Bangladesh Banking

An efficient banking system, although important for economic growth, is often unable or unwillingly to lend money to the poorer section of society, hence the need for micro finance institutions. Bangladesh has long history of micro credit finance, with internationally acclaimed organization such as the Grameen Bank providing credit to the poor, particularly rural woman. These institutions, in addition to providing credit, emphasis the need to develop skills and raise consciousness among the rural poor.There are about 800 micro finance institutions in the country with a total membership of about 7 million of which 82 per cent are woman. The cumulative disbursement made by these institutions since their inception is estimated at Tk. 44 billion, with current loans at Tk.9. 6 billion. It is estimated that they have created employment for about 54,000 people.

A recent survey of 1,798 households in Bangladesh indicates that about 45 per cent of eligible households in Bangladesh participate in micro-credit programmes and that about two –thirds of the perticipants are woman. The survey found that micro-credit programmes had a positive effect on socio-economic variables, including children's schooling, children's nutrition and family planning.

Borrowing by woman particularly improved the nutritional status of both male and female children. Consumption by about 5 per cent of programme participants increased to the point that their households rose above the poverty line. These findings about the importance of micro-credit in poverty reduction have been substantainted by other studies both in Bangladesh and in other countries.