MFIs capitalise on borrowers’ ignorance

Several microcredit borrowers said due to weekly loan installment system they cannot afford their kids’ education properly and ensure better health for their family

The microfinance borrowers yesterday a programme demanded that the lenders increase their credit amount alongside bringing down the interest rate and facilitating loan reimbursement procedures.

They also alleged that NGOs that offer less than sufficient amount of credit to them do not come to their rescue at their austerity, rather ensnare them in a perpetual loan cycle.

The allegations surfaced on the sidelines of a national convention titled “Towards Poverty alleviation and Social Development: The Role of Micro Finance Institutes” held in the capital.

The Institute of Microfinance, Palli Karma Sahayak Foundation and Micro credit Regulatory Authority jointly hosted the programme.

Several microcredit borrowers said due to weekly loan installment system they cannot afford their kids’ education properly and ensure better health for their family. They added that it was also tough for them to obtain microcredit and in most cases they fail to make out the lenders’ critical finance system.

“I got a loan of Tk30,000 with 12% interest from an NGO, EC Bangla, which will be reimbursed within 45 weeks, but this is very difficult to pay back the amount soon,” Srimoti Sabita Rani, an NGO member hailing from Munshiganj shared her view with the Dhaka Tribune.

Besides the weekly installments, the lenders also realise service charges, added Sabita. The borrowers vented their frustration by saying that the little amount of loan the NGOs provide for them hardly helps them make both ends meet together. NGOs never give support during financial crisis, claimed another microcredit holder Halima Begum who came from Ramgati village under Noakhali district

“I am a member of a local NGO that demands Tk2,500 as service charge against a loan of Tk25,000. I hardly gained from my investment into Soyabin cultivation that was damaged due to heavy rainfall, but my lender was strict to realising the installment.”

Halima also said the micro financers capitalise on the borrowers’ ignorance.

“We are illiterate and we do not know their critical finance system. They provide us with loan and we are bound to repay them.”

Another microcredit holder Peyara Bugum claimed that the NGOs allocate a good amount of loan only to those that have capacity to repay. “But like us, she said obtaining a big loan is a far cry and the small amount of credit makes us encounter a continuous financial crises.”

Halima said she took a loan more than 10 years ago, but still she could not repay it and come out of the loan cycle.

“To pay my previous loan, I rush towards another NGO to save my skin.”

An NGO organiser, Manobi Bairagi, hailing from Jessore told the Dhaka Tribune the microcredit borrowers that invest money into business can profit, but those who use their loan for meeting family needs find themselves in difficult situations.

“NGOs cannot provide sufficient loan for those that have little or no capital while they are not much concerned about social development,” she said.

The woman entrepreneur said sometimes women are provided with training, but they hardly get such market as necessary to run their business, and ultimately they become prone to taking more and more loans.


Abid Azad

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