Bangladesh Microfinance Review (August 2011)

Bangladesh’s microfinance industry is perhaps the oldest and, therefore, most mature microfinance sector in the world. On account of its pioneering role in developing a low-cost model of microcredit delivery – known worldwide as the Grameen model – and in demonstrating its sustainability, Bangladesh has been referred to as “the birthplace (and sometimes as the ‘mecca’) of microfinance”. In recent years, however, the pre-eminence of the country in the microfinance world has been diluted by the phenomenal growth of the Indian microfinance sector and by Bangladeshi MFIs’ relatively slow adaptation of innovative microcredit products to serve the needs of clients more effectively. It has been slow to diversify product offerings away from credit, especially relative to markets such as Kenya and the Philippines in the case of payments and to South Africa and India in the case of microinsurance. Microfinance is provided overwhelmingly by NGO-MFIs with the Grameen Bank being the only exception in terms of institutional type. The NGOs not only offer microfinance services but also implement a wide range of other development programs aimed at poverty reduction. For the purpose of determining microfinance coverage, the total number of households in Bangladesh has been calculated using an estimated household size of 5 persons resulting in 33 million households. Bangladesh Microfinance Statistics, 2009 indicates 27.05 million microfinance borrower accounts in the country at the end of 2009. Assuming every household below the poverty line is a potential microfinance borrower, the extent of microfinance coverage in Bangladesh would be 220% of all households below the upper national poverty line.

Author: Sinha, Sanjay
Type: Report
Year: 2011