Socio-Economic and Indebtedness-Related Impact of Micro-Credit in Bangladesh Book

Contents: Foreword. Preface. 1. Introduction. 2. Basic information on respondents and micro-credit as received by them. 3. Impact of micro-credit: selected socio-economic variables. 4. Rate of interest, cost of borrowing, loan repayment and velocity of credit creation. 5. Micro-credit and women empowerment. Executive summary and conclusion. Bibliography. Annexes.

"Some of the micro-borrowers in Bangladesh have benefited in certain respects. A lot of them are struggling under the stringent terms of credit including high cost of borrowing and a weekly repayment schedule starting a week after a credit is taken. Many have gone further into indebtedness and face a bleak future. The micro-borrowers face the threat of expulsion and confiscation of their assets when they fail to pay up weekly installments; and some have in fact had their meager assets confiscated when they failed to pay up. This threat is in effect collateral.

Very little empowerment has been achieved by the women micro-borrowers. Often, they are simply the conduit for some money coming into the family. Only about 10% of the female respondents have indicated that they are in full control of and manage the economic activities undertaken with micro-credit.

A large majority of the micro-credit households have remained condemned to a lowly and subservient state of living. The main culprits for this state of affairs include the glaring and accentuating socio-economic disparity and worsening iniquitous power relations in the country, neither of which is addressed or even recognised by the micro-credit institutions (MCIs).

These are some of the major findings thrown up  by this study which is based on a country-wide rurally representative sample survey conducted during January-February 2006. It is now even more important today, as Muhammad Yunus and Grameen Bank have jointly been awarded 2006 Nobel Peace Prize, that the pitfalls of micro-credit operations are properly recognised and addressed. The study strongly suggests that for meaningful and sustained poverty reduction, a comprehensive approach, commensurate with the complex nature of poverty and the prevailing social dynamics is necessary. Micro-credit with less stringent terms can be one of the key elements within the framework of such a comprehensive approach." (jacket)