Micro Finance in the Banking sector of Bangladesh
ABSTRACT
The world is getting more matured in terms of level of sophistication. At the same time it becomes a threat due to the difficulty of having areas where further sophistication is possible. But, now, the most sensitive problem for all is the severe poverty. Micro-credit became a new phenomenon in the present world due to its recognition of an efficient weapon to fight against poverty. A current investigation proved that, more than 1.3 billion inhabitants are struggling to earn a smaller amount one dollar ($1) a day where they are captivated by extreme shortage of basic needs such as; food, cloth, shelter, treatment and education. However, reducing poverty is more successful in rural areas than in urban areas because of its random access in remote places. In every year half a billion US dollar are given to 7.5 million borrowers throughout the country as a micro-loan to break the vicious cycle of poverty. Commercial banks are historically not inclined to provide loan to the poor and grassroots people of the society. But commercial bank’s involvement in microfinance is very important for fighting against vicious poverty in the country. An earnest effort has been made to make the micro-credit programs and methodologies comprehendible with the process of diffusion and usability from a commercial perspective. Such perspective is important to give micro finance program an institutional modality that will ultimately ensure long-term existence. It is also important that commercial banks can change the scenario of microcredit sector because of their high structural administration and economic power. So, this paper approaches to explore selected Commercial Bank’s activities and the way it assists enormously to develop the living standard of the poor and vulnerable people in Bangladesh and encourages to apply this model in different countries.
1.1 INTRODUCTION
Micro finance used as a key element in the development strategy of Bangladesh since the
The world is getting more matured in terms of level of sophistication. At the same time it becomes a threat due to the difficulty of having areas where further sophistication is possible. But, now, the most sensitive problem for all is the severe poverty. Micro-credit became a new phenomenon in the present world due to its recognition of an efficient weapon to fight against poverty. A current investigation proved that, more than 1.3 billion inhabitants are struggling to earn a smaller amount one dollar ($1) a day where they are captivated by extreme shortage of basic needs such as; food, cloth, shelter, treatment and education. However, reducing poverty is more successful in rural areas than in urban areas because of its random access in remote places. In every year half a billion US dollar are given to 7.5 million borrowers throughout the country as a micro-loan to break the vicious cycle of poverty. Commercial banks are historically not inclined to provide loan to the poor and grassroots people of the society. But commercial bank’s involvement in microfinance is very important for fighting against vicious poverty in the country. An earnest effort has been made to make the micro-credit programs and methodologies comprehendible with the process of diffusion and usability from a commercial perspective. Such perspective is important to give micro finance program an institutional modality that will ultimately ensure long-term existence. It is also important that commercial banks can change the scenario of microcredit sector because of their high structural administration and economic power. So, this paper approaches to explore selected Commercial Bank’s activities and the way it assists enormously to develop the living standard of the poor and vulnerable people in Bangladesh and encourages to apply this model in different countries.
1.1 INTRODUCTION
Micro finance used as a key element in the development strategy of Bangladesh since the
References: Awal, A.: Case Study Bangladesh: Financial Linkages in Bangladesh, Banking with the Poor Network, 2003,http://www.microfinancegateway.org/gm/document-1.9.27834/37596_file_2Case_study_Bangladesh.pdf, 08/10/2009 Bell, R., Harper, A. and Mandivenga, D. 2002: Can commercial banks do microfinance? Lessons from the Commercial Bank of Zimbabwe and the Co-operative Bank of Kenya Groen, Ruth Goodwin: The Role of Commercial Banks in Microfinance, 1998, http://www.microfinance-pasifika.org/assets/newsitefiles/books/The%20Role%20of%20Commercial%20Banks%20in%20Microfinance.pdf CDF (Credit and Development Forum) (2011), “Microfinance Statistics”, Vol.17, December 2004.http://www.cdfbd.org Microcredit Regulatory Authority (MRA) (2011a) MRA, ―About us‖, Website of the Microcredit Regulatory Authority, accessed on 09/11/2009