Change for better to eradicate poverty
From the very inception microcredit has been standing on two fundamental pillars --microcredit and microsaving. And microcredit is a collateral free group guaranteed lending. However, over the years it has gradually changed from its original, fundamental character, as well as, markets, loan, ceiling, etc. Now micro finance institutions (MFIs) are less interested in depending on donors' supports and are introducing sustainable operations. These MFIs/NGOs have also shifted their goals and missions from temporary services to self-sufficiency. Mode of operational change was initiated by another leader in the field Md. Shafiqual Haque Choudhury, the founder-president of ASA-Bangladesh, following Dr Yunus. ASA introduced real banking with the poor with lots of innovative ideas which have also been replicated at home and abroad.
The changes brought about in microcredit operation thereof are based on simplicity: shorter loan processing time, reducing overhead cost through simple structure, cost effectiveness, in approaches, high form of decentralisation, standardisation, provision of individual lending instead of on group liability, diversification of products i.e. savings, credit, mini-insurance, health assistance etc., and clients-friendly methodology related to borrowers' capacity and choice.
For all latest news, follow The Daily Star's Google News channel. Based on the borrowers' social strata ASA revised and introduced nine loan products ranging from Tk 1,000 to Tk 2,00,000 allowing withdrawal of any amount by client in group meeting without deducting any amount from the sanctioned loan in the name of force savings or force selling of product or implements. Generally the concepts and key elements of microcredit are discussed and implemented in weekly meetings. Such fundamental changes and flexibility in microcredit delivery highly inspired the poor borrowers to take part in microfinance more and more.
Microcredit Information Exchange (MIX) report, 2005 rated ASA as the best micro finance institution in the world considering its high growth rate (6.4 million members), high return of assets, productivity, operational self-sufficiency, financial sufficiency and low cost for money lent. With such advances in microcredit services there is little doubt that it is an effective tool in the fight for eradicating poverty.