More benefit at less cost
The idea of extending collateral-free loan was wonderful. The inherent weight of trust worked. It paid off and encouraged. The operation multiplied and enkindled growth from individual to individual and also institution to institution. In the process emergence of ASA, among others, has been prominent after Grameen Bank.
The mission, apparently, is of helping the poor to change their lot, reducing poverty. Whatever, it involves some cost, even if it is kept at the minimum by standard, effort-fully, to provide as much possible benefit to the other (receivers) end. Here ASA went for innovating ways to reduce operation cost. It expanded its operation quite fast, faster than many others, across the country covering almost all districts. But it tried to keep the operation cost lower without affecting the quality of service, i.e. covering more members per field office, only necessary number of staff and minimum furniture to avoid any redundancy, lean structure reducing overhead cost, decentralization to branch level, simple and transparent account and record keeping but strong monitoring and supervision.
For all latest news, follow The Daily Star's Google News channel. All this has not only effectively reduced operation cost increasing members benefit but also led to the organisation's impressive success as the leading microcredit provider. It was able to reach assistance to 6.39 million members through 2,579 branches by September 2006. As such, it has been able to distribute US$ 5,427 million equivalent causing a US$ 310 million equivalent outstanding with 99.93 percent recovery rate. It's a success story undoubtedly, whereby it is running a special programme of flexible loan to assist 0.19 million hardcore poor members.
ASA has been placed as the best microcredit provider in the world by Microfinance Information eXchange (MIX). MIX is an international research institution on microcredit based in Washington, USA. It works on benchmarking, monitoring, infrastructure development, etc of microcredit throughout the world and publishes analyses, which are globally recognised.
By now several MFIs in different countries are replicating its model to be successful themselves. Simplicity, flexibility and cost-effectiveness are the keys to this success. The organisation aims at providing more benefit at less cost. And when more benefit can be provided at less cost, it obviously proves to be the most effective tool in poverty reduction.
This innovative approach to microcredit operation has been able to introduce a revolutionary change in its traditional and fundamental structure for better. The most uncommon characteristics, among others, of this approach are -- no necessity of establishing any primary group for getting loan, no group guarantee and no binding for weekly installment, as usually in practice. The operator fixes the installments and other conditions considering the member's ability, competence, income cycle and other socio-economic status. This has enabled wider membership and as such wider poverty reduction sphere.