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Microfinance

RDRS operates its Microfinance Programme in a client-centric approach. RDRS seeks to make poor people economically self-reliant, increase their household income and assets, and therefore focus on micro, small and medium enterprise development to create employment opportunities in formal and informal sectors.

The current approach of RDRS microfinance programme is two-pronged in offering financial services on the key premise of establishing enterprises, and special consideration is given to women for empowerment. The microfinance programme continues constantly research to diversify its products and to bring innovative solutions to the financial sector by digitization and introducing cashless banking.

Programme

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Introduction

RDRS Bangladesh started its microfinance (MF) program in 1991 to create employment opportunities and provide income-generating support to poor and disadvantaged people. The program puts particular emphasis on women and the minority segment of the society. Initially, the program started in eight districts under Rangpur Division; now gradually covered 29 districts. RDRS Microfinance strives to make financial and other related services (savings, credit, insurance, skill development training etc.) accessible to the poor and disadvantaged with a view to increase their income and employment opportunities for them with special emphasis on women, physically disabled and minorities.



Goal of the program

  • Create opportunities in employment and entrepreneurship in formal and informal sectors for RDRS’s MF clients by enabling access to appropriate and diverse financial products and services.


Overall Objective of the program

  1. Income generation for microfinance clients (particularly women and marginalized groups) through access to financial services, and enterprise promotion.
  2. Enhance competency for microfinance clients in the management of income and savings at the individual, household, and enterprise levels.
  3. Introduce Client Centric diversified financial products for RDRS MF clients and contribute to increased financial sustainability.


Strategic priorities areas

RDRS Microfinance Program works on the following 7 priority areas to achieve its goals and objectives:

1. Ensured access to financial services.

2. Development of Enterprise (Micro and Small).

3. Human Resource Development.

4. Innovative Product Development.

5. Digitization of Microfinance Program.

6. Enabling Corporate Social Responsibility (CSR).

7. Fund Mobilization.



Geographical Coverage

As of December 2023, Microfinance Program is being implemented through 284 branches in 138 Upazila's of 29 districts of 7 divisions of the country. (Except Barishal division).



Financial Products and Services

RDRS offers client-friendly diversified financial products and services, i.e. micro-loans, microentrepreneur’s loans, agricultural loans, water and sanitation loan, diversified savings like – General Savings, Voluntary Savings, Monthly Savings deposit scheme (MSDS), Double Benefit Savings Deposits (DBSS), Monthly Profit Saving Scheme (MPSS) and access to member loan security fund to cover the risk of the borrowers. Financial products are developed to meet the needs of various customers and to assist them to enjoy better living conditions. The operational methods are very easy, and quick and minimum documentation is required.



Categories of Loan

Principally, loan products are designed in main two categories based on loan size and rate of interest.

1. Micro Loan: The loan is intended for rural and urban poor households to finance their economic and non-economic activities. The microloan aimed to build a strong capital base. This loan is called ‘Udayan loan’ the loan ceiling varies from BDT 10,000 and gradually increased maximum 1,000,000. Women are given priority for this microloan. Agriculture loan is also disbursed under microloan. The rate of interest also varies on loan size from 22% to 24%.

2. Micro Entrepreneur loan: The micro-entrepreneur (ME) loan is mainly a graduated micro loan and is considered an individual loan. This micro-entrepreneur loan is called ‘Unnati Loan’. ME loans significantly contribute to creating self-employment and wage employment opportunities. Furthermore, the inclusion of missing middle borrowers into financial inclusion has become of utmost importance. RDRS ME loan ranges from BDT 101,000 and gradually increased maximum 3,000,000. Youths and women entrepreneurs are priorities for this loan. The rate of interest also varies on loan size from 20% to 24%.

3. Agriculture loan: From the inception of the microfinance program, RDRS has given special attention to the agriculture sector in the northern part of Bangladesh, i.e. Rangpur division. RDRS is implementing many agriculture projects in collaboration with PKSF, such as Shufolon, LIFT, KGF etc. to support the agriculture credit. Besides, in collaboration with commercial banks agriculture loan is also provided to the farmers. Technical support is also provided to the farmers. Bangladesh Bank also finances to RDRS agriculture credit and conducts field-level monitoring. RDRS is implementing a project titled ‘Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project (SMAP)’ with the supported by Bangladesh Bank. Out of total loan, around 65% loans are disbursed on agriculture sector.

4. Non-IGA Credit: Considering the social impact and health and well-being of the clients, RDRS is being implemented some non-IGA credit project such as- Water Credit (Supported by Water.org), BD Rural Wash, Sanitation Development, Asset Creation, Livelihood Increasing (Supported by PKSF)



Savings Program

RDRS offers four types of savings products – General Savings, Voluntary Savings, Monthly Savings Deposit Scheme (MSDS) and Double Benefit Savings Scheme (DBSS) and Monthly Profit Saving Scheme (MPSS).

1. General Savings: Microfinance clients have to save a minimum of 200 Taka to 500 taka per month. They will enjoy a return of 6% interest per annum against their savings.

2. Voluntary Savings: Through voluntary savings, members can save any amount of money after depositing compulsory savings. They will enjoy a return of 6% per annum against their savings.

3. Monthly Savings Deposit Scheme (MSDS): A Monthly Savings Deposit Scheme (MSDS) is a product where Members can invest monthly starting from BDT 100 to BDT 10,000 for tenure of 3 years or 5 years with 7 percent and 7.5 percent interest rates respectively.

4. Double Benefit Savings Scheme (DBSS): This is a fixed-term deposit product where members can invest a bulk amount of money with a specific plan. The plans start with a minimum investment of Tk 20,000 and a maximum of Tk 1,000,000.

5. Monthly Profit Saving Scheme (MPSS): Under Monthly Profit Savings Scheme (MPSS), Members get monthly profit based on deposited amount. Members can deposit from BDT 25,000 to BDT 1,000,000 individual and BDT 2,000,000 for family. Member get monthly profit BDT 925 per 100,000 BDT. The profit rate is 11.10%.



Microfinance Digitization

1. Mobile Apps Collection: Mobile Aps collection is being implemented in all branches. This process ensures digitization for the transaction and eases the record-keeping process, providing real-time status and also reduces paperwork in branch offices.

2. Mobile Payment Gateway with Bkash: It is a growing demand for RDRS microfinance program. An agreement was signed with Bkash for this service. Initially, our plan is to start with Unnati borrowers to pay their instalment through Bikash wallet.

3. An agreement was signed with HISHAB a private limited company incorporated in Bangladesh for providing a voice user interface over telecommunication network for microfinance institute. HISHAB provides two types of services- 1. VRS (Voice Reporting Service) and 2. Verification of the last transaction (Real time audit). The service will be initiated from August 2023.

4. Agreement with EcoDev Solutions: RDRS made an agreement with an Indian IT Analytics company – Eco-Dev Solutions to assess ME borrower's readiness to pay and the affordability of the loan as a part of KYC through its solution called mpower-u. The mpower-u solution mainly deals with the appropriate behavior competence of an entrepreneur.



Current portfolio status of Microfinance program as of December 2023

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Particulars

December 2023

Basic Information

 

01

Branch

284

02

Field Officer (Microfinance Officer and Loan Officer)

1,462

03

Total Microfinance Staff

2,898

04

Member

451,262 (93% women)

05

Borrower

 352,145

06

Savings Balance  (Million BDT)

4712,942,311

07

Loan Outstanding (Principal) (Million BDT)

13,631,708,648

Ratio Analysis

 

08

Operational Self Sufficiency (OSS)

122%

09

On-time Recovery (OTR)

93.22%

10

Portfolio At Risk (PAR)

10.47%

11

Savings Loan Ratio

35%

12

Borrower Member Ratio

78%



Revolving Loan Fund (RLF)

The Revolving Loan Fund (RLF) is one of the most important elements to carry out the microfinance operation. RDRS RLF consists of different sources of loans like Member’s Savings, PKSF, Commercial Bank, Capital Fund etc. RDRS RLF is given below as December 2023.

Source of Fund

Amount (BDT in Million)

%

Member Savings (Excluding FDR)

                              4,271.56

33%

Loan with PKSF

                              1,506.93

11%

Loan with Commercial Bank

                              4,461.89

30%

RDRS Capital Fund

                              2,653.79

25%



Ongoing Projects under Microfinance Program as of December 2023

S.#

Project Name

Donor/Partner

Working Area (District)

01

Small and Marginal Sized Farmers Agricultural Productivity Improvement & Diversification Financing Project (SMAP)

Bangladesh Bank-JICA

RDRS working areas

02

Enhancing Resources & Increasing Capacities of Poor Households towards Elimination of Poverty (ENRICH)

PKSF

Panchagarh and Kurigram

03

Adolescent Program

PKSF

Rangpur, Lalmonirhat, Thakurgaon, Moulovibazar

04

Kuwait Goodwill Fund for promotion of Food Security in Islamic Countries Program (KGF)

PKSF-Kuwait Govt.

Thakurgaon

05

Skills for Employment Investment Program (SEIP)

PKSF

RDRS working areas

06

Learning and Innovation Fund to Test new Ideas  (LIFT)

PKSF

Kurigram

07

Bangladesh Rural Water, Sanitation and Hygiene for Human Capital Development Project (BD Rural Wash)

PKSF

Kurigram, Lalmonirhat, Nilphamari, Gaibandha, Hobigonj, Moulovibazar, Sherpur

08

Recovery and Advancement of Informal Sector Employment (RAISE)

PKSF

Rangpur, Gaibandha, Kurigram, Lalmonirhat, Nilphamari, , Panchagarh, Thakurgaon, Dinajpur

09

Microenterprise Development Project-Additional Financing (MDP-AF)

PKSF-ADB

RDRS working areas

10

Poverty alleviation through Implementation of Integrated Agricultural Activities (Integrated Agriculture)

PKSF

RDRS working areas

11

Poverty alleviation through family based integrated activities implementation (Char Rajibpur)

PKSF

Kurigram

12

Water and Sanitation for Rural Poor of Northern Bangladesh (Water Credit)

Water.org

RDRS working areas



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Celebrating MUJIB100

To celebrate the Birth Centenary of the Father of nation, Bangabandhu Sheikh Mujibur Rahman, RDRS Microfinance program arranged a special documentary projection event at Rangpur Office and circulated it through Radio Chilmari.

RDRS has set up Mujib Corner its Torben V. Petersen library in Rangpur premises. The Mujib Corner was inaugurated by Md. Foshiullah, Executive Vice Chairman of Microcredit Regulatory Authority.



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PKSF Managing Director visited RDRS activities

Managing Director of Palli Karma-Sahayak Foundation (PKSF), Dr. Nomita Halder, NDC visited RDRS MF activities in Rangpur and Kurigram districts during 20-21 March 2022. She travelled to Manush Marar Char in Kurigram district and attended two group meetings, visited health care and nutrition centre, and attended a Federation meeting.  She also met RDRS staff at Rangpur office and shared her views and experience that inspired RDRS undertaking some projects like, Agriculture value chain, Integrated Agriculture Project and SEIP project. Mr. Jashim Uddin, AMD, Dr. Sharif Ahmed Chowdhury, GM, program and two other PKSF officials accompanied her. 



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RDRS Scholarship Program

RDRS is being conducted scholarship program by its own fund. Selected students are given monthly 4,000 taka for higher education and Tk 3,000 for diploma course for completing their higher education and Diploma course. The Scholarship money is being given quarterly basis

 



Projects

Poverty Alleviation through Family-based Integrated Activities Implementation

RDRS Bangladesh is implementing the Poverty Alleviation through Family-based Integrated Activities Implementation project in Char Rajibpur in Rajibpur upazila of Kurigram district. The project is being implemented with the support of Palli-Karma Sahayok Foundation (PKSF). The project is working with 12,000 households in the project area. The group members of RDRS microfinance programme will be benefitted from this project. The project is designed in line with SDG – 1, 3, 4, 5, 6, 8, and 13 (No Poverty; Good Health and Well-Being; Quality Education; Gender Equality; Clean Water and Sanitation; Decent Work and Economic Growth; and Climate Action).

Char Rajibpur has the highest poverty rate 79.08%, with vulnerability in many areas like socio-economic condition, employment, education, health & nutrition, and communication than any other upazilas in Kurigram district. Natural disasters such as flood, cyclone, drought, river erosion are regular phenomena of this upazila. Considering the vulnerability of the area, RDRS has initiated this poverty alleviation project to increase per capita income of the poor people of Char Rajibpur.

The goal and objective of the project are sustainable poverty alleviation through the ultra-poor community to increase enabled and ensure food and nutrition; to enable adaptation and enhance economic condition improvement; and to assist ensuring of GO and NGO services. 

The major activities under the project are training, technical service and income-generating activities (Livelihoods), inclusive finance, health & nutrition, social mobilisation, disability inclusion, gender equality, climate change & disaster management, education, immigration activities.

The key highlights are enterprise development, growing vegetables in the courtyard round the year, health camp, nutrition display camp, providing assistance to children, medicine for curative care, and providing assistance to pregnant mothers.


Water and Sanitation for Rural Poor of Northern Bangladesh (2nd Phase)

RDRS Bangladesh is implementing the Water and Sanitation for Rural Poor of Northern Bangladesh project in Panchagarh, Thakurgaon, Dinajpur, & Nilphamari district of Rangpur division and Moulvibazar & Hobigonj district of Sylhet division. The project is being implemented with the support of Water.org. The 50,000 households are the direct and 225,000 households are the indirect programme participants of the project. The Program participants are poor household members. Most of them have no ability to install sanitary latrines, even some of them are not able to set up a tube well on their own. This project is providing loan facilities with technical support to the poor for construction of latrines.

The Water and Sanitation for Rural Poor of Northern Bangladesh project is designed in line with SDG –6 (Clean Water and Sanitation).

The goal of the project is to bring the underprivileged community people under access to safe water and sanitary latrines to ensure their good health and a healthy environment for all. The objectives of the project are

  1.  To facilitate access to safe drinking water as well as improved sanitation facilities of poor and disadvantaged people;
  2. To make programme participants aware of health-hygiene and waste management system; and
  3. To introduce evidence-based documentation and coordination among WaSH actors for the replication of good practices.

The programme participants are receiving hygiene education and awareness along with the sanitation loans. The major activities of the project are water loan disbursement, sanitation loan disbursement, training for programme participants, group discussion etc.  


Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project (SMAP)

RDRS Bangladesh is implementing the Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing project in RDRS working areas covered by microfinance programme. The project is being implemented with the support of Bangladesh Bank. The microfinance borrowers are the direct programme participants of the project. The SMAP project is designed in line with SDG 2 (Zero Hunger).

The goal and objective of the SMAP project is to increase agricultural productivity and diversity of the small and marginal sized farmers (SMFs) of Bangladesh by financing agricultural loans and providing technical support services (agriculture and livestock) to farmers through Microfinance Institutions, thereby contributing to the sound development of agricultural finance and the agricultural sector of Bangladesh.

The major activities are being accomplished under the project are providing loan, technical orientation, and technical support services to the programme participants. 

The lifestyle of MF clients under the SMAP project is positively changing. They are being able to produce more quality food by using modern technologies at less production cost.   


Integrated Agriculture Unit

RDRS Bangladesh is implementing Integrated Agricultural Unit project in Kurigram Sadar, Rajarhat and Khedabag of Kurigram district. The project is being implemented with the support of Palli-Karma Sahayok Foundation (PKSF). The MF group members are the target people of the project. This project is directly working with 1000 households in the project area. The Integrated Agricultural Unit project is designed in line with SDGs 1 and 14 (No Poverty, Life Below Water).

The goal and objective of the project is poverty alleviation through implementation of integrated agricultural activities.

The major activity of the project is implementing different agricultural demonstrations in the project area.

After participating in the project, the target people have gained more knowledge on smart agriculture. They are using new agricultural tools in farming that has increased their production and income.


Recovery and Advancement of Informal Sector Employment (RAISE)

RDRS Bangladesh is implementing the Recovery and Advancement of Informal Sector Employment (RAISE) project in Rangpur, Gaibandha, Nilphamari, Panchagarh, Thakurgaon, Dinajpur, Lalmonirhat and Kurigram districts. The project is being implemented with the support of Palli-Karma Sahayok Foundation (PKSF) and the World Bank. The target communities of the project are COVID-19 affected micro entrepreneurs and low-income youth Entrepreneurs. The project is directly working with 1590 programme participants. The RAISE project is designed in line with SDG 8 (Decent Work and Economic Growth).

The goal of the project is to provide services that can enhance earning opportunities for low-income youth in Urban and Peri-Urban areas of Bangladesh. The objectives are:

  1. to provide financing to entrepreneurs affected by COVID-19 on easy terms through PKSF's affiliates to re-establish their business ventures;
  2. to assist access to finance for youth entrepreneurs through Business development; and
  3. Apprenticeship program (Skill training & Employment of informal sectors).

The major activities are being accomplished under the project are enrollment in apprenticeship training programme; community outreach programme; and master craftsperson orientation.