Home ›› 28 Jan 2022 ›› Front
Khadiza Islam, a city housewife, was living in Dhaka’s Mohammadpur with her husband when the Covid-19 pandemic turned off the light for their livelihood.
Her husband Abdur Rahim was furloughed by the private enterprise he was working for, and hard time befell them.
The city life being upended, the couple shifted to their ancestral home in the district of Bhola to survive the Covid-induced financial crises.
Khadiza and Abdur Rahman hit upon a plan to raise cattle and go for fish farming at the same time in a leased-out pond.
They took microcredit from a non-government organisation (NGO) and went ahead in accordance with their plan that clicked amazingly well, and that changed their lot within a short span of time.
Within a year the hard-working guys found themselves in a state of solvency, and are now dreaming to expand their business.
Like Khadiza, millions of marginalised families gradually have changed their economic condition through microfinance at the grassroots level.
Microcredit insiders say poor or low-income people struggling to survive the pandemic are the prime borrowers of microcredit and/or are members of Microfinance institutions (MFIs).
Several sectors have been affected by the pandemic excepting the agricultural sector that has retained growth, thereby boosting microfinance and its borrowers even amid the pandemic.
According to the Microcredit Regulatory Authority (MRA), the total amount of loan disbursement was Tk 1,53,855 crore to its 3.51 crore members through 7,46 licensed microcredit institutions, NGOs, banks and 10 other government departments, offices or bureaus in FY2020-21.
In FY 2019-20 disbursed loans were Tk 1,36,275 crore among 3.33 crore members.
It was Tk 1,40,300 crore in FY 2018-19, Tk 1,20,100 crore in FY 2017-18 and Tk 1,04,500 crore in FY 2016-17.
According to the Microcredit Regulatory Authority (MRA), outstanding loans also increased during the pandemic. In FY21, the total outstanding loan was Tk 949,85 crore, which was Tk 888,64 crore in the previous fiscal.
In FY 2018-19, the outstanding loan was Tk 787,30 crore, in FY 2017-18, it was Tk 673,90 crore and in FY 2016-17, it was Tk 583,62 crore.
Md Fasiullah, executive vice-chairman, Microcredit Regulatory Authority, told The Business Post, “MFIs disbursed Tk 600 crore to Tk 700 crore each day amid the Covid-19 pandemic to the marginalised people.”
“The microcredit sector grew during the pandemic because of the healthy saving mentality of the borrowers who are mostly farmers one way or the other and who could produce their crops successfully and put aside a portion of their profit.”
After the government restricted cattle import from India, cattle farming boosted in Bangladesh, Fasiullah said, adding that hundreds of small entrepreneurs transformed their destiny through poultry and fish farming assisted by microcredit loans.
The microfinance institutions were fully open during the second lockdown as per the government directive which was a great chance for the marginalised community to seek loan, said the expert.
Microcredit insiders say a lion’s share of the country’s population is involved in agriculture still occupying more than 70 per cent of land.
The pandemic failed to bite agro-based production that remained unaffected unlike other heavy industries and service sectors.
Former Executive Director of MRA Ajoy Kumar Khan told The Business Post that the country’s priority is to achieve Sustainable Development Goals (SDG) set by the United Nations.
As per the goal number one, entrepreneurs have to be created by providing microcredit loans, particularly to those living below the poverty line in Bangladesh perspective.
“So it is a good sign for this nation that an economic revolution is happening,” he maintained.
The MRA data says expected loan collection in FY 2020-21 was Tk 1,397,13 crore while it was Tk 1,329,88 crore in FY 2019-20, Tk 1,250,90 crore in FY 2018-19, Tk 1,112,21 crore in FY 2017-18 and Tk 87,685 in FY 2016-17.
The branches of financial institutions under the microcredit sector also increase every year.
In FY 2020-21, a total of 20,955 branches were across the country. The number was 20,898 in FY 2019-20, 18,977 in FY 2018-19, 18,196 in FY 2017-18 and 17,120 in FY 2016-17.
Zahid Hussain, a former lead economist of the World Bank’s Dhaka office, told The Business Post that manufacturing and service sectors are the most vulnerable during the pandemic.
When the farming sector especially dairy, fish and other productions at the grassroots levels were going upscale, financial institutions reposed their trust in the agro-based marginalised people to disburse their loans.
“Around 10 per cent city dwellers had moved to their villages either by losing jobs or by having their salaries cut. These middle- or low-income people resorted to agricultural production to survive,” the economist observed.
“In addition, around 4 lakh expatriates returned to homeland without money who embraced farming as their income-generating activities while staying in their villages during this trying time, and who took microcredit and made good use of it – all contributed to the growth of the microfinance sector.”
The deposits of MFIs members are the prime loan source for microcredit sectors.
The total loan sourced from different funds were Tk 1,27,464 crore in Fiscal Year 2020-21.
Among the loan sources were its members’ deposits that stood at Tk 42,239,14 crore.
The contribution of PKSF, a ‘not-for-profit’ company of the Bangladesh government, was Tk 7,189 crore during the period.
The total loan sourced was Tk 1,00,054 crore in FY 2019-20. It was Tk 90,161 crore in FY 2018-19, Tk 74,184 crore in FY 2017-18 and Tk 624,02 crore in FY 2016-17, according to the Microcredit Regulatory Authority.
