Islami Bank will start lending to migrant families
Wednesday, 13 May 2009
FE Report
Islami Bank Bangladesh Ltd. (IBBL) will start lending migrant families and returned migrants to tap the potentials of investing the multi-billion dollars of remittance flowing into Bangladesh, officials said Monday.
The country's biggest private bank, which handled US$1.26 billion remittances in 2008 financial year, will also provide advisory services and entrepreneurship training to potential migrant investors, they said.
"We've already opened 10 SME (small and medium enterprises) centres across the country to facilitate investments by migrants and their family members," a bank official said.
He added, "For us, it is an untapped opportunity. But it is crucial for us to pave the way for their safe investments. I think, we are well-placed to cater to the financing needs of family members of migrants or a returned migrant."
IBBL accounted for nearly 23 per cent of the total annual remittances that came in trickles in the country.
Officials said the bank, which follows Islamic sharia laws, will be delivering remittances as well as loans for any potential investor with a broader goal of ensuring "productive use" of remittances.
The step is part of a Bangladesh Bank plan to foster investments by individuals linked to overseas migration, thus giving a boost to the rural economy.
Central bank officials involved said already six non-government organisations have started lending out to migrant families located in 14 districts under a project, funded by the UK government.
Bangladesh Bank officials said microfinanciers have already the skilled staff and physical presence in communities through their microenterprise lending experience. Shakti Foundation, Uddipon, ASPADA and SSS are involved in the project.
Led by the central bank, the project will initially be delivered to nearly 2000 migrant families in over a dozen districts such as Dhaka, Chittagong, Noakhali and Munshiganj within this year.
Bangladesh chapter of International Alternative Financial Institutions (INAFI) is implementing the project, partly funded by the Remittance Payment and Partnership (RPP) project.
RPP officials said a number of microlenders have developed capacity to provide services to entrepreneurs including the provision of loans under the microfinance programme.
Microcredit loan sizes tend to be between Tk 5000 and Tk 30,000; while small enterprise loans vary from Tk 30,000 to Tk 300,000.
They said that there are a large number of families where at least one member is working abroad in migrant-populated areas.
"Many families have used their savings or mortgaged or sold land to enable the family members to migrate. And money sent home by them is built up into a substantial amount, typically between Tk 200,000 and Tk 1.0 million. But they find no effective channel to invest," said Robert Smith, a project official, in a recent interview.
"So this programme will be of critical importance to those who want to see their hard-earned money find avenues of investment," he added.
Last year, Bangladesh received US$ 9.0 billion in remittances, boosted by record 875,000 overseas jobs.
The country became top 10 remittance recipient nation in the developing world, according to the World Bank.
Islami Bank Bangladesh Ltd. (IBBL) will start lending migrant families and returned migrants to tap the potentials of investing the multi-billion dollars of remittance flowing into Bangladesh, officials said Monday.
The country's biggest private bank, which handled US$1.26 billion remittances in 2008 financial year, will also provide advisory services and entrepreneurship training to potential migrant investors, they said.
"We've already opened 10 SME (small and medium enterprises) centres across the country to facilitate investments by migrants and their family members," a bank official said.
He added, "For us, it is an untapped opportunity. But it is crucial for us to pave the way for their safe investments. I think, we are well-placed to cater to the financing needs of family members of migrants or a returned migrant."
IBBL accounted for nearly 23 per cent of the total annual remittances that came in trickles in the country.
Officials said the bank, which follows Islamic sharia laws, will be delivering remittances as well as loans for any potential investor with a broader goal of ensuring "productive use" of remittances.
The step is part of a Bangladesh Bank plan to foster investments by individuals linked to overseas migration, thus giving a boost to the rural economy.
Central bank officials involved said already six non-government organisations have started lending out to migrant families located in 14 districts under a project, funded by the UK government.
Bangladesh Bank officials said microfinanciers have already the skilled staff and physical presence in communities through their microenterprise lending experience. Shakti Foundation, Uddipon, ASPADA and SSS are involved in the project.
Led by the central bank, the project will initially be delivered to nearly 2000 migrant families in over a dozen districts such as Dhaka, Chittagong, Noakhali and Munshiganj within this year.
Bangladesh chapter of International Alternative Financial Institutions (INAFI) is implementing the project, partly funded by the Remittance Payment and Partnership (RPP) project.
RPP officials said a number of microlenders have developed capacity to provide services to entrepreneurs including the provision of loans under the microfinance programme.
Microcredit loan sizes tend to be between Tk 5000 and Tk 30,000; while small enterprise loans vary from Tk 30,000 to Tk 300,000.
They said that there are a large number of families where at least one member is working abroad in migrant-populated areas.
"Many families have used their savings or mortgaged or sold land to enable the family members to migrate. And money sent home by them is built up into a substantial amount, typically between Tk 200,000 and Tk 1.0 million. But they find no effective channel to invest," said Robert Smith, a project official, in a recent interview.
"So this programme will be of critical importance to those who want to see their hard-earned money find avenues of investment," he added.
Last year, Bangladesh received US$ 9.0 billion in remittances, boosted by record 875,000 overseas jobs.
The country became top 10 remittance recipient nation in the developing world, according to the World Bank.