors as well as marketing inputs. General loans are provided for any profitable and socially acceptable income enerating activities such as rural trading rural transport paddy husking food touch on small shops and restaurants, etc. Although diversion of loans for household consumption needs is not encouraged, there is an understanding that money is fungible, and what is important is that income levels within the household modify a client to repay her installments regularly and continue to remain a customer in good standing. General loans usually range in the midst of USD$15 and USD$160. Members are eligible to apply for larger amounts once they have repaid their outstanding loan in full and as per the terms and conditions specified in the loan contract.The micro-enterprise l oans are larger than general loans, and can be borrowed both at the group level and also as individuals directly, but with more rigorous credit appraisal including a thorough household and business appraisal to assess risk and potential for repayment. The clients are usually graduates who have successfully repaid several general loans and are committed to transforming small income generating activities into sustainable micro enterprises that will provide the primary income for the household. Some MFIs offer agricultural loan products that have different terms and conditions for repayment depending on the agricultural cycle.Repayments are made with monthly installments of interest and a payment of the principle amount in one or more installments depending on the cash flow of the household. MFIs also offer loans for other purposes, including asset creation, lodgement improvement, house saying, purchase of homestead land, as well as education of children. Several MFIs offer loans for repair of their homes, upgrading and in some cases actual construction of home or purchase of homestead land. Bangladesh Bank now offers house-building loans to MFIs at the rate of 1 percent per annum to finance the demand for housing loans from MFI clients. The average loan size is typically USD$310.In addition to these productive or investment loans MFIs also provide other loans for emergencies, disaster mitigation, sanitary latrines and subway wells. Due to the fact that Bangladesh is a lot affected by intrinsic disasters including floods and typhoons, MFIs often provide emergency loans and disaster loans to help clients cope with the loss of income and assets as a result of a disaster. Typical microfinance loan products 1. General Loan 2. Micro enterprise Loan 3. Agricultural Loan (for cultivation purposes) 4. lodgement Loan or House Improvement Loan 5. Education loan 6. Emergency or Disaster Loan 7. Tube well loan 8. Sanitary latrine loan &8212&8212&8212&8212&8212&8212&821 2&8212&8212&8212&8212&8212&8212&8212&8212&8212- &8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212&8212- Trends and Growth of Microfinance Programs of MFIsTrends and Growth of Microfinance Program of MFIs The previous chapter dealt fundamentally with the overall development of the microfinance sector. This chapter presents the overall trends and growth of the sector using plank data of 126 MFI-NGOs. These MFI-NGOs, however, have mobilized around 82 percent of the members mobilized by total MFI-NGOs of the country. GB is not included among these MFI-NGOs. The use of such venire data enables to clearly understand the growth and efficiency of the MFI-NGOs in the given period. Employment and Gender MFI-NGOs have not only contributed to providing financial services but also contributed to the generation of employment.Over the past four years, 2006 through 2009, there has been remarkable growth (Table) in employment creation by the MFI-NGOs. The panel data show, these 126 MFI-NGOs created some 31,505 new employments. The increasing trend in employment creation was observed from 2006 to 2008 while a slight come down was taken place in 2009. A negative annual growth rate of total stave in 2009 was 0. 60 percent which was drastically lower compared to positive 2. 54 percent growth in 2008 and 27. 15 percent in 2007. Over a period of four years, 2006 through 2009, the growth was around 30 percent. There is a positive relationship between program expansion and number of staff employment.Credit staffs constitute a major share of total staff. The share of credit staff in total staff was around 62 percent in 2009 while no significant change was observed from 2008. On the other hand, the other staff contributed to around 38 percent of total staff resulting a slight increase in 2009 over 2008. Table 1 module Strength and Growth of MFI-NGOs Figure 1 Percent distribution of Staff of MFI-NGOs by gender 2009 Figure 2 Percent distribution of Sta ff of MFI-NGOs by gender 2008 Women empowerment has been one of the major objectives of MFIs. Although this is reflected in mobilization of distaff members, it is not reflected in emale employment. Only around 26 percent of total staff and around 16 percent of total credit staff were egg-producing(prenominal) in 2009. Although the total number of female staff increased but the growth rate declined. This is evident from Figure 2. 1. 3. This may have happened because of longer hours of work, adverse geographical condition and overall, the psychology of the employers. take over the growth of female staff was higher compared to the growth of male staff in 2009. The growth of female staff was 6. 63 percent compared to a negative 2. 89 percent growth of male staff in 2009. The distribution of staff of MFI-NGOs by gender has been presented in Figure.However, recruitment of local level field female staff has probably contributed to higher female employment, which indirectly stimulated wo men empowerment. Figure 3 Trend in Credit Staff of MFI-NGOs Membership in MFI-NGOs Figure 4 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 2009 Figure 5 Percent Distribution of Membership in MFI-NGOs by Rural and Urban Areas in 2008 MFIs initially started their programs in rural areas. Over time, they spread out their programs to urban areas too. Microfinance in Bangladesh is synonymous to credit for landless and asset less rural poor. As such the preeminence of rural members is quite natural in the overall microcredit members mobilized.On the other hand, the magnanimity of female members in the overall membership is very usual, as microcredit as a poverty alleviation tool has taken women empowerment as one of its agenda from the very on set. A total of 22,734,381 members were mobilized up to 2009. Among them, the share of rural areas was 88. 59 percent in 2009 (Figure) compared to 89. 33 percent in 2008 (Figure). There has been an increasing trend i n membership mobilization in rural areas up to 2008 since 2006 (Figure), but it decreased in 2009 by around 6 fate point. In urban areas, the total number of members was increasing at a decreasing rate. As are evident from Table 2. , the number of female members in rural areas decreased for the first time in 2009 by around 2 percentage point compared to 2008. But over the period, 2006 to 2009, female members in the rural areas achieved a growth of around 32 percent. Figure 6 Trend in Membership by Location of MFI-NGOs Figure 7 Distribution of Growth of Membership The annual growth of rural female member was 1. 62 percent in 2009 compared to 2. 99 percent in 2008 and 12. 39 percent in 2007. The annual decrease in the number of male members in rural areas was 877,271 in 2009 from 2008 with a deceasing rate of around 26 percent. Over the period, 2006 through 2009, the rate declined by around 21 percent. An opposite scenario was seen in the growth of male members in urban areas.In this year the growth rate of male membership got rid of 1 percent negative growth of 2008 and recorded 1 percent positive growth. In 2007 male membership had 13 percent positive growth. Interestingly, some 1,257,210 members were declined in rural areas, while the number grew by 37,589 in urban areas resulting decrease of overall 1,219,621 members in 2009 compared to 2008. Over the period from 2006 to 2009, the overall growth of membership was around 20 percent and at the same time the growth of female and male members was around 30 percent and 20 (negative) percent respectively. The trend on the membership is also shown in Figure. Table 2 Growth of Membership Trends in Lending BehaviorThe scenario of the sector is also possible to see through important program data, such as, amount of members savings or group savings, total (or cumulative) number of borrowers provided loans (inclusive of repeat loans) ever, current number of borrowers, amount of cumulative loans disbursed, amount of loans outstanding with the borrowers, and amount of revolving loan funds. Borrower-Member Ratio All the members at a given point of time may not be borrowers, and even everyone may not borrow. This is reflected in borrower-member ratio. As the panel data (Table 2. 3. 1) showed that in 2009 MFIs could provide loans to 70. 42 percent of the members compared to 74. 20 percent in 2007 and 78. 80 percent in 2007.This declining trend throws a big question to the microfinance industry about its progression with the given mandate of reaching the poor with financial services for poverty alleviation. As expected, borrower-member ratio is higher for the female than the male members. Around 73 percent of the female members had borrowed in 2009 while the percentage was around 77 in 2008 and about 83 percent in both 2007 and 2006. The higher ratio for female could be happened due to perceive financial discipline and less mobility of female. After showing a round-the-clock increasing trend in the borrower- member ratio for male members from around 54 percent in 2006 to around 61 percent in 2008, and again it declined to around 56 percent in 2009.The borrower-member ratio for female members was around 17 percent higher than that of male members in 2009 and the trend continued also in all the years under consideration. It could be the mobility of the male borrowers that makes MFIs conservative in lending to them. Table 3 Borrower and Member Ratio (%) There is, however, not much difference exists in borrower-member ratio in rural and urban areas. But a decreasing trend was observed in the borrower-member ratio in both the rural and urban areas. Such trend may be attributed to market saturation, mobility of members in the credit market, or the process of consolidation of the MFIs. Plausible causes need to be investigated. Intensity in Number of LoansIt is reflected in the ratio of cumulative borrowers and current borrowers. Cumulative borrowers are essentially the number of loans taken. Current borrowers represent active members. As such, the ratio of cumulative borrowers and current borrowers will give us a trend in the intensity of number of loans per borrower. The cumulative number of borrowers of 126 MFI-NGOs till 2009 was 39,536,838, higher by around 12 percent than the 2008 level, and around 53 percent higher than the 2006 level. As expected, the number of current borrowers was less than the cumulative borrowers. The number o