The ongoing political turmoil continues to take its toll on the small and medium businesses who have borrowed money from micro finance institutions (MFIs) as the big MFIs have tightened their vigilance fearing the future impact on loan recovery.
Although there is a little impact on the loan recovery rate during the non-stop countrywide blockade that started since January 06 last, big MFIs, regulators and lending organisations are closely monitoring the situation fearing adverse impact in the coming days on microfinance operation at field level if this situation prolongs, said industry insiders.
However, most of the MFI officials said they are adjusting the weekly instalments from the savings of the micro or medium loan borrowers that can make them sustain for two to three months of any crisis moment.
BRAC Communications manager Shararat Islam told the FE that while there have been difficulties this year, the effects on borrowings and repayments have not been pronounced so far.
"The impact of the political problems will depend on how long it continues. In the past, prolonged political unrest had affected disbursements and repayments," she said, adding: as an NGO, our top concern has always been the security and welfare of our clients, not their ability to repay loans.
BRAC is operating in 64 districts of the country and has 5.5 million members and 4.5 million borrowers.
Chief of micro finance of Development Organisation of the Rural Poor (DORP) Nurul Islam told the FE that although there was no severe impact on micro finance operation yet, their loan recovery fell to 91 per cent in the second week of February from 98 per cent recovery in the first week.
He also said some of their borrowers had adjusted their loan instalment from their voluntary savings. DORP has Tk 22.10 million compulsory savings and Tk 3.7 million voluntary savings.
DORP has micro finance operation in 15 upazilas of five districts with 13,000 members and 11,500 borrowers. The five districts are: Tangail, Sirajganj, Kishoreganj, Chittagong and Barguna. Of these districts, borrowers living in Sirajganj, Tangail and Chittagong are badly affected.
Borrowers of these areas who are engaged in small and medium businesses like transportation, CNG-run auto-rickshaw driving, weaving, grocery and fishing are the worst hit as they cannot move freely and sell their products.
Uddipon, one of the largest MFIs of the country, operates in 37 districts with around 0.5 million members and 0.4 million borrowers.
Uddipon executive director Emranul Huq Chowdhury said except for few pocket areas where borrowers drive CNG-run auto-rickshaws or general rickshaws and involved in agriculture, they were yet to experience any major impact on disbursement or recovery of loans due to the political turmoil as the economic base of the poor is now much stronger than it was before.
Besides, there are eight savings schemes of Uddipon where members and borrowers save money.
He thinks micro finance sector will start feeling the impact after another one month. The impact will be severe on the borrowers engaged in cap making, tailoring, small garment factory, leather goods making, agriculture, grocery shops once their sales continue to drop.
"We will increase loan flow to agricultural sub-sectors like cattle rearing, poultry and fisheries where the borrowers repay the instalments on monthly basis and where the return is a bit slow," said Mr Emranul.
He also said, "It is also in our consideration to defer their instalments and make the withdrawal of savings flexible in case of emergency".
Palli Karma Shahayak Foundation (PKSF), chairman Qazi Kholiquzzaman Ahmad said they were closely and cautiously monitoring the ongoing situation. But so far none of their 200 partner MFIs has complained about their operation at field level.
Our partner organisations always communicate with us about their steps during crisis period. We will arrange rescheduling of the loans of the borrowers if they fail to repay as MFIs cannot waive the total amount," said the noted economist who has been heading the lone NGO MFI of the government.
Executive Vice-Chairman (EVC) of Microcredit Regulatory Authority (MRA) Khandakar Muzharul Haque said although the impact was not severe yet, the loan disbursement and collection process have slowed down with the continuous political unrest.
He thinks the borrowers may be affected after another two or three months.
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Turmoil taking its toll on small, medium businesses
Kamrun Nahar | Published: February 13, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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