Holiday Post: Micro Credit is a booming sector in Bangladesh. Every Micro Credit Institute (MFI) is trying to expand its working area and increase to their portfolio. MFI is highly Competitive and to some extent restless.  Micro Credit sector is still a semi-formal sector with informal work environment and formal policies. My job is administrative which gave me the opportunity to see people working in every department. According to my experience, new comers join this sector with a different expectation of having desk job in a polished manner. But this sector is field based. So the rate of drop out is high. But if someone can survive the hardship of initial years of carrier he/she would love the cordial environment and can have a great carrier. This is the only sector where by doing work with root level people a person can grow as a human being as well. Says Mohammad Abdul Awal, Executive Director, Aso Gori Unnayan Sangstha. In a written interview of NGOs various point with Holiday post.

Since the competition is raising day by day every MFI try to disburse loan at their soonest. Some MFI doesn’t even care for the mandatory paper work or follow the systematic procedure before the disbursement. So it became difficult to maintain the quality of work.  We see that, one person can easily take loan from various MFIs at the same time. In some cases people take loan much more than can actually afford. So at some point some borrowers flee from their residence and become migrants after being failed to repay to their loan. That makes the overall environment unstable and riskier for small and medium MFIs. He concerned.

In rural area almost every small-medium entrepreneurs gets the financial support from MFIs. Beside that people take loan to buy rickshaw-four wheeler, to go abroad as a migrant worker, to start farming.  The overall money circulation in rural area is being dominated by MFIs. During lockdown in 2020 and 2021 due to Covid-19 we have seen how the rural economy in Bangladesh is dependent on MFIs. So I think,  MFIs has important role play in our community group. he point out.

According to micro credit regulatory authority’s policy he said, Micro Credit Regulatory Authority is the sole authority to determine and monitor policies regarding Micro Credit. It is a continuous process and so far going right. But the authority takes longer time to approve any application regarding regular activities which keep on hold the applied matter. It takes months to get approval of something and there is no coordination between Ministry of Social Welfare and MRA which is very important to run regular activities smoothly. Each and every policy is determined and monitor by MRA. So the entire sector is under a supreme monitoring system where there is no scope of having individual policy.  He added.

Micro Credit industry in Bangladesh is still not as secured as it is required. To ensure the security of existing MFIs it is important to introduce CIB (Credit Information Bureau) and SIB (Staff Information Bureau) in every MFI. Otherwise the financial corruption both in member level and in employee level would never be stopped. Moreover, this sector is already overcrowded. So there is no need to register any new MFI. He also added

Micro Credit is not micro anymore. Over the years it became macro in terms of volume. Ten years ago those who needed 5 thousands taka to start a business are now taking 3 to 5 laks to run the same business. The starting amount of loan shifted from 5 thousands to 30 thousands. Some even take 50 thousands as a beginner. The loan range is now 30 thousands to 30 laks. Because of this wide range loan demand AGUS is operating with several loan products; RMC is for the beginners which is below 1 lakh, Medium Entrepreneurs is for medium scale loan which is from 1 lakh to 7 lakh and Mediam enterpreneaurs  is for large scale loan which is above 7 laks.  he added.

He also added, the community life in the working area of AGUS is fast forwarding. People are not interested in weekly installment system anymore. They prefer monthly installment even if his/her income is daily or weekly. Monthly installment system was introduced by national organizations. Borrowers picked it up rapidly and started demanding for monthly installment for all kinds of loans. As a result the work strategy has changed to provide loan on monthly basis.

AGUS got its primary registration from Social Welfare with only one mission; which is to work for the betterment of the life of the community people at every aspect (education, health, housing, livelihood, etc.). So it’s not a business rather social work. But to survive as a MFI in this competitive sector AGUS try to serve people from all social class with different loan products (i.e. Seasonal loan for agriculture purpose, special scheme for migrant workers.