This document summarizes a study on personal installment loan services provided by local and foreign commercial banks and NGOs in Bangladesh in 2015. It finds that personal installment loans have grown popular among medium-low income customers. Foreign banks and NGOs generally provide more prompt service than local banks, though NGOs charge higher fees. Foreign banks and NGOs also tend to be more technologically advanced than local banks and NGOs in designing personal loan products. The study highlights differences in total amounts disbursed, outstanding loans, and customer numbers between banks and NGOs.

1. Harunnur Rasid
(Bsc in EEE,IUB)
PROJECT: Loan system at Bank and NGO.
Abstract
The study aims to investigate of Personal installment loan services between a local and foreign
commercial bank and NGO over a period of 2015. The study revealed that personal installment
loan services have been popularizing among the customers of medium-low income levels in the
society. It is demonstrated that the foreign sample bank and NGO is providing prompt services as
compare to local sample bank as regards personal installment loan facilities, terms and
conditions, fees. But NGO are charging more charges than the local bank. It is observed that
foreign commercial banks and NGOs are more dynamic, more technological oriented and
aggressive customer service than the local commercial bank. Moreover, foreign and local bank is

2. more technological than the NGO in the context of designing the personal loan features. Finally,
the study highlights the major components of personal installment loan and rural area loan
system in the shed light of total disbursed amount, total outstanding amount, total customer
achieved, etc.
Keywords: Personal Installment Loan, Local Bank, Foreign Bank, NGO, Bangladesh
Acknowledgement
I would like to thank IUB (Independent University, Bangladesh) for having such a wonderful and
unique course through which we get the chance to learn and experience about a little bit of thing which
are related to Economic and finance. It will certainly have a lifetimeimpact on me and i would always
be looking for opportunities to do something for myjobfield . Thisshort but long lasting ECR433course has
shown us the other side of the economicandfinance, which we wouldn‘t have seen otherwise.
MylearningandExperiencefromthis coursewouldbeveryuseful inmyfuture career.
Introduction
Banks and financial institutions are the most important organizations in overall financial
intermediation and economic acceleration of a country. Banks play a significant role for
providing loan. With globalization, banks are facing severe competition in faster financial
intermediation in a proper and transparent manner. At present a total of 51 commercial banks are
operating in Bangladesh with four nationalized (NCB), 30 local private (PCB), 12 foreign (FCB),
and five specialized . Banks work with the motive of earning profit through providing a better
banking service
What is loan ?

3. According to finance, a loan is a debt provided by an entity like an organization or individual
to another entity at an interest rate and also evidenced by a note which specifies, among other
things, the principle amount, interest rate and date of repayment.
History of loan
In the middle age, Land lord has a lot of money and he would give money or land to the people.
When people give money back to the land lord, land lord took the money with a little bit of
interest.
From there, loan system was born. Time has been passed away and organized society become
modern society .Now we are live in modern society. In modern society, has a lot of bank and
NGO which have a loan system for the people.
Loan provider organization
In the modern societies, loan system is highly seemed around us and also have a lot of legal
organization which give a loan to the people.
Mainly two types of organization has a loan system.
1.NGO (Non-Governmental Organization)
2. Bank
NGO (Non Governmental Organization)
According to bangladesh Bureau of Statistics, 2356 number of NGO are working in our country.
A few of them have a loan system. ASA, BRACK, SHAPLA, SHOKTI, TMSS are mostly common
face for giving loan to the people.
BANK

4. Bangladesh has 56 banks including state owned commercial and specialized banks, private
commercial, foreign commercial banks. Most of bank has loan system in their banking system.
Classification of loan
Various types of bank and NGO are various types of loan system. There is likely much more
different between NGO and Bank about their loan system. Most of the NGO gives loan as an
installment which is paying weekly. But in banking system, installment is paid by monthly. NGO
has a limited loan service(minimum BDT 5 thousand to maximum 5 lacks) but bank has a huge
loan service.
Loan System at NGO
A few number of NGO are giving loan as a project. ASA, TMSS, BRACK, SHOKTI, are mostly
known to the people cause they have a lot branch in our country. NGO loan system are in
details here:
Loan system on NGO
Category
Eligible
Criteria
Initial
Maximum
Loan Size
Interest Rate Loan Term Repayment
Mode
Primary loan Economically
active poor to
undertake or
strengthen
income
generating
activities
(IGAs).
BDT 8,000-
30,000 or US$
103-386
depending on
the economic
potential of
area and
client’s
capacity as
well, in special
cases initial
loan size can
be Tk. 5,000 or
lower but
Maximum
27% declining
4, 6 or 12
months based
on nature of
IGAs
Generally
weekly or
monthly for all
term loan. But
repayment can
be made in
one
installment at
maturity of 4
or 6 months
term loan

5. entrepreneurs
and traders
can be
provided
maximum BDT
70,000 or
US$900 at first
loan cycle.
Secondary
loan
Informal or
formal
small/micro
enterprises or
entrepreneurs
and traders to
promote and
scale up
production,
business
activity and
employment
generation.
BDT 71,000-
300,000 or
US$ 913-3858
depending on
the economic
potential of
area and
client’s
capacity
Same as
Above
12, 18, 24 or
30 months
based on
nature of
enterprises
Weekly or
monthly
This loan system is about ASA Ngo
Category
Eligible
Criteria
Initial
Maximum
Loan Size
Interest Rate Loan Term Repayment
Mode

6. Primary loan Economically
active poor to
undertake or
strengthen
income
generating
activities
(IGAs).
Maximum BDT
20000 or
depending on
the economic
potential of
area and
client’s
capacity as
well, in special
cases initial
loan size can
be Tk. 11,000 .
Maximum
27% decline
4, 6 or 12
months based
on nature of
IGAs
Generally
weekly or
monthly for all
term loan. But
repayment can
be made in
one
installment at
maturity of 4
or 6 months
term loan
Secondary
loan
Micro
enterprises or
entrepreneurs
and traders to
promote and
scale up
production,
business
activity and
employment
generation.
BDT 10,00,000
tk depending
on the
economic
potential of
area and
client’s
capacity
Same as
Above
12, 18, 24 or
30 months
based on
nature of
enterprises
Weekly or
monthly
This data is about TMSS loan system.
This loan system is called LEAD(Loan for Enterprise Advancement and Development.).TMSS has
a lot of project. Loan system is one of them.
As per report of June 14, TMSS has cover up 6 division, 36district, 101 upzaila. TMSS has 100
branch in this area. Approximately seventy thousands of people are borrowing their loan
system. Their loan disbursement approximately BDT 300 core.TMSS has giving a large amount
money as a loan.

7. Loan system at Bank
Different types of bank have different catteries in their loan system. In below, Some
commercial bank show their loan system.
Homeloan
o Loan amount BDT 3 Lac to maximum BDT 1 crore
o Repayment tenor 1 year to 25 years
Partiial secured loan
o Fully secured loan in the for up to 95% of FD value
o Unsecured loan for up to Tk. 10 Lac payable in Equal Monthly Installments (tenor
ranging from 12 to 60 months).
o Zero processing fee for the overdraft facility
Autoloan
o Loan up to Tk. 20 Lacs
o 90% - 100% loan of car value
o Flexible & low interest rate
Personal loan
o Loan up to Tk. 10 Lacs
o 12 - 60 months installment option
o Competitive interest
o Agricultural Loan
o Any Purpose Loan
o Bank Overdraft
o Business Loan

8. o Car Loa
o CNG Conversion Loan
o Corporate Loan
o Education Loan
o Executive Loan
o Furniture Loan
o Home Loan
o Marriage Loan
o Medical Loan
o Personal Loan
o Professional Loan
MTB
o MTB Personal Loan
o MTB Auto Loan
o MTB Home Loan
o MTB Home Equity Loan
o MTB Professional’s Loan
TRUST Bank loan system
o Trust Entrepreneur Loans
o Trust Bunon
o Trust Ekota (Group Loan)
o Trust Muldhan
o Peak Season Loan

9. o Trust Nondini
o Trust Sukannaya
o Trust Ekota (Group Loan)
o Manufacturing Loan
o JICA Loan Fund
o Engineering Loans
o Trust Projukti
o Contractors/Suppliers Loan
o Trust Easy Pay
o Agriculture Loans (Trust Shufola)
o 4-Cow integrated Farm Loan
o Solar Energy Plant Loan
o Rural Farming ( Fisheries, Poultry, Live Stock) Loan
o Rural Manufacturing and Processing Unit Loan
o Loan for Solar Mini-grid
o Solar Irrigation Pumping System Loan
o Vermin Compost Loan
Many NGO are not like to give loan male but they give loan only for female. In banking system,
there is no boundaries about giving loan.
The most common thing is that NGO and Bank has some requirement to take loan from there.
Why people take a loan ?
o Poverty in bangladesh
o Illiteracy

10. Poverty in Bangladesh
According to latest survey report on Bangladesh bureau of statistics (BBS), In 2014 The country
poverty rate is now 25.6 percent including 12.4 percent of ultra-poor. Most of percentage exist
in rural area. These people survive on bread and wages. The employee of NGO offer these poor
people that they can start a business by getting loan. For that reason, the employee of NGO are
easily convince these people to get loan from them but the thing is that they don’t know actual
rate of interest what they should pay. Rural people think that they will do better if they get
loan.
percentage
Poverty rate Ultra poor Capable rate
In city, Most of people are taking loan from commercial bank whatever it’s a state own bank or
private banks. Private commercial bank offer various types of loan to the people. Private
commercial bank offer homemade loan, car loan, various types of business loan, study loan,
wedding loan etc. City people are attracted easily to get the loan. From this way, employee of
bank are convinced these people. City people are also In capable rate.
Illiteracy
As per the latest literacy survey report of Bangladesh Bureau of Statistics (BBS), the country's
literacy rate of the population aged above 15 reached 59.82 percent and the literacy of women
is 55.71 percent. They don’t know what the actual rate of interest is. They think that they can
pay the weekly installment without any difficulties. In rural areas, most of the women are
taking loan from NGO.

11. Disadvantages
In rural areas, people must be show same amount of asset while NGO give a loan. People must
be sign in paper if he or she cant capable to pay the installment weekly or monthly, this signing
asset must be taken by NGO. For that reason, many of family lost their property when they are
ineligible to pay the installment.
It’s also a matter of sorrow some of NGO don’t give loan for male but they just give loan only
for women. As per latest survey report on BBS, most of the rural people are stuck in paying
installment. Sometimes, people are harassed by NGO people if they can’t pay the installment in
due times.
In City, most of the people are taking the loan on business purpose. These people are lost their
property if they are ineligible to pay the installment monthly or yearly. Other reason is that, If
people taking a loan from bank, they will not pay the govt. tax. These people don’t think that if
they get loan, how much interest paid by him.
Conclusion
Banks and NGOs are providing loan to the people for better future. But it has an advantage and
disadvantage like a coin. In bank and NGO loan system, People get a benefits but sometimes
people are in stuck when they are not capable to pay the installment. People should thinking
before taking loan at all he or she would capable to pay or not.
References

12. • http://www.tmss-bd.org/other-project/lead-2/
• http://asa.org.bd/loan-products/
• http://www.bbs.gov.bd/home.aspx