Small loans help poor raise income

FE Team | Published: April 21, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Kamrun Nahar
Micro credit programme has been contributing to the raising of income of people mainly from lower to mid-income groups, industry insiders said. Safia is a borrower of Village Education Resource Centre (VERC), a non-government development organisation which has a micro credit programme in Savar area of Dhaka district. She became a member of the organisation in 1982 "I got Tk 5000 to help my husband repair our truck. Gradually I qualified to get bigger amounts of money as I properly utilised the loan amount and contributed to increasing family income," Safia told the FE during a group meeting. Safia now is no more a micro credit borrower. She now belongs to micro enterprise group of 11 members. This group members can borrow money ranging from Tk 30,000 to Tk 0.7 million. Now Safia has a truck, a shop and seven rooms which are rented to people and a savings of Tk 16,500 with the micro credit group. She gets Tk 40,000 as room rent. She last took Tk 0.15 million from VERC at 25 per cent interest which will be repaid within 45 weeks. She has to pay Tk 3750 weekly and her saving is Tk 150 a week. Safia will receive yearly five per cent interest on her savings. "Now I will quit the group as I do not need loan any more," Safia added. All such members never went to a bank and are happy as the loans are hassle-free. "We get micro credit whenever we want after becoming a member. Only a male has to be the guarantor. They start recovery within one week. We never miss our instalments," Safia said. Though micro credit is targeted at landless people and aims to take out the extreme poor out of the vicious cycle of poverty, various organisations have been conducting their micro credit programmes where there is hardly any ultra poor like those in 'char' lands or backward areas of the country. VERC has 40 branches in 12 districts with 44,000 borrowers and about 62,000 members. It has disbursed a cumulative amount of Tk 4.03 billion. All the members of the micro enterprise group are very happy as they contribute to their family income with the money borrowed by the women and this has helped them raise their social status as their income has increased and they are empowered. They have a strong voice in the decision- making process of their families. Another micro credit group at Khatrapara village of Savar has 18 members who are eligible for getting loans from Tk 1000 to 29,000. These members can take loan three weeks after becoming members but repayment starts one week after receiving a loan. Razia (65) became a member of the group in 1988. She got a loan of Tk 10,000 in 1996 to help her son do agricultural work. Her son took lease of agricultural land of others as Razia does not have any cultivable land of her own. But she has a house on a four-decimal plot. "I have taken Tk 20,000 loan to cultivate the land my son has taken lease of", Razia told this correspondent during a visit. She repays Tk 500 a week with a 45-instalment schedule and saves Tk 20. Her daughter-in-law also has taken a loan to help her husband's agricultural work to increase their income. Razia thinks the loan will be of great help as their family members have no other source of getting money from to help increase family income by cultivating others' land which needs a lot of money.