1 / 15

Bangladesh Grameen Bank (BGB) Model

Bangladesh Grameen Bank (BGB) Model. 5 members groups, they must be neighbors but not relatives Joint Liability Groups (JLG) or Solidarity Groups (SG) Individual lending within JLG model 7 groups constitute a centre at the village level

jaden
Télécharger la présentation

Bangladesh Grameen Bank (BGB) Model

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Bangladesh Grameen Bank (BGB) Model • 5 members groups, they must be neighbors but not relatives • Joint Liability Groups (JLG) or Solidarity Groups (SG) • Individual lending within JLG model • 7 groups constitute a centre at the village level • All loans must be approved by other group members as well as all other centre members • Lending is in the order of 2:2:1 (leader being the last) • Every member must contribute Rs. 5/week • Inability of a client to pay savings results in the concerned group or centre paying up for that client

  2. Bangladesh Grameen Bank (BGB) Model • 5 % of all productive loans disbursed to a group is collected as tax and deposited in the group fund • From this group fund, member can access loans for consumption purposes (maximum 75% of group fund), no interest charge • There is also an emergency fund (optional) where each member contribute Rs. 1/week. • Loan disbursement is done at the centre level. • Weekly repayment schedule (maximum 52 weeks) • Interest rate varies between 15-24 % p.a. on flat basis and on a weekly basis.

  3. SHG V/s BGB Model – Client Perspective • Strength for SHG Model - Flexible internal operations - can select cheaper supplier of funds - can evolve from existing groups - can evolve into Federations - very empowering - a major part of the interest is retained within the group fund

  4. SHG V/s BGB Model – Client Perspective • Weaknesses of SHG model - Need management skills - can be hijacked internally or externally - cash may not be secure, if savings are held within the group

  5. SHG V/s BGB Model – Client Perspective • Strengths of BGB model - No need for literacy - Protected from internal exploiters - Poorer are included - Bank/MFI can offer tailor-made services - savings are safe - members are forced to accumulate reserves, which can be used in emergencies

  6. SHG V/s BGB Model – Client Perspective • Weaknesses of BGB model - inflexible internal operations, very rigid - group composition not in members’ control - must meet frequently (weekly), more time consuming

  7. SHG V/s BGB Model – Bank/MFI Perspective • Strength of SHG model - lower costs, (one account for whole group) and (appraisal, recovery done by members) - groups can fit to any branch - No social intermediation cost as groups are promoted by SHPI - large access to clients

  8. SHG V/s BGB Model – Bank/MFI Perspective • Weaknesses of SHG model - Need SHPI to promote the groups - Groups may move to other bank - more risks as hard to monitor the groups - slow process to increase the scale of business - may be forced to link the groups under some “schemes”

  9. SHG V/s BGB Model – Bank/MFI Perspective • Strengths of BGB model - Tight control over the groups, so less risk - standardized procedures - members have the feelings of ‘belonging’ to bank/MFI

  10. SHG V/s BGB Model – Bank/MFI Perspective • Weaknesses of BGB model - Higher transaction costs - members need continuous guidance and presence - needs dedicated system

  11. SHG Model – Suitable Conditions • Existing bank network in rural areas • Communities are fragmented, with various different groups based on caste, or wealth level • There are credible NGOs or other community development institutions to promote the groups • Peoples’ opportunities and financial service needs are diverse

  12. BGB Model – Suitable Conditions • The prospective clients are very poor and marginalized, and are vulnerable to exploitation unless they are protected by a rigid structure • Clients are illiterate • The area is densely populated, so that it is practical for MFI staff to visit the groups every week • The population is fairly homogenous

  13. Federated SHG Model • Federation is apex institution of all SHGs in an area (1000-3000 members) • SHG------Cluster------------Federation • Federation can be registered under Society registration Act. • Helps in promotion of new SHG and strengthening of existing SHGs • Facilitate inter-group exchange (financial and non-financial) • Access of outside funds to member SHGs

  14. Federated SHG Model • As the number of groups increases, it becomes difficult for SHPI to interact directly with each group • SHPI can start withdrawing and can concentrate on other area • External funds for on-lending are routed through federation • Federation can help SHGs in loan recovery

  15. NBFC Model • Profit maximization through financial services to rural/poor clients • Registered as profit making NBFC under the Companies Act 1956 • Diverse client group • Multiple channels • Sound financial intermediation, no social intermediation • Diversified products for different clients

More Related