The purpose of this research is to analyze the recent trend of microcredit programs in Bangladesh in reducing self-generating activities and reducing poverty. This study has been focusing on how Grameen Bank is increasing economic development and self-reliance of rural poor people through unsustainable loans.

At present (after 2020) the microfinance sector in Bangladesh has become more digital and technology-enabled. According to Bangladesh Bank, this sector is being given special emphasis on financial inclusion (financial inclusion), small and medium enterprises (SME financing) and women entrepreneurship development.

Recent Trends

• Grameen Bank is still playing an important role in the development of rural poor people
• Member’s income, education, health and quality are generally improved compared to those who are not members
• Microcredit has now been easier and faster through mobile banking and digital payments
• Although the sector is exposed rapidly, there are challenges such as loan payment pressure and inflation
• Overall, it’s still playing an important role in reducing poverty

👉 In short, Microcredit is still a powerful tool in the social-economic development of Bangladesh, although its functionality is now changing with new technologies and economic realities.

Background of the Term Paper

Grameen Bank and other Micro Finance Institutions (MFIs) and NGOs are an important medium to ensure financial inclusion in developing countries. In conventional banking systems, poor people are usually deprived of deprivation of deprivation due to lack of credit, education and credit history.

Microcredit concept was introduced in Bangladesh in 1976 to solve this problem, where group-based social responsibility (social collateral) was used instead of deposit and encouraged self-administered income and entrepreneurship development through small loans.

It is basically a model of women-focused, where small businesses, agriculture and rural economic activities are created and also associated with training, health awareness and social development services.

Current Situation of Bangladesh:

According to Bangladesh Bank’s recent data:

• Currently around 30 million+ borrower is associated with microcredit activities
• About 500+ MFI/NGO and banks are active in this sector
• Total outstanding loan is now over 200 billion BDT and is growing consistently
• The sector is now moving towards digital transactions, mobile banking and SME focused financing

Key Features

• Provide small loans without deposit
• Women entrepreneurs and rural population priorities
• Increase small business and agricultural income
• Social Development Services with Loans (Health, Education, Training)

Effects

• Increase rural employment
• Important role in reducing poverty
• Improvement of life and income
• Creating small entrepreneurship (micro-entrepreneurship development)

👉 In short, Microcredit plays an important role in the long run in the economic and social development of the poor population in Bangladesh and is currently being effective in a more modern, technological and widespread form.

Objective of the Term Paper

• This study examines the role of microcredit to improve the life quality of poor borrowers
• It analyzes how Grameen Bank analyzes how the daily life of rural population of Bangladesh improves
• The research explores customers’ attitude and satisfaction about rural banks
• It evaluates the functionality of the services of microfinance institutions in rural areas
• Research searches how microcredit contributes to poverty reduction and rural development

Scope of the Study

This research provides overall picture of Grameen Bank’s Singair, Manikganj branch staff’s behavior, performance, banking facilities, various services and customer satisfaction.

The study mainly analyzes the following things:

• Microcredit Program makes it easier to access the financial services of rural poor
• Microcredit affects how rural people’s daily life quality improvement
• What changes are made to social and economic development through participation in loan activities

Limitations of the Study

This study includes only Grameen Bank and its borrowers, so the results may not fully represent the entire microfinance sector.

• The research data has been originally collected from the phone interview of borrower and bank officials; the depth of information has been somewhat limited since the face-to-face interviews
• Distance and financial constraints have restricted data collection due to the lack of research in Sweden and cannot go to the field level in Bangladesh
• Although there are around 3,589 microfinance institutes and over 190 million borrowers in the world, this study focused only on a model of Grameen
• The results of microfinance models and structures differ in different countries may not apply in one way for all regions
• So, the results of this study must be considered limited scope-based analysis

Methodology of the Report

This study has analyzed the role of economic development of Bangladesh through microcredit in the Singair of Grameen Bank, Manikganj branch and the research has been completed by following an orderly research process.

Sources of Data

Primary Data

• Talk to customers directly (face-to-face conversation)
• Observation (direct observation)
• monitoring activities
• Questionnaire Survey

Secondary Data

• Grameen Bank’s annual report
• Grameen Bank official website
• Various publications and reports
• Relevant books, Research Letters and Journal

Data Analysis and Findings

Grameen Bank is currently one of the most well-known and important microfinance institutions in Bangladesh. Some important information has been found by analyzing customer satisfaction rate of rural bank, which is shown below:

Behavior of Employees

Research shows that most customers are satisfied with the behavior of bank employees. Overall, the use and service of most customer employees means medium to good levels.

Mobile Banking

Mobile Banking is a comparative new service. Many customers are not fully aware of this service yet. But those who know and use this service have provided satisfactory feedback to the service.

Credit Facility

Rural Bank offers loans facilities for individuals and small entrepreneurs. Most customers are interested and satisfied with taking this loan advantage. Especially interest rates and simple conditions have been considered acceptable to many customers.

Reliability

Grameen Bank maintains high level of reliability in customer service. Research shows that the bank provides timely services and completes the activities according to the promise. They work sincerely to solve customers’ problems and maintain time to provide services.

Responsiveness

Rural Bank employees respond quickly to customers’ needs. They inform customers about the time of service and are interested in helping at any time.

Empathy

Rural Bank demonstrates sympathy towards customers to maintain the quality of service. They take special care of customers and provide additional or flexible services (such as evening facility) for important customers in some cases.

Conclusion

The main purpose of this study is to analyze the role of microcredit in reducing poverty in grassroots levels in Bangladesh. Results show that active participation of weak and marginalized populations in income-productive activities plays an important role in reducing poverty.

The microcredit activities of Grameen Bank play an important role in promoting women’s economic activities, which accelerate social and economic development at grassroots levels.

Field Survey and Case Study also shows that social awareness of disadvantaged people, increased skills and improved institutional capabilities. As a result, they are slowly moving towards a better social-economic situation.

👉 Overall, the microcredit model of rural bank is playing an effective and sustainable role in reducing poverty, creating autonomous employment in Bangladesh and empowering women.

Frequently Asked Questions

• Q1: What is Microcredit?
• Ans: Microcredit is a small loan without deposit, used for income-producing of poor people.

• Q2: What is the purpose of microcredit in Bangladesh?
• Ans: Its main purpose is to reduce poverty, create employment and increase self-reliance.

• Q3: How does Grameen Bank work?
• Ans: Grameen Bank provides loans to the poor through social deposits based on group-based social deposits and adds women to economic activities.

• Q4: Who uses microcredit more?
• Ans: In Bangladesh, mainly rural poor people and especially women entrepreneurs use microcredit.

• Q5: What are the main advantages of microcredit?
• Ans: It helps poor people create autonomous income and improves their lives.