Microcredit organizations in Bangladesh include Grameen Bank, around 1500 non-governmental organizations (NGOs), commercial and specialized banks, and government programs. These organizations provide small, uncollateralized loans to impoverished individuals and groups to support entrepreneurship, alleviate poverty, and empower communities. Microcredit is sustained through financial regulations tailored to objectives, increasing customer base to boost savings, large coverage, and addressing development needs of the poor. The Microcredit Regulatory Authority regulates and supervises microfinance operations in Bangladesh.

1. INSTITUTE OF BUSINESS ADMINISTRATION
JAHANGIRNAGAR UNIVERSITY
ASSIGNMENT ON
Microcredit Organizations in Bangladesh
Submitted To
Md. Alamgir Hossen
Assistant Professor
Course Instructor
Bank Management- [FIN 401]
Submitted By
Fara Ul Fath
Class ID: 2215
Batch: 26
Date of Submission
24th
April, 2019

2. Micro Credit:
Microcredit is the extension of very small loans (microloans) to impoverished borrowers who
typically lack collateral, steady employment and a verifiable credit history. It is designed not only
to support entrepreneurship and alleviate poverty, but also in many cases to empower women and
uplift entire communities by extension
Microfinance, also called microcredit, is a type of banking service that is provided to unemployed
or low-income individuals or groups who otherwise would have no other access to financial
services (KAGAN,2018). While institutions participating in the area of microfinance most often
provide lending (microloans can range from as small as TK100 to as large as TK25,000), many
banks offer additional services, such as checking and savings accounts,
and microfinance products; and some even provide financial and business education. Ultimately,
the goal of microfinance is to give impoverished people an opportunity to become self-sufficient.
Necessity of Micro Credit:
Microfinance has tremendous potential as an instrument for poverty reduction. Microcredit
programs are more cost-effective than formal finance in providing financial services to poor rural
clients and are also more cost-effective than some other types of anti-poverty programs. Although
microfinance generates benefits for the poor and women in particular, it seems to benefit only that
portion of the poor that is able to use loans productively. Analysis of household data indicates that
many uneducated participants in microfinance programs tend to have special abilities such as oral
accounting skills, for example, that enable them to use loans to generate income. Those who are
eligible but do not participate in microfinance programs tend to lack these skills ( Dhar and
Robboy, 2019). Microfinance is important because it provides resources and access to capital to
the financially underserved, such as those who are unable to get checking accounts, lines of credit,
or loans from traditional banks.
Without microfinance, these groups may have to resort to using loans or payday advances with
extremely high interest rates or even borrow money from family and friends. Microfinance helps
them invest in their businesses, and as a result, invest in themselves.
Advantages of Micro Credits:
One of the main advantages of micro-credit is not needed endorsements; grant depends on trust,
which means it can reach who could not get through other funding. In addition, rates of return are
quite high, and when small amounts convenience in payment of fees, so that the grant does get the
benefit of it and if the credits are paid to say that things are going well for whom receives.
Financing conditions also may be better than other loans, and there are also many products and
options based on each group.
The benefits of microfinance extend beyond the direct effects of giving people a source for capital.
Entrepreneurs who create successful businesses, in turn create jobs, trade, and overall economic

3. improvement within a community. Empowering women in particular, as many
microfinance organizations do, may lead to more stability and prosperity for families.
Why Microcredit is Sustaining?
In microfinance, sustainability can be considered at several levels institutional, group, and
individual and can relate to organizational, managerial, and financial aspects. Microcredit is
sustaining through some strategies:
1. Financial regulations for different objectives
2. Increasing number of customers that increases the gross saving as a whole, which reduces
inequality in economy too.
3. Large financial and geographical coverage and reach
4. Ultimately, the vast target customer and opportunity of development for the poor people is
the core reason to sustain while there’s numerous banks in the country.
Microcredit Regulatory Authority:
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 for NGO-MFIs in 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.
Microcredit Organizations in Bangladesh:
In Bangladesh there are mainly four types of institutions involved in micro-finance activities.
These are
1. Grameen Bank (GB), a member owned specialized institution
2. around 1500 Non- Governmental Organizations (NGO) like BRAC, Proshika, ASA,
BURO-Tangail, BEES, CODEC, SUS, TMSS, Action- Aid etc.
3. Commercial and Specialized banks like Bangladesh Krishi Bank (BKB), Rajshahi Krishi
Unnayan Bank (RAKUB) and
4. Government sponsored micro finance projects/ Programs like BRDB, Swanirvar
Bangladesh, RD-12 and others which are run through several ministries viz., Ministry of
Women & Children Affairs, Ministry of Youth & Sports, Ministry of Social Welfare etc.
All the programs are targeted at the functionally landless rural poor. All the MFIs provide
mostly small, un-collateralized one-year term loans to individuals belonging to jointly liable
peer groups, and they use similar on-site loan disbursement and weekly collection methods by
forming village organizations or centers.
_________________________________________________________________
O _______________________________________________________________