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Poverty Reduction And Microfinance
Poverty reduction or poverty alleviation is a set of measures, those are economic and humanitarian that is intended to permanently lift people out of poverty.
We think economics progress and poverty reduction are those that raise or are intended to rise, ways of enabling the poor to create wealth for themselves ending poverty forever. Poverty occurs in both developing countries and developed countries. While poverty is much more widespread in developing countries, both types of countries undertake poverty reduction measures.
Poverty has been historically accepted in some parts of the world as inevitable as non-industrialized economies produced very little, while populations grew almost as fast, making wealth scarce and therefore likely to need relief in times of crisis. Poverty reduction is largely as a result of overall economic growth. Food shortages were common before modern agricultural technology and the dawn of industrial revolution led to high economic growth, eliminating mass poverty in what is now considered the developed world.
Today, continued economic development is constrained by the lack of economic freedoms. Economic liberalization requires extending property rights to the poor, especially to land.
Inefficient institutions, corruption and political instability can also discourage investment. Aid and Governments support in health, education, and infrastructure helps growth by increasing human and physical capital.
Poverty alleviation also involves improving the living conditions of people who are already poor. Aid, particularly in the medical and scientific areas, is essential in providing better lives, such as the Green Revolution. Some believe that small changes in the way each of us in affluent nations lives our lives could solve world poverty.
Microfinance is a category of financial services targeting individuals and small businesses (within the Somity/Group Member) who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; Insurance; and payment systems, among other branches. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient.
Microfinance initially had a limited definition – the provision of microloans to poor entrepreneurs and small businesses lacking access to credit. The two main mechanisms for the delivery of financial services to such clients were: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group. Over time, microfinance has emerged as a larger movement whose object is “a world in which as everyone, especially the poor and socially marginalized people and households have access to a wide range of affordable, high quality financial products and services, including not just credit but also savings, insurance, payment services, and fund transfers.”
Proponents of microfinance often claim that such access will help poor people out of poverty, including participants in the Microcredit Summit Campaign. For many, microfinance is a way to promote economic development, employment and growth through the support of micro-entrepreneurs and small businesses; for others it is a way for the poor to manage their finances more effectively and take advantage of economic opportunities while managing the risks. Critics often point to some of the ills of micro-credit that can create indebtedness. Due to diverse contexts in which microfinance operates and the broad range of microfinance services, it is neither possible nor wise to have a generalized view of impacts microfinance may create. Many studies have tried to assess its impacts.
Economic liberalization, Poverty reduction and Microfinance
Some have claimed that, due to economic liberalization, poverty in the world is rising rather than declining. We also know that extending property rights protection to the poor is one of the most important poverty reduction strategies a nation can implement. Securing property rights to land, the largest asset for most societies, is vital to their economic freedom.
Some have claimed that, increasing land rights is ‘the key to reducing poverty’ citing that land rights greatly increase poor people’s wealth, in some cases doubling it. So, we can say that, key issues were security of tenure and ensuring land transactions were low cost.
New enterprises and foreign investment can be driven away by the results of inefficient institutions, corruption, the weak rule of law and excessive bureaucratic burdens. Such costly barriers favor big farms at the expense of small enterprises where most jobs are created.
Trade liberalization increases total surplus of trading nations. Remittances sent to poor countries; they are sometimes larger than foreign direct investment. Foreign investment and export industries helped fuel the economic expansion of fast-growing poorer nations. However, trade rules are often unfair as they block access to richer nations’ markets and ban poorer or under privileged nations from supporting their industries. Processed products from poorer nations, in contrast to raw materials, get vastly higher tariffs at richer nations’ ports.
Microfinance plays a vital role on Economic liberalization. By Microfinance poor people can receive money or capital without mortgage and Microfinance operates through Samites/Group base.
Capital, Technology, Poverty reduction and Microfinance
Long lasting economic growth per person is achieved through increases in capital (factors that increase productivity), both human and physical and technology. Improving human capital, in the form of health, is needed for economic growth. Nations do not necessarily need wealth to gain health. However, it was spending less each year on maternal health because it learned what worked and what did not. Knowledge on the cost effectiveness of healthcare interventions can be elusive but educational measures to disseminate what works are available, such as the disease control priorities project. Promoting Hand washing is one of the most cost-effective health interventions and can decline deaths from the major childhood diseases like as Diarrhea and Pneumonia.
Human capital, in the form of education, is even more important determinant of economic growth than physical capital. Like as, children leasable costs per child per year and reduces non-attendance from anemia, illness and malnutrition and increase school attendance as by constructing schools.
UN economists argue that good infrastructure, such as roads and Information networks, help market reforms to work. Someone claims that, it is investing in railways, roads, ports and rural telephones in African countries as part of its’ formula for economic development. It was the technology as the steam engine that originally began the dramatic decreases in poverty levels. Cell phone technology brought the market to poor or rural sections. With necessary information, the remote farmers can produce specific crops to sell to the buyers that bring the best price.
Such technology also helps bring economic freedom by making financial services accessible to the poor. Those in poverty place overwhelming importance on having a safe place to save money, much more so than receiving loans. Also, a large part of microfinance loans is spent on products that would usually be paid by a check ingot savings account. In our country statics says that, mobile banking and agent banking collected money from village, and this collect money invest money at urban. However, several academic studies have shown that have only limited effect on poverty reduction when not accompanied by other basic infrastructure development.
Employment, productivity, Poverty reduction and Microfinance
Economic growth has the indirect potential to alleviate poverty, as a result of simultaneous increases in employment opportunities and labor productivity. For instance, in some country most of the chronically poor are wage earners in formal employment, because their jobs are insecure and low paid and offer no chance to accumulate wealth to avoid risks. This appears to be the result of a negative relationship between employment creation and increased productivity, when a simultaneous positive increase is required to reduce poverty.
Increases in employment without increases in productivity leads to a rise in the number of “working poor”, which is why some experts are now promoting the creation of “quality” and not “quantity” in labor market policies. This approach doe’s highlight how higher productivity has helped reduce poverty in some country, but the negative impact is beginning to show. Like employment growth has slowed while productivity growth has continued. Furthermore, productivity increases do not always lead to increased wages, as can be seen in some countries, where the gap between productivity and wages has been rising. Some study showed that other sectors were just as important in reducing unemployment, as manufacturing. The services sector is most effective at translating productivity growth into employment growth. Agriculture provides a safety net for jobs and economic buffer when other sectors are struggling. Some study shows that, suggests a more understanding of economic growth and quality of life, poverty alleviation and Microcredit.
Helping farmers, Poverty reduction and Microfinance
Raising farm incomes is described as the core of the antipoverty effort as three quarters of the poor today are farmers. Estimates show that growth in the agricultural productivity of small farmers is, on average, at least twice as effective in benefiting the poorest half of a country’s population as growth generated in nonagricultural sectors. For example, a study suggested that new varieties could benefit farmers in future. The study assessed the potential economic and poverty impact of improved varieties, released by the national agricultural research organization in collaboration with the International Crops Research Institute. By this way we can insurance benefit by Microcredit for poverty reduction.
Improving water management is an effective way to help reduce poverty among farmers. With better water management, they can improve productivity and potentially move beyond subsistence-level farming. During the Green Revolution irrigation was a key factor in unlocking some country agricultural potential and reducing poverty.
The International Water Management Institute aims to improve the management of land and water resources for food, livelihoods and the environment. In one project it’s scientists worked on demonstrating the impact that improving water management in agriculture can have. Study found that access to irrigation provided families with opportunities to diversify their livelihood activities and potentially increase their incomes. For example, people with land could reliably grow rice or vegetables instead of working as laborers or relying on rainfall to water their crops. Those without land could benefit by working within new inland fisheries.
Building opportunities for self-sufficiency, Poverty reduction and Microfinance
Making employment opportunities available is just as important as increasing income and access to basic needs. Poverty activist for poor people has based his career around doing both at once, creating companies that employ the poor while creating “radically” affordable goods. Some people list three Great Poverty Eradication Myths, that we can donate people out of poverty, that National Economic growth will end poverty and that Big Business, operating as it does now, will end poverty. Economic models which lead to national growth and more big business will not necessarily lead to more opportunities for self-sufficiency. However, businesses designed with a social goal in mind, such as micro finance, may be able to make a difference.
Development aid, Poverty reduction and Microfinance
A major proportion of aid from donor nations is ‘tied’, mandating that a receiving nation buy products originating only from the donor country. This can be harmful economically. For example, Money from to fight AIDS requires it be spent on drugs.
Some people disagree with aid when looking at where the development aid money from NGOs and other funding is going. Funding tends to be used in a selective manner where the highest ranked health problem is the only thing treated, rather than funding basic health care development. This can occur due to a foundation’s underlying political aspects to their development plan, where the politics outweigh the science of disease. The diseases then treated are ranked by their prevalence, morbidity, risk of mortality, and the feasibility of control. Through this ranking system, the disease that cause the most mortality and are most easily treated are given the funding. The argument occurs because once these people are treated, they are sent back to the conditions that led to the disease in the first place. By doing this, money and resources from aid can be wasted when people are re-infected. This was seen where people were treated for hookworm and then contracted the disease again once back in the conditions from which they came. To prevent this, money could be spent on teaching citizens of the developing countries health education, basic sanitation, and providing adequate access to prevention methods and medical infrastructure. Not only would NGO-MFI money be better spent but it would be more sustainable. These arguments suggest that the NGO development aid should be used for prevention and determining root causes rather acting upon political endeavors and treating for the sake of saying they helped.
Some think tanks and NGOs have argued that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient countries or because it is tied to the importing of products from the donor country over cheaper alternatives. Sometimes foreign aid is seen to be serving the interests of the donor more than the recipient, and critics also argue that some of the foreign aid is stolen by corrupt governments and officials, and that higher aid levels erode the quality of governance. Policy becomes much more oriented toward what will get more aid money than it does towards meeting the needs of the people. Problems with the aid system and not aid itself are that the aid is excessively directed towards the salaries of consultants from donor countries, the aid is not spread properly, neglecting vital, less publicized area such as agriculture, and the aid is not properly coordinated among donors, leading to a plethora of disconnected projects rather than unified strategies.
Supporters of aid argue that these problems may be solved with better auditing of how the aid is used. Immunization campaigns for children, such as against polio, diphtheria and measles have saved millions of lives. Aid from non-governmental organizations may be more effective than governmental aid; this may be (NGO-MFI) because it is better at reaching the poor and better controlled at the grassroots level and reducing poverty.
Relief and Poverty reduction
One of the proposed ways to help poor countries that emerged during the 1980s has been relief. Given that many less developed nations have gotten themselves into credit from banks and governments from the rich nations and given that the interest payments on these credit are often more than a country can generate per year in profits from exports, cancelling part or all of these credit may allow poor nations “to get out of the hole”. If poor countries do not have to spend so much on payments, they can use the money instead for priorities which help reduce poverty such as basic health-care and education.
The role of education, skill building as precursors to economic development and Microfinance
Universal education has some role in preparing youth for basic academic skills and perhaps many trade skills, as well. Apprenticeships clearly build needed trade skills. If modest amounts of cash and land can be combined with a modicum of agricultural skills in a temperate climate, subsistence can give way toward modest societal wealth. As has been mentioned, education for women will allow for reduced family sizes, an important poverty reduction event on its own right. While all components mentioned above are necessary, the portion of education pertaining to the variety of skills needed to build and maintain the infrastructure of a developing (moving out of poverty) society: Building trades; Plumbing; Electrician; Welding; farm and transport mechanical skills (and others) are clearly needed in large numbers of individuals, if the society is to move out of poverty or subsistence. Yet, many well-developed western economies are moving strongly away from the essential apprenticeships and skill training which affords a clear vocational path out of modern urban poverty.
One of the most popular of the new technical tools for economic development and poverty reduction are Microloans, made famous in 1976 by the Grameen Bank in Bangladesh (Prof. Muhammad Yunus model). The idea is to lend small amounts of money to farmers or villages so these people can obtain the things they need to increase their economic rewards. A small pump costing only $50 could make a very big difference in a village without the means of irrigation. A specific example is the help farmers buy equipment or seeds, Help Street vendors procure an inventory to sell, or help others set up small shops. Somity/Group approach increased their access to microcredit for taking up small-scale farm activities and reducing poverty.
Empowering women, Poverty reduction and Microfinance
The empowerment of women has relatively recently become a significant area of discussion with respect to development and economics, however it is often regarded as a topic that only addresses and primarily deals with gender inequality. Because women and men experience poverty differently, they hold dissimilar poverty reduction priorities and are affected differently by development interventions and poverty reduction strategies. In response to the socialized the feminization of poverty, policies aimed to reduce poverty have begun to address poor women separately from poor men. In addition to engendering poverty and poverty interventions, a correlation between greater gender equality and greater poverty reduction and economic growth has been illustrated by research. Suggesting that promoting gender equality through empowerment of women is a qualitatively significant poverty reduction strategy.
Gender equality, Poverty reduction and Microfinance
Addressing gender equality and empowering women are necessary steps in overcoming poverty and furthering development as supported by the human development and capabilities approach and the Millennium Development Goals and SDG. Disparities in the areas of education, mortality rates, health and other social and economic indicators impose large costs on well-being and health of the poor, which diminishes productivity and the potential to reduce poverty. The limited opportunities of women in most societies restrict their aptitude to improve economic conditions and access services to enhance their well-being. Qualitatively Gender equality policy and implementation is significant contributor in poverty reduction strategy. These are also affecting of Microcredit and helpful for reducing poverty.
Mainstreaming gender, Poverty reduction and Microfinance
Gender mainstreaming, the concept of placing gender issues into the mainstream of society, was established by the United Nation’s the Fourth World Conference on Women as a global strategy for promoting gender equality; the UN conference emphasized the necessity to ensure that gender equality is a primary goal in all areas of social and economic development, which includes the discussion of poverty and its reduction. Correspondingly, the World Bank also created objectives to address poverty with respect to the different effects on women. One important goal was the revision of laws and administrative practices to ensure women’s equal rights and access to economic resources. Mainstreaming strengthens women’s active involvement in poverty alleviation by linking women’s capabilities and contributions with macro-economic issues. The underlying purpose of both the UN and World Bank policies speaks to the use of discussion of gender issues in the promotion of gender equality and reduction of poverty. These are also outcome/affect of Microcredit.
Strategies to Empower women, Poverty reduction and Microfinance
Several platforms have been adopted and reiterated across many organizations in support of the empowerment of women with the specific aim of reducing poverty. Microcredit also help theme economic and political participation by women increases financial independence from and social investment in the government, both of which are critical to pulling society out of poverty.
Economic participation, Poverty reduction and Microfinance
Women’s economic empowerment or ensuring that women and men have equal opportunities to generate and manage income is an important step to enhancing their development within the household and in society. Additionally, women play an important economic role in addressing poverty experienced by children. By increasing female participation in the labor force, women are able to contribute more effectively to economic growth and income distribution since having a source of income elevates their financial and social status. However, women’s entry into the paid labor force does not necessarily equate to reduction of poverty; the creation of decent employment opportunities and movement of women from the informal work sector to the formal labor market are key to poverty reduction. Other ways to encourage female participation in the workforce to promote decline of poverty include providing childcare services, increasing educational quality and opportunities and furthering entrepreneurship for women. Protection of property rights is a key element in economically empowering women and fostering economic growth overall for both genders. With legitimate claims to land, women gain bargaining power, which can be applied to their lives outside of and within the household. The ability and opportunity for women to lawfully own land also decreases the asset gap that exists between women and men, which promotes gender equality. Microcredit also contributes a lot for these.
Political participation, Poverty reduction and Microfinance
Political participation is supported by organizations such as IFAD as one pillar of gender equality and women’s empowerment. Sustainable economic growth requires poor people to have influence on the decisions that affect their lives, specifically strengthening women’s voices in the political process builds social independence and greater consideration of gender issues in policy. In order to promote women’s political empowerment, the United Nations Development programmed advocated for several efforts: increase women in public office, strengthen advocate ability of women’s organizations, ensure fair legal protection; and provide equivalent health and education. Fair political representation and participation enable women to lobby for more female-specific poverty reduction policies, programsand Microcredit also contributes a lot for these.
Other approaches on Poverty reduction
Another approach that has been proposed for alleviating poverty is Fair Trade which advocates the payment of an above market price as well as social and environmental standards in areas related to the production of goods. The efficacy of this approach to poverty reduction is controversial.
Some Community and monetary economist specialist argued that the mainstream global economy with its debt-based currency has built-in structural incentives that create poverty through keeping money scarce. Someone says that, the success of modern clubs and local currencies such as the local economies and calls for the creation of community currency as means to reduce or eliminate poverty.
Some have argued for radical economic change in the system. There are several fundamental proposals for restructuring existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups, socialism, communism, anarchism, libertarianism, binary economics and participatory economics, among others.
Climate change adaptation, Poverty reduction and Microfinance
The increase in extreme weather events, linked to climate change and resulting disasters is expected to continue. Disasters are a major cause of impoverishment and can reverse progress towards poverty reduction.
A researcher at a leading global think-tank, the Overseas Development Institute, suggests that far more effort should be done to better coordinate and integrate poverty reduction strategies with climate change adaptation. The two issues are argued to be currently only dealt with in parallel as most poverty reduction strategy papers ignore climate change adaptation altogether, while National Adaptation Programmes of Action likewise do not deal directly with poverty reduction. Microcredit can also help them for poverty reduction.
Sustainable Development Goal for Poverty reduction
The first of the 17 Sustainable Development Goals (SDGs) calls for an end to poverty by 2030 and seeks to ensure social protection for the poor and supporting people affected by climate-related extreme events. As the decade that began in 2002, the percentage of the world’s population living under the poverty line by half, from 26 per cent to 13 per cent. If during those 10 years growth rates prevailed over the next 15 years, it is possible to decrease the rate of extreme poverty in the world to 4 per cent by 2030, assuming that growth will benefit all income groups of the population on an equal footing. However, if the growth rates over a longer period of 20 years, the rate of prevalent global poverty is likely to be about 6 per cent. In other words, the eradication of extreme poverty will require a significant change from its historical growth rates.
Poverty targeting for Poverty reduction
Poverty reduction requires governments to identify and reach out to extremely poor and help them out of poverty through sustainable measures. One such approach supported by many international donors is of targeted poverty reduction programmes. There are several poverty targeting methods through which poor communities are identified and tracked for poverty reduction programmes. For instance, one common method of poverty targeting is ‘means testing’ that uses a certain income or expenditure threshold for an individual or the household to be considered as poor and eligible for support.
Global initiatives to end hunger on under nutrition, Poverty reduction
An important part of the fight against poverty is efforts to end hunger and achieve food security. In April 2012, the Food Assistance Convention was signed; the world’s first legally binding international agreement on food aid. The May 2012 Copenhagen Consensus recommended that efforts to combat hunger and malnutrition should be the first priority for politicians and private sector philanthropists looking to maximize the effectiveness of aid spending. They put this ahead of other priorities, like the fight against malaria and AIDS.
The main global policy to reduce hunger and poverty are the recently approved Sustainable Development Goals. In particular, Goal 2: Zero Hunger sets globally agreed targets to end hunger achieve food security and improved nutrition and promote sustainable agriculture.
In 2013 Caritas International started a Caritas-wide initiative aimed at ending systemic hunger by 2025. The One human family, food for all campaign focuses on awareness raising, improving the impact of Caritas programs and advocating the implementation of the right to food.
The partnership Compact2025, led by IFPRI with the involvement of UN organizations, NGOs and private foundations develops and disseminates evidence-based advice to politicians and other decision-makers aimed at ending hunger and under nutrition in the coming 10 years, by 2025. Microcredit can also help the people for poverty reduction.
Microcredit Regulatory Authority of Bangladesh for Poverty reduction and Microfinance
The Microcredit Regulatory Authority (MRA) has been established by the Government of the People’s Republic of Bangladesh under the “Microcredit Regulatory Authority Act 2006” to promote and foster sustainable development of microfinance sector through creating an enabling environment of NGO-MFI’s for Poverty Eradication Bangladesh. MRA is the central body to monitor and supervise microfinance operations of NGO-MFIs. License from the Authority is mandatory to operate microfinance operations in Bangladesh as an NGO (MFI). List of Licensed MFIs as of Dec 31, 2019 (MRA are given permission for operate Microfinance) to 758 NGO-MFI’s.
Under Microcredit Regulatory Authority Rules, 2010
RIGHTS OF THE CLIENTS – the rights of the Clients of the Microcredit Organization will be as follows:
(a) To get micro credit, microcredit enterprise loan, disaster management loan and Insurance services if available as specified by the Microcredit Organization;
(b) To know the applicable procedures clearly, in writing or verbally, in order to avail the services offered by the Microcredit Organization;
(c) If the client has no outstanding loans he will have the right to withdraw his deposit, in part or full, and will also be able to withdraw his name as a client;
(d) To participate in various training and awareness creation programs of the Microcredit Organization;
(e) To claim the benefits of insurance policies subject to fulfillment of stipulated conditions;
(f)To receive documentary evidence of all transactions from the Microcredit Organization;
(g) To earn interest on deposits as stipulated by the organization; and
(h) Receive information related to deposit and loan balance from the relevant branch office on any working day.
DUTIES OF THE CLIENTS – the following are the duties of the Clients of the Microcredit Organization:
(a) Deposit the amount stipulated by the relevant organization, ensure entry in the passbook and obtain signature from the designated employee of the Microcredit Organization and also to ensure that loan and Insurance related transactions are recorded properly in the appropriate pass book;
(b) Make timely payments of loan installments and Insurance premium as per specified terms and to encourage other Clients also to do the same;
(c) Abide by law and order of the Samity and spontaneously co-operate with the Microcredit Organization by attending the meetings of the Samity and participating in its operational programs;
(d) Be fully aware of the terms and conditions of the services before availing any service offered by the Microcredit Organization;
(e) Actively participate in the demand-based training courses and awareness programs of the Microcredit Organization;
(f) Efficiently invest the granted loan amount into stipulated income generating activities and thereby increase own profit desirably; and
(g) Refrain from taking loans from one or more sources which the Client cannot utilize profitably.
Palli Karma-Sahayak Foundation (PKSF)for Poverty reduction and Microfinance
Palli Karma-Sahayak Foundation (PKSF), an apex development organization, was established by the Government of Bangladesh (GoB) in May 1990, for sustainable poverty reduction through employment generation.
Legally, PKSF is a “company not for profit” and is registered under the Companies Act of 1913/1994 with the registrar of Joint Stock Companies. The legal structure of PKSF allows flexibility and authority to undertake programmes in a dynamic environment, implementing them throughout the country and manage its affairs as an independent organization/for Poverty Eradication and Microcredit.
In the beginning of its operations in 1990, PKSF set the goal of creating self-employment opportunities in the rural off-farm sector and adopted the strategy of promoting a credit programme for attaining this goal by the partner NGO for Poverty Eradication and Microcredit. This credit programme, launched for the moderate poor, has been diversified over time in accordance with the changing needs of heterogeneous poverty-stricken segments of society and has gradually evolved into an “inclusive financing programme” by the partner NGO. PKSF’s present financing programme includes the moderate poor of both urban and rural areas, ultra-poor, micro entrepreneurs, marginal and small farmers; members of these poverty groups are offered customized service NGO. Enabling the poor to come out from the low productivity trap, PKSF has integrated capacity building, technology transfer, value chain development and other technical services in its development programme.
PKSF, over the years, has gained in-depth understanding and valuable experience on the multi-dimensional aspects of poverty partner NGO for Probity Reduction as financer. Adding new dimension to its mission in 2010, PKSF reshaped its core goal as “establishing human dignity”, instead of limiting its efforts towards achieving economic freedom only and started undertaking new programmes for attaining this goal. In order to increase productive assets and human capacities, each family is being provided with education, health, technical and financial services in a coordinated manner under this programme by partner NGO-MFI’s for Poverty Eradication and Microcredit.
PKSF has adopted disaster management and micro insurance programme under the fold of its social protection programmes by partner NGO. PKSF has also started implementing a project aiming to enhance the capacities of the poor to increase their resilience to the adverse impacts of climate change. In addition, mapping of various rural business clusters has been completed to commence programmes for the development of rural industries by partner NGO-MFI’s for Poverty Eradication and Microcredit.
Ensuring accountability and transparency at all levels of its activities is of utmost importance at PKSF. Proper utilization of its resources, both from policy and implementation perspectives, is crucial. PKSF compromises of two policy-making bodies as per its Articles of Association; the General Body and the Governing Body. These two bodies are responsible for providing overall policy guidance and strategic directions for the implementation of all PKSF activities. Members of these bodies are highly distinguished professionals of national and international repute, having demonstrated track records in the development sector.
The uniqueness Prof. Muhammad Yunus modal for Poverty reduction and Microfinance
The concept of small loan is not new. Credit and savings institutions for the poor have also been around for decades, providing customers who were traditionally neglected by commercial banks a way to obtain financial services through cooperatives and development finance institutions. One of the earlier and longer-lived small credit organizations providing loans to the rural poor with no collateral was the Irish Loan Fund system, initiated in the early 1700s by the author and nationalist Jonathan Swift. Swift’s idea began slowly but by the 1840s had become a widespread institution all over Ireland. Their principal purpose was making small loans with interest for short periods. By this way “Susus” of Ghana, “Chit funds” in India, “Tandas” in Mexico, “Arisan” in Indonesia, “Cheetu” in Sri Lanka, “Tontines” in West Africa, and “Pasanaku” in Bolivia, as well as numerous savings clubs & burial societies found all over the world.
In the 1800s and so on, various types of larger and more formal savings and credit institutions began to emerge in Europe, organized primarily among the rural and urban poor. These institutions were known as People’s Banks, Credit Unions, and Savings& Credit Co-operatives etc. and replicated in Germany, Indonesia, Latin America, Europe, North America etc. and eventually, supported by the cooperative movement in developed countries and donors, also to developing countries.
Between the 1950s and 1970s, some governments and donors focused on providing agricultural credit to small and marginal farmers, in hopes of raising productivity and incomes. These efforts to expand access to agricultural credit emphasized supply-led government interventions in the form of targeted credit through state-owned development finance institutions, or fanners’ cooperatives in some cases, that received concessional loans and on-lent to customers at below market-interest rates. These subsidized schemes were rarely successful, rural development banks suffered massive erosion of their capital base due to subsidized lending rates and poor repayment discipline and the funds did not always reach the poor, often ending up concentrated in the hands of better-off farmers.
Meanwhile, starting in the 1970s in Bangladesh, Brazil and a few other countries extended tiny loans to groups of poor women to invest in micro-businesses. This type of micro-enterprise credit was based on solidarity group lending in which every member of a group guaranteed the repayment of all members. These “micro-enterprise lending” programmes Bangladesh.
The origins of the current microcredit model can be traced back in the late 1970s to action research, ‘Jobra’ experiment which was underway under Professor M. Yunus, namely the ‘Dhelci Rin Prokolpa’ and assisted by the Bangladesh Bank to deal with the relief and rehabilitation needs of post-independence Bangladesh. Gradually this initiative was established as ‘Grameen Bank’, a new dimension for small credit as a successful development tool named as ‘Microcredit’ as well as ‘Microfinance’.
SDG 1: End poverty in all its forms everywhere
Eradicating poverty in all its forms remains one of the greatest challenges facing humanity. While the number of people living in extreme poverty dropped by more than half between 1990 and 2015 – from 1.9 billion to 836 million – too many are still struggling for the most basic human needs. Globally, more than 800 million people are still living on less than US$1.25 a day, many lacking accesses to adequate food, clean drinking water and sanitation. Rapid economic growth in countries like China and India has lifted millions out of poverty, but progress has been uneven. Women are more likely to live in poverty than men due to unequal access to paid work, education and property. Progress has also been limited in other regions, such as South Asia and sub-Saharan Africa, which account for 80 percent of those living in extreme poverty. New threats brought on by climate change, conflict and food insecurity, mean even more work is needed to bring people out of poverty. The SDGs are a bold commitment to finish what we started and end poverty in all forms and dimensions by 2030. This involves targeting the most vulnerable, increasing access to basic resources and services and supporting communities affected by conflict and climate-related disasters.
Conclusion :Bangladesh is known as the land of microcredit in the world. The data on microfinance industry of the country have been drawing increased attention of researchers, academicians, development practitioners, donors and policy makers at home and abroad. MRA are given permission for operating Microfinance to 758 NGO-MFI’s. This picture is different aspects of Microfinance Institutions (MFIs) in different categories.
Institutionally, microcredit is provided through direct providers as well as apex lenders. Microfinance institutions (MFIs) are the main direct providers, which are basically non-government organizations (NGOs). This review has labeled them here as MFI-NGOs. Besides these, the MFI-NGOs report includes other retailers and wholesalers like Palli Karma-Shahayak Foundation (PKSF) and Private Commercial Banks (PCBs), Specialized Banks (SBs), State-Owned Commercial Banks (SCBs), Rural Development Scheme (RDS) of Islami Bank Bangladesh Ltd. (IBBL) and various government sponsored programs like BRDB-TCCAs and Jubo Unnayan Adhidaptar, etc., which are involved in wholesale and retail lending. Both public and private sectors were the two paramount sectors for the wholesale lending.
In our Country (Bangladesh), those excluded from normal Banking channel they received Microcredit Loan and serves from MFI-NGO.As on December 2015, the total number of active members of microfinance sector is 36.23 million that includes active members of GB, BRAC, ASA and also the rest MFI-NGOs (Source: CDF survey 2014 & 2015).
According to the MRA Annual report (Financial year 2017-2018) Only MRA license holder MFI-NGO`s disburse TK. 1,20,191 crore . This is 77% of the total disbursement(Source: MRA Annual report 2017-2018).