T he major actors in microcredit program (MCP) in Bangladesh are the Grameen Bank, three big NGOs namely BRAC, Proshika Manobik Unnayan Kendra and ASA (which are Partner Organizations i.e. POs of Palli Karma-Sahayak Foundation (PKSF). In addition there are 141 other medium and small NGOs (partners of PKSF) and a number of other NGOs which are not POs of PKSF, but affiliate to Credit Development Forum (CDF). The nationalized commercial banks also provide credit to the poor people, but those are guided by banking principles and not by the principles of MCP. BRDB, the largest development agency of the government for poverty alleviation also has credit programs for the poor, which are similar to those of MCPs undertaken by NGOs. The recent floods have affected the borrowers, majority of whom are rural poor. The effect on the borrowers has in turn affected the financial and liquidity position of microfinance institutions.

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Grameen Bank has requested the Bangladesh Bank to provide the fund. BRAC requested the government to provide major portion of its requirement. While, the total requirement according to the above estimate is Tk 9.19 billion, PKSF can meet the additional requirement to the tune to Tk 450 million only. The three big NGOs� require about 1.78 billion taka all of which may not be available from PKSF and as such government has to provide in the case of Grameen Bank.

CDF estimates that BRDB requires 2 billion taka for its revolving loan fund for microcredit. BRDB�s loan fund requirement may be considered by the government since BRDB is a government program. CDF estimates fund requirement of NGOs (which are not POs of PKSF) to the tune of about Tk 520 million. However, the channel through which loanable funds can be provided to these NGOs is difficult to determine, because the NGOs operate MCP through grants from donors, savings from participants of programs and some loans from different sources. A rigorous system has not being developed to channel government/donor credit fund to these NGOs.

The recent floods in Bangladesh have provided both a challenge and an opportunity for microcredit. The challenge is to quickly recover from the losses due to flood and to bring the poor people again into the path of sustainable development. The opportunity is to consolidate and improve upon the modalities of MCP and to bring the poorest of the poor into its coverage increasing the impact on the socio-economic conditions of the poor.

Dr. Salehuddin Ahmed
Managing Director
Palli Karma-Sahayak Foundation (PKSF)