NOVEMBER 21, 2016: FINANCIAL EXPRESS
Bangladesh is the motherland of micro-credit or micro-finance. Introducing micro-credit facilities was an attempt to reverse conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. Grameen Bank (GB) brought this concept into a reality in Bangladesh as the first of its kind in the modern world. As of December, 2015, Grameen Bank has 8.81 million borrowers, 97 percent of whom are women. With 2,568 branches, GB provides services in 81,392 villages, covering more than 97 percent of the total villages in Bangladesh. Currently hundreds of NGOs like BRAC, Proshika are conducting various micro credit schemes in the country.
In this conception credit or investment facilities are provided to the poorest of the poor without any collateral in order to alleviate hard core poverty. This is really a cost effective weapon to fight poverty serving as a catalyst in the over all development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor, cannot provide any collateral security and therefore, not bankable. But it has now been established that if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, these millions of people with little or no income with their millions of small efforts could contribute to create the biggest avenue to the sustainable development.
But how much sympathetic and humane are the micro-credit facilities providers to those poorest of the poor? Considering the historical judgment of their habit these extreme poor are very much loyal, honest, repay their debt regularly at any cost and not willful defaulter. Therefore, in return micro-credit providers should also consider their personal, social and financial problems on the humanitarian ground solving those with collective efforts that might not be very much costly. The borrower should work cordially to change their financial status sustainably. Their mutual relationship should not be confined simply as lender and borrower.
Hopefully there has been a micro-credit scheme in our country which is very much humane in customer care and at the same time more innovative in product mechanism than those of typical micro-credit assistance. This is a silent revolution in micro-credit assistance and fighting extreme poverty in the country. Welfare oriented Islamic economy is always dedicated to balanced economic growth by ensuring reduction of rural-urban disparity and equitable distribution of income. On the basis of this principle Islami Bank Bangladesh Limited (IBBL) introduced “Rural Development Scheme (RDS)” in 1995 which is a micro-credit scheme based on Islamic Shariah. Here investment facilities are given based on Shariah principles, that is buying and selling, profit and loss sharing and ijarah or leasing. With that major objective, Branches of the Bank have been encouraged to invest their deposits in their respective areas and in particular for the financial upliftment of the rural people. Consequently RDS has been introduced to provide agriculture and rural sector with the investment facilities in order to create opportunity for generating employment and raising income of the rural people with a view to alleviate extreme poverty.
Currently 252 Branches of the Bank have been operating the activities of the Scheme in their respective areas. These Branches are working among the poor in 19,025 villages of 64 districts of the country covering more than 25 percent of the total villages in Bangladesh and 83% of those are women. Present number of members is 973,006 since the beginning the scheme. The members are provided investment facilities of an amount of BDT 152,938.32 million against which the outstanding was 21,780.88 million. Rate of recovery of the Scheme is more than 99.22%. This scheme is growing by double digit each year.
The distinction of the RDS is that here the members are treated not as a borrower but as a development partner. The lender here not only provides the borrower with the financial solutions but also render motivational counseling to mitigate personal, social and other problems. In case of proper sanitation and pure drinking water members are given Quard (Lending without profit) to meet up the cost. Gift voucher for Tk.1000 is presented for any new born among members. For the treatment of the ailing members funds are collected from the members for the treatment purpose which is non-refundable. Scholarship is awarded to the children of the members for their outstanding results in various public examinations. Above all in case of failure in payment of installment the authority do not put extra mental pressure on the members. Moreover waiver is given in case of genuine loss in investment.
In this Shariah based micro credit scheme no commission or charges are imposed against rendering services and necessary papers or documents are provided with free of cost. Only the profit is charged against investment facilities. In a word, no processing fees or other hidden charges are imposed here. In the conventional micro credit scheme a certain portion of fund is deducted from the amount to be disbursed to the client. But in RDS there is no such type of deduction. Free training program is arranged for the members related to agriculture with the specialist resource person. Unemployed sons or daughters of the members are given free vocational training for being self employed. In this way this scheme tries hard and soul to eradicate poverty permanently, but not keeping poverty persistent for making further business. Moreover, for the regular repayment of the investment client at least one installment is waived as a reward and incentive. Above all lessons are also given for upholding moral and ethical values in the family, society as well as in personal life.
Regular monitoring, supervision and counseling are very much strict in RDS. After providing investment facilities the designated officers monitor and supervise the proper utilization and progress of the investment facilities availed by the clients. Regular counseling is given to the members who have availed investment facilities so that they could get maximum benefit utilizing the fund. The center fund collected from the members is kept by opening a Mudaraba Savings Account in the name of the respective centre. This fund is utilized for the welfare of the members by way of ‘Quard’ as per decision of the Centre in the weekly meeting.
The entire scheme has been drawn taking into account the social welfare objective of the Bank in order to upgrade the status the socially unsecured, underprivileged and economically backward or weaker section of the population of the society. However, Group discipline is strictly followed and complied with so that only the right persons are selected and included as members of the Group. Besides, each member of the Group gives personal guarantee for other members of the same Group and the members are jointly and severally liable and responsible for payment of investment.
As the part of innovation a new special scheme, called “Micro Enterprise Investment Scheme (MEIS)” has been introduced in 2005 from the same bank in order to satisfy the graduated clients who have already availed highest limit of investment under the Scheme. The ceiling of MEIS investment is BDT 50,000/- to BDT 300,000/- and Local small traders and entrepreneurs may also be provided this facilities under the limit. In 2012 another scheme, titled “Urban Poor Development Scheme (UPDS)” in order to alleviate urban poverty through investment in income generating activities. The Scheme activities started formally from 14.05.2012 through Gandaria Branch, Dhaka.
Any micro credit scheme should work for the alleviation of poverty permanently so that getting emancipation from the curse of poverty the poor might not fall into a vicious cycle of debt. The extreme poor should be treated from the humanitarian point of view. Most of the NGOs are getting fund from various donors or welfare foundations all over the world with very soft terms and conditions giving undertaking for utilization of fund just for the welfare of the poor. But in many cases they become ‘Shylock’ of ‘The Merchant of Venice’ where welfare is extremely a trivial matter. A significant portion of fund is spent for setting up luxury office, buying latest model cars, providing big salaries to the managers and for other management expenses. But the poor should be given financial assistance with flexible, soft and bearable terms and conditions. Because, it is proven that the repayment habit is much better than those of so called rich industrialists. If the maximum population is uplifted to the above poverty line, the economic cycle shall get faster pace and only then consistency in the growth of GDP is possible and SDG must be achievable.
© Copyright: Reserved by the writer (Noore Alam Siddiqui)
