BURO, Tangail, now named as only BURO, was started as an experimental programme in 1989. The credit procedures are based on the Grameen model but with some modifications. It motivates the target people to form customer groups, encourages them to save and provides credit to capitalize their income generation activities and meets emergency needs.
BURO has one of the most competitive environments in Bangladesh. BURO introduced a programme of special loans for sanitary latrines and tube-wells as a result of the activities of other MFIs. BURO has always charged interest rates that are significantly higher than those of its main competitors, Grameen Bank, BRAC, ASA. In preference to reducing interest rates BURO has chosen to serve clients that sought user-friendly, client-responsive financial services. As a result, BURO continues to expand its product range with varying degrees of success.
Some of the products developed by BURO most notably the contractual savings product, have resulted in a higher cost of capital (20 percent flat rate). However, by offering a variety of flexible financial services, BURO has managed to maintain a higher than average client retention rate and to charge a higher rate of interest on loan products than its main competitors. BURO’s experience shows that offering flexible financial services attracts clients who are prepared to pay a higher price for the additional services.
ASA provides both credit and savings services on a remarkably large scale. ASA operated a credit delivery and recovery system based on a modified version of the Grameen Bank’s group-based lending methodology, stripped down to an elegantly simple (if somewhat inflexible) system that allowed management to control the flows of money precisely and exactly.
ASA has achieved impressive results through a highly standardized and rigid lending system. The loan product itself is a model of simplicity and standardization. A Unit Manager, 5-8 credit officers and a messenger/cleaner run ASA’s Units. The Unit Manager is also responsible for a loan portfolio and spends most of his time in the field, alongside the credit officers. There is no administrative staff at the Unit: credit officers are responsible for all administrative tasks. Strict internal control is achieved through all staff at a Unit noting daily transactions in the same book – this allows everyone to see what has happened during the day. All staff at the Unit know the total cash expected from loan recovery and savings collection for each day. Thus, if a credit officer comes in with less than the projected amount, he/she is subject to immediate questioning by fellow staff members and follow-up by the unit manager. The system’s reliance on transparency and discipline means that it works extremely well.
To reinforce the system, regional managers also play an important role in internal control. They visit units and review the books and accounts. They even visit clients and groups to verify transactions when warranted. The entire ASA system is controlled and driven by directives sent out from Dhaka, without substantial financial investment in training staff on the contents of individual directives. The directives are typically generated on the basis of discussions with field staff in regular coordination meetings and field visits by senior staff, which are used to monitor and review ASA's policies.
BRAC’s combining financial services with social protection- the IGVGD program has demonstrated that micro-credit can be linked to social protection programs in order to provide both the livelihood protection and the livelihood promotion functions necessary to tackle extreme poverty. Starting in 1985, BRAC has worked with the Government of Bangladesh and the World Food Program (WFP) to integrate a program of credit and training with a targeted feeding program for the very poorest households through the IGVGD programme. At any time IGVGP covers around 200,000 beneficiaries. Extremely poor households are selected by locally elected officials to receive a VGD card entitling them to receive 30kg of wheat per month over an 18 month period. BRAC provides training in poultry rearing and then micro-credit to start an income-generating activity.
Evidence suggests that the IGVGD program has been highly successful in reaching the poorest and has on average had a positive impact in terms of permanent improvements in beneficiaries’ incomes and assets. Hashemi (2001) shows that improvements peaked in the period immediately after the program ended, when the loss of the wheat inputs had not yet been felt; three years on, however, most households showed sustained improvements in economic status. In addition, by 2000, 66 per cent of IGVGD participants were moving into standard microfinance programs, of these around two-thirds entered the BRAC credit program, but one-third were joining other NGOs, highlighting an important ‘grooming’ function of the program.
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