Trends and Growth of
Microfinance Program
TRENDS AND GROWTH OF MICROFINANCE PROGRAMS OF MFIs
This chapter presents a picture of microfinance programs focusing on the trends and growth of different indicators of the overall microfinance sector in Bangladesh. In doing so, data of all reporting MFIs have been used and average figure per MFIhas been calculated. The available data and information have been processed carefully and are presented in such a manner that it can help the readers to understand clearly the growth and efficiency of the MFIs in the given period. While the previous chapter basically deals with the overall development of the microfinance sector of the country, this chapter is specific and limits itself to the trends and growth of the sector based on definite and widely accepted indicators.
2.1.Direct employment generation by employing staffs by MFIs:
Up to December 2015, the 506 MF-NGOs including the Grameen Bank (GB), BRAC and ASA have created employment for 233,503 personsof which 142,801 (61%) are directly related to microfinance (Table 2.1). Over the period of last five years, the total staffs have grown 38.58% in 2015 while the average growth is 9.64%. On the other hand, in case of credit related direct programs, the staff growth rate has been 50.92% while the average growth has been 12.73%.In 2015 as against 2014, there has been a remarkable growth in total staff as well as in credit programs, which are 9.64% and 12.73% respectively. In 2012 total staff growth and credit staff growth was the highest during the last five years, which were 25.53% and 26.20% respectively.
Table 2.1: Growth of staff employed by MFIs
(As of December)
Year / MFIs reported / Total staff / Credit staffNo. / Per MFI / % change / No. / Per MFI / % change
2011 / 695 / 231,098 / 333 / 0.30 / 129,907 / 187 / 8.09
2012 / 540 / 225,858 / 418 / 25.53 / 127,632 / 236 / 26.20
2013 / 550 / 227,806 / 414 / -0.96 / 126,817 / 231 / -2.12
2014 / 511 / 230,177 / 450 / 8.70 / 133,607 / 261 / 12.99
2015 / 506 / 233,503 / 461 / 2.55 / 142,801 / 282 / 8.13
Growth in 2015 over 2011 (in %) / 38.58 / 50.92
Per year average growth (in %) / 9.64 / 12.73
Source: CDF yearly survey 2011 to 2015.
2.2.Growth of members of MFIs by location:
That the overwhelming majority of members are from rural areas is quite clear from the available data on the MF-NGOs. This appears to have direct bearing of rural-urban population ratio on MFIs rural-urban membership ratio. Prevalence of poverty in rural areas might have also contributed to this situation that caused them to have started their programs in rural areas first and, gradually, expanded their programs to urban areas. Women empowerment had been one of the prime agenda for the poverty alleviation tool both in the UN-sponsored MDGs and PRSPs in Bangladesh.
It appears from Table 2.2 that a total of about 36.23 million members have been mobilized as on December 2015 of which 32.57 million in rural and about 3.66 million in urban areas. Per MFI total members are 71,605 in 2015 with 50.52% increase over 2011. The share of rural areas in active members is about 89.90% in 2015, which was 89.92% in 2014. The difference is due to the fact that in 2014 a total of 511 MFIs provided data as against 506 MFIs in 2015. Furthermore in 2015, the growth of members per MFI over 2011 is 50.52% with per year average growth is 12.63%. During this five year period, the growth of members in the rural area is 48.11% and per year average growth is 12.03%. On the other hand, the picture in the urban is that the growth of members per MFI is 75.95% with per year average growth is 18.99%.
Table 2.2: Members’ growth by location
(As on December)
Year / MFIs / Total member(in no.) / Member per MFI
(in no.) / Year over year (y-o-y) change per MFI (in %)
Rural / Urban / Total / Rural / Urban / Total / Rural / Urban / Total
2011 / 695 / 30,203,216 / 2,859,124 / 33,062,340 / 43,458 / 4,114 / 47,572 / 6.61 / 2.29 / 6.22
2012 / 540 / 29,383,704 / 2,862,113 / 32,245,817 / 54,414 / 5,300 / 59,714 / 25.21 / 28.83 / 25.52
2013 / 550 / 28,972,199 / 3,036,724 / 32,008,923 / 52,677 / 5,521 / 58,198 / -3.19 / 4.17 / -2.54
2014 / 511 / 30,610,635 / 3,428,296 / 34,038,931 / 59,903 / 6,709 / 66,612 / 13.72 / 21.52 / 14.46
2015 / 506 / 32,569,465 / 3,662,814 / 36,232,279 / 64,367 / 7,239 / 71,605 / 7.45 / 7.90 / 7.50
Growth in 2015 over 2011 (in %) / 48.11 / 75.95 / 50.52
Per year average growth (in %) / 12.03 / 18.99 / 12.63
Source: CDF yearly survey 2011 to 2015.
2.3.Borrower-Member ratio:
In MFIs all members by turn access to loan facilities. But there is a period when loan is liquidated by them and such borrowers have to wait for some time for the next loans. So at any point of time 100% members cannot be borrowers. The average borrower-member ratio during the five years shows that the ratio is 81.68% in 2015, which is pretty high. In 2011, the ratio was 82.18% which was a bit higher.The Table 2.3 shows that the borrower-member ratio since 2011 began to fall slightly. This ratio is quite close.
The table further shows that during the years the members’ growth has been 50.52% while the borrowers’ growth 49.59%. Per year members’ average growth is 12.63% and that of the borrowers is 12.40%. During the five year span both increase and decrease has occurred in the growth of members and borrowers per MFI. The negative growth is not an issue to be concerned with. In the MFI sector many members on their own cease to become members and borrowers after liquidation of loans. Sometimes many MFIs shutdown branches due to continued losses and hence the number of members’ and borrowers’ decline. This is a normal phenomenon in microfinance.
Table 2.3: Growth of members and borrowers per MFI and borrower-member ratio
(As of December)
Year / MFIs reported / Member per MFI / Borrower per MFI / Borrower % of memberNo. / % change / No. / % change
2011 / 695 / 47,572 / 6.22 / 39,097 / 11.11 / 82.18
2012 / 540 / 59,714 / 25.52 / 48,060 / 22.93 / 80.48
2013 / 550 / 58,198 / -2.54 / 46,677 / -2.88 / 80.20
2014 / 511 / 66,612 / 14.46 / 53,311 / 14.21 / 80.03
2015 / 506 / 71,605 / 7.50 / 58,486 / 9.71 / 81.68
Growth in 2015 over 2011 (in %) / 50.52 / 49.59
Per year average growth (in %) / 12.63 / 12.40
Source: CDF yearly survey 2011 to 2015.
2.4.Savings growth of MFIs:
The practice of savings mobilization from the members can be traced as early as the MFI formation or microcredit program initiation year. Usually, the MFIs mobilize savings from their members through flexible and mandatory savings. The more the amount of net savings the higher is the retention rate of the members in the program.
2.4.1.Savings growth by location: In 2015, total net savings mobilization of the 506 reporting MFIs from their members is Tk. 270,690million of which 90.30% is from rural areas and the rest 9.70% from urban areas. Total net savings mobilized per MFIs by members increased by 20%, the rural savings grew 20% and the urban savings 27%. On the other hand, growth of net savings per MFI in 2015 over 2011 is 99.61%. The rural and urban savings per MFI during this time are 90.94% and 245.92% respectively. Per year average growth of net savings per MFI is calculated at 24.90%. This growth figure per MFI has been calculated at 22.73% in the rural and 61.48% in the urban areas. The growth of this indicator is certainly indicative of MFIs holding stronger footing in the sector over the years. Year to year changes of net savings per MFI follow both increase and decrease pattern over the last five years.
Table 2.4.1: Savings growth by location
(As of December)
(Tk. in million)
Year / MFIs / Total net savings / Net savings per MFI / Year over year (y-o-y) changes per MFI (in %)Rural / Urban / Total / Rural / Urban / Total / Rural / Urban / Total
2011 / 695 / 175,988 / 10,165 / 186,152 / 253 / 15 / 268 / 28.43 / 25.00 / 28.23
2012 / 540 / 145,935 / 11,953 / 157,888 / 270 / 22 / 292 / 6.72 / 46.67 / 8.96
2013 / 550 / 176,887 / 15,923 / 192,810 / 322 / 29 / 351 / 19.26 / 31.82 / 20.21
2014 / 511 / 205,988 / 21,143 / 227,131 / 403 / 41 / 444 / 25.16 / 41.38 / 26.50
2015 / 506 / 244,434 / 26,256 / 270,690 / 483 / 52 / 535 / 19.87 / 26.56 / 20.49
Growth in 2015 over 2011 (in %) / 90.94 / 245.92 / 99.61
Per year average growth (in %) / 22.73 / 61.48 / 24.90
Source: CDF yearly survey 2011 to 2015.
2.4.2.Savings mobilization per member and borrower: MFIs performanceunder this indicator appears to be quite satisfactory. Average net savings mobilized per member continued with an impressive growth of 32.70%per year since 2011. Per year average growth is 8.17%. Generally per member savings has been on the rise. On the other hand, savings per borrower rose from Tk.6,851in 2011to Tk. 9,147 in 2015 resulting in 33.51% increase. Per year average savings growth of borrower has been 8.38%. Borrowers’ savings growth had both rise and fall during these years. Details are in (Table 2.4.2).
Table 2.4.2: Year-wise savings per member and borrower of MFIs
(As of December)
(in Tk.)
Year / Savings per member / Savings per borrowerTk. / % changes / Tk. / % changes
2011 / 5,630 / 20.92 / 6,851 / 15.61
2012 / 4,896 / -13.04 / 6,084 / -11.20
2013 / 6,024 / 23.04 / 7,510 / 23.44
2014 / 6,283 / 4.30 / 8,338 / 11.03
2015 / 7,471 / 18.91 / 9,147 / 9.70
Growth in 2015 over 2011 (in %) / 32.70 / 33.51
Per year average growth (in %) / 8.17 / 8.38
Source: CDF yearly survey 2011 to 2015.
2.5.Trend in lending behavior:
The year 2015 has been found in this review to be a year of modest growth after boost in the two preceding years in terms of both borrowers as well as loan size.
2.5.1.Loan disbursement of MFIs:This review has found that in 2015, a total of Tk. 827,768.40 million was disbursed by 506 reporting MFIs which was Tk. 647,215.61 million in 2014 by 511 MFIs resulting in 28% increase in disbursement. However, since 2011 the disbursement has increased 88% (Table 2.5.1). However, per MFIs loan disbursement has increased to Tk. 1,635.91 million in 2015 compared to Tk. 1,266.57 million in 2014 registering an annual growth of 29.16%. Such growth of per MFI loan disbursement was much higher in 2011 and 2012, which was 31.71% and 45.60% respectively. Notably the growth of disbursement per MFI in 2015 over 2011 is 158.23%. Per year average growth has been calculated at 39.56%.
Table 2.5.1: Annual growth in loan disbursement
(As of December)
(Tk. in million)
Year / MFIs reported / Total disbursement during the year / Per MFI disbursementTk. in million / % change
2011 / 695 / 440,288.84 / 633.51 / 31.71
2012 / 540 / 498,101.88 / 922.41 / 45.60
2013 / 550 / 566,841.57 / 1,030.62 / 11.73
2014 / 511 / 647,215.61 / 1,266.57 / 22.89
2015 / 506 / 827,768.40 / 1,635.91 / 29.16
Growth in 2015 over 2011 (in %) / 158.23
Per year average growth (in %) / 39.56
Source: CDF yearly survey 2011 to 2015.
2.5.2.Average size of loan disbursed:Over the period under review (2015), the overall size of loan per borrower is observed to be higher than immediate past years. Average loan size per borrower is around Tk. 27,340 of the reporting 506 MFIs in 2015 compared to Tk. 24,243 in 2014 of 511 MFIs. The overall growth per loanee in 5 years (2011-2015) has been worked at 48.69% indicating per year growth of loan size per borrower during the period at 12.17% [Table 2.5.2]. The loan size growth is generally significant but shows a fluctuating pattern.
Table 2.5.2: Loan size per borrower
(As of December)
Year / MFIs reported / Loan disbursement duringthe year (Tk. in million) / Loanee in the year(in no.) / Loan size per loanee
Tk. / % changed
2011 / 695 / 440,288.84 / 23,944,796 / 18,388 / -
2012 / 540 / 498,101.88 / 23,570,155 / 21,133 / 14.93
2013 / 550 / 566,841.57 / 25,495,307 / 22,233 / 5.21
2014 / 511 / 647,215.61 / 26,697,271 / 24,243 / 9.04
2015 / 506 / 827,768.40 / 30,276,576 / 27,340 / 12.78
Growth in 2015 over 2011 (in %) / 48.69
Per year average growth (in %) / 12.17
Source: CDF yearly survey 2011 to 2015.
2.5.3.Outstanding loan of MFIs:Outstandingloan is indicative of balance amount of loan generally after repayment by the borrower on the on-going business. Loan portfolio is a liability of the borrower to the MFI. Again it is MFI’s current assets. The bigger the portfolio of the MFI, the higher will be its interest income or service charge. In the year 2015, the amount of outstanding loan of the 506 reporting MFIs is Tk.521,829.36 million, which was Tk. 409,965.57 million of 511 MFIs resulting in the increase of 27%. The Table 2.5.3 shows that the outstanding loan per MFI has increased to Tk. 1,031.28 million in 2015 from Tk. 402.61 million in 2011 registering a growth of 156.15%% while per year average growth of MFI loan outstanding has been39.04%in 2015.
It is important to analyze the average per borrower outstanding loan since this is the amount that remains with the borrower to be utilized as small capital. In 2011, per borrower outstanding loan was only Tk.10,298, which has increased to Tk. 17,633 in 2015 resulting in an increase of 71.23%, while per year average growth was 17.81%. This shows that the loan handling capacity of the borrower has enormously increased. Per borrower loan outstanding continued to rise over the last five years. In case of per MFI loan outstanding there is both increase and decrease situation.
Table 2.5.3: Trend of outstanding loan and borrowers
(As of December)
Year / MFIs reported / Outstanding borrower / Outstanding loan(Tk. in million) / Per MFI outstanding loan / Per borrower loan outstanding (in Tk.)
Tk. in million / Yearly change (in %)
2011 / 695 / 27,172,553 / 279,815.51 / 402.61 / 40.40 / 10,298
2012 / 540 / 25,952,400 / 311,044.01 / 576.01 / 43.07 / 11,985
2013 / 550 / 25,672,383 / 348,053.22 / 632.82 / 9.86 / 13,557
2014 / 511 / 27,241,897 / 409,965.57 / 802.28 / 26.78 / 15,049
2015 / 506 / 29,594,065 / 521,829.36 / 1,031.28 / 28.54 / 17,633
Growth in 2015 over 2011 (in %) / 156.15 / 71.23
Per year average growth (in %) / 39.04 / 17.81
Source: CDF yearly survey 2011 to 2015.
2.5.4.Recovery rate:Loan recovery rate is an important issue for the MFIs. From the repaid loan comes both principal amount and the interest income or service charge. An MFI with a good recovery rate can lend money to its clients better and move towards sustainability with service charge income. During the period under review (2015), loan recovery rate has been found to be at the highest level (98.56%) than most of the previous years since 2011. Thelowest recovery rate was 94.92% in 2013. Overall, the loan repayment rates of MFIs have been found to be very satisfactory except 2013where the rate was slightly lower than 95%. The loan recovery rate in 2015 is higher by 3.01% in terms of growth over 2011. Again per year average growth rate of recovery is 0.75%. During the last five years, both increase and decrease in the growth of recovery rates are noticed.
Table 2.5.4: Year-wise loan recovery rate of MFIs
(As of December)
Year / MFIs reported / Loan recovery rate (in %) / % Change2011 / 695 / 95.68 / 1.30
2012 / 540 / 98.23 / 2.67
2013 / 550 / 94.92 / -3.37
2014 / 511 / 98.39 / 3.66
2015 / 506 / 98.56 / 0.17
Growth in 2015 over 2011 (in %) / 3.01
Per year average growth (in %) / 0.75
Source: CDF yearly survey 2011 to 2015.
2.5.5.Overdue loan: The overdue loan is a term in the microfinance terminology denoting some kind negative connotation in the performance of an MFI. Overdue loan has been increasing slowly since 2011 and has stood at Tk. 13,399.99 million in 2015. The overdue loan as percentage of loan outstanding has been gradually falling since 2011 (4.13%) and reached at 2.57% in 2015. This overdue /loan outstanding ratio is not that worrying. In context of rising trend, the overdue loan is also increasing. Per MFI overdue loan is also gradually rising. The average growth of overdue is 59.24% during the last 5 years while per year average growth is 14.81%.
Table 2.5.5: Trend of overdue loan of MFIs
(As of December)
Year / MFIs reported / Overdue loan / Overdue % of outstanding / Per MFI overdue loanTk. in million / % Change
2011 / 695 / 11,557.38 / 4.13 / 16.63 / 84.37
2012 / 540 / 11,773.30 / 3.79 / 21.80 / 31.09
2013 / 550 / 12,225.83 / 3.51 / 22.23 / 1.97
2014 / 511 / 15,344.62 / 3.74 / 30.03 / 35.09
2015 / 506 / 13,399.99 / 2.57 / 26.48 / -11.81
Growth in 2015 over 2011 (in %) / 59.24
Per year average growth (in %) / 14.81
Source: CDF yearly survey 2011 to 2015.
2.6.Trend of contribution of various sources of loan fund:
During the process of review of the MFIs performance over the year 2015, the reporting MFIs have been found managing funds for loan disbursement from 6 major sources. These were categorized into six main types that include members’ savings, loans from different sources, internal funds, excess income, donors grant and others.
If we look at the 5 years fund scenario it will be seen a coherence in all the years. The net savings is followed by loans, internal funds and surplus. The percentage of donor fund is extremely insignificant.During the last 5 years, it has decline 1.75% (2011) to 0.57% in 2015.This review has found that the members’ savings was the largest source of fund for the MFIs. Moreover, as the major source members’ net savings continued to be the single most important source of loan fund. This is a less expensive source of fund. There is, however, huge potential of savings collection particularly in the rural areas. But due to the limitation of current regulation, savings cannot be mobilized to the desired level. Despite the fact, the members’ savings still has been playing a significant role in expanding microfinance sector over the last few decades.During 2015, members’ savings was (44.51%), loans (19.72%), Internal funds (20.47%), Surplus income(11.76%), Donors grants (0.57%) and other sources (2.98%). As the microfinance program is expanding the quantum of loans is also rising. Internal fund is also a good strength of the organization. This is also showing a rising trend.
Table 2.6: Trend of contribution of sources of loan fund by category(in %)
(As of December)
Sl. / Fund source category / 2011 / 2012 / 2013 / 2014 / 2015 / All1 / Members’ savings / 54.38 / 45.75 / 44.01 / 43.68 / 44.51 / 46.47
2 / Loans / 17.28 / 18.69 / 17.83 / 17.85 / 19.72 / 18.27
3 / Internal funds / 17.36 / 25.25 / 26.83 / 26.62 / 20.47 / 23.31
4 / Surplus income / 6.99 / 8.35 / 8.98 / 9.71 / 11.76 / 9.16
5 / Donors grant / 1.75 / 1.01 / 1.10 / 0.84 / 0.57 / 1.05
6 / Others / 2.24 / 0.93 / 1.26 / 1.30 / 2.98 / 1.74
Total / 100.00 / 100.00 / 100.00 / 100.00 / 100.00 / 100.00
Source: CDF yearly survey 2011 to 2015.
2.7.Conclusions:
Microfinance has recently has gained considerable importance in the financial sector due to its effective role in poverty reduction especially among the rural poor. This chapter has presented a picture of the microfinance performance of the 506 MFIs. The available statistics of 5 years from 2011 to 2015 on different indicators has provided a clear idea of the trends and growth of this sector. It has been quite evident that remarkable growth has been achieved in many indicators including borrower-member ratio, loan disbursement, the size of loan per borrower, net savings per member, loan outstanding and loan recovery rate. This sector has emerged as the most vibrant financial sector in the country’s economy. The chapter further has revealed that although donors’ grant played role as the major source of fund for quite long in the past, today members’ net savings has become a prime source. Besides, own fund, excess income, bank loan and loan from PKSF are also most dependable sources for the MFIs. The sector will is almost free from donor fund. In a few years donor fund will be become nil. Thanks to all the donors that supported the microfinance sector so much in the past.What is imperative now is to create provisions in the microcredit regulation so that MFIs can mobilize more savings from the general public as well andMFIs thus could be legally equipped to materialize this objective. This is most important to spur rural development of the country.
Bangladesh Microfinance Statistics 2015 | CHAPTER 02 | 1