Rotation of vicious cycle of poverty is closely related to personal and family demand and income. The dynamism of the vicious cycle is ultimately revealed when there is no income to meet the compulsory minimum demand. There is no alternative way to generate the family and personal income without proper use of assets, capabilities and potentialities. In this regard, financial services and technical support are consequently needed. But the destitute people cannot utilize their minimal assets, capabilities and potentialities owing to illiteracy and lack of financial investment. In this respect, microfinance is incorporated with a view to bringing about a positive improvement in the socio-economic condition of vulnerable people of the development-world. SSS has been providing financial services and nursing to the target people through its credit program since 1991.
Goal and Policy
The main goal of credit program is to alleviate poverty gradually from the society by providing financial assistance and diversifying and increasing income with a view to ensuring optimum alternative use of assets, capabilities and potentialities of the target people. SSS has been implementing its credit program with the following policies:
- Organizing target people;
- Removing illiteracy and superstition from the society;
- Analyzing resources and financial potentialities of the target people;
- Making them savings-oriented for the sake of increasing their capabilities and assets;
- Providing IGA-related training and technical support;
- Providing financial support in IGAs;
- Creating self and wage-based employment and ensuring women empowerment;
- Increasing accessibility in basic needs with sustainable income and thus gradually forming enriched families.
Implemented Programs and Activities
SSS has been implementing microfinance program since 1991 for providing financial services at the doorsteps of vulnerable rural and urban people. The organization gradually imparted variation to its microfinance activities with time, socio-economic development, demand of clients and under real condition and included savings, security fund, technical services, training, technology and remittance transfer activities and so on to its microfinance program. The following programs and projects have been implemented during 2016-2017:
Microfinance Activities: SSS has been implementing its microfinance activities following inclusive finance method based on demand and capabilities of group members. It has classified its group members and microfinance activities for keeping up the aspired development of the target people in a balanced way. It also adopted policies to include every social sector to the organizational services. Group-based (Samiti-based) activities have been followed with a view to alleviating social superstitions and developmental ignorance.
Generally a group is formed with 10 to 40 members. According to organizational policy, it is compulsory for every group member to include him/herself in any group for his/her accessibility in credit services. There is also classification among groups based on economic environment, gender and nature of microfinance activities. Group members have to attend the weekly meetings. In the meetings, various ways to improve financial condition, empowerment of deprived and marginal people, food-nutrition, health consciousness, education and culture etc. are discussed. At the same time, member enlistment, savings and instalment recovery, credit proposal, proposal for meeting security fund claim, microfinance policies of the organization and so on are also discussed in these meetings.
The group members can get credit at least after two weeks of membership. Based on the kind of credit program, the amount of credit may vary from Tk. 5,000 to Tk. 15,00,000. The annual declining rate of service charge is zero to 25 per cent. The repayment system may be weekly, monthly or one-time. Generally, the duration of repayment is one year, but it can extend up to maximum two years under special circumstances. Descriptions of credit related programs and projects of SSS are presented below:
Jagaran Microcredit Program: SSS has been implementing Jagaran microcredit activities with a view to providing support to common and lower-middle class families of both urban and rural region for facilitating and developing respectively their financial activities and lands. Jagaran is one of the most important microcredit programs of SSS. This program is expanded over the entire working area of the organization. The loan size under the program fixes at Tk. 15,000 to Tk. 74,000. The service charge is 25 per cent (at declining rate of interest) and the duration is one year with weekly repayment system.
Agrasar Microcredit Program: SSS provides Agrasar microcredit for the sake of creating new entrepreneurs, developing existing ones and expanding innovative and traditional activities. Agrasar is also another important component of microcredit program of SSS. Agrasar activities are expanded over the entire working area. In exchange for annual service charge of 25 per cent (declining rate), credit amount of Tk 75,000 to Tk. 15,00,000 is provided under the program. The duration of repayment is one year with weekly or monthly repayment system. Agrasar microcredit program has put the sign of widely advancement in the creation of self and wage-based employment and thus alleviating unemployment and poverty.
Sufalan Microcredit Program: SSS provides Sufalan microcredit with a view to keeping seasonal agricultural activities of its group members on-going and developing their resources and capabilities. Marginal and poor farmers keep their economic activities activated easily with the credit money avoiding their capital and technological limitations. Sufalan microcredit is mainly provided on seasonal crops and vegetable cultivation and on beef fattening. It is a supporting credit program of SSS. The credit limit in this sector may stand at Tk. 10,000 to Tk. 50,000. But a group member can receive credit up to Tk. 5,00,000 under special approval. The credit can be received with annual service charge of 25 per cent (declining rate) and the duration of credit is three to six months under one-time repayment system. The popularity of the credit is gradually ascending as the farmers get a chance of repaying the credit amount after selling their crops or cows. The program is expanded over the entire working area of SSS.
Buniad Credit Activities: Buniad credit facility is provided to the marginal, vulnerable and destitute families that do not own any visible lands or fixed assets for their livelihood and economic development. Under the program, the target people get training and technical and counsel services simultaneously for their IGA related capacity building. The credit ceiling under the program is Tk. 5,000 to Tk. 40,000 and the annual service charge is 20 per cent (declining rate). The duration of credit repayment is one year with weekly repayment system. Presently, SSS is implementing the program in the determined areas: Tangail, Gazipur, Dhaka, Sherpur, Jamalpur, Kurigram, Rangpur, Sirajganj, Bogra, Jaypurhat, Gaibandha, Pabna, Natore, Rajshahi, Kishoreganj and Mymensingh districts.
Sahas Credit Activities: SSS provides Sahas credit in the working area in order to rehabilitate the affected people both in natural and manmade disasters and bring the disaster-stricken people back to normal life. The amount of credit under the program fixes at Tk. 4,000 to Tk. 6,000 and annual service charge is four per cent (flat rate). The credit repayment system can be weekly or monthly or one-time. The duration of credit repayment is two years. SSS has specially been benefitting its group members with this kind of emergency credits.
Housing Credit: SSS started housing credit activities with a view to solving accommodation problems of families of its marginal-level homeless group members. SSS has been implementing the housing credit program in Tangail since 1999 with the funding of Bangladesh Bank. The credit amount of Tk. 70,000 is provided under the program with six per cent annual declining rate of service charge. The credit can be repaid within six years with weekly repayment system.
Special Credit Program: SSS started Special Credit Program as a subsidiary credit activity for the members under main credit program living in towns and industrial area. SSS has been implementing the program since February 2016. Members can increase their business income, facilitate any income generating activity, purchase household components, buy or lease lands, take advanced treatment, meet educational expenses of children, build or repair houses, arrange social ceremonies and so on with the borrowed money.
Group members who are the second time borrowers and do not have the opportunity to take other subsidiary credits, and who have taken credit of one lac taka or less can get the special credit facility. The duration of repayment is six months and the credit amount fixes at Tk. 10,000 to Tk. 50,000 with annual declining rate of service charge of 25 per cent. The special credit program follows monthly repayment system.
OBA Sanitation Microfinance Program: SSS started to implement the project named Microfinance Institutions Lending for Improved Rural Sanitation in Bangladesh from June 2016. The goal of the project is to increase accessibility of rural people to improved sanitary latrines. PKSF and ASA, a partner organization of PKSF and a non-government development organization have jointly been funding the project. SSS has been implementing the project under 14 of its branches of Tangail Sadar upazila. The group members of main credit program of SSS are target people of the project. The families that lack sanitary latrines can take credits under the project to installing improved sanitation system. The credit limit fixes between Tk. 5,000 to Tk. 10,000. The amount is totally free of service charge. The duration of credit is one year with weekly repayment system.
ENRICH Program, KGF and LIFT Project: Details of ENRICH program have been presented in ninth chapter, KGF project in seventh chapter and LIFT project in eighth chapter of the annual report.
Savings is a distinguished regulator in development finance. Savings always helps to increase skills and assets, it also plays a leading role for the proper use of investment and assets. With a view to fortifying clients’ capabilities and economic base by increasing their savings intention through income diversification, SSS has been implementing different types of savings activities. Presently, SSS implements four savings schemes and they are presented in Figure-2.2:
|SI||Name of Savings||Annual Profit||Minimum Savings|
|1||General Savings (GS)||6%||30 Taka|
|2||Security Savings (SSP)||6%||30 Taka|
|3||Voluntary Savings (VS)||6%||100 Taka|
|4||Fixed Deposit Receipts (FDR)||9-10%||–|
Security Fund Activities: Life and resources are always uncertain. So it is essential to protect both life and resources from the risk of undetermined future. In order to reduce death related credit risk and provide other emergency support to the debtors, SSS has been implementing security fund activities since 1999. A group member automatically comes under the activities when he/she includes himself/herself to the main credit program.
Under the Security Fund Activities, the outstanding amount of the credit is exempted if either the borrower or the selected nominee dies. Tk. 5,000 is also provided for meeting the funeral rites expenses of the member or borrower. Under security fund, the borrower also gets healthcare support of Tk. 5,000 for four types of physical adversities like caesarean delivery, operation on gallbladder stone, hysterectomy and appendicitis. Apart from that, the borrower gets special financial support for other expenses like expensive treatment, education of children, wedding, house amendment, sudden death of family member etc.
Remittance Transfer Program: SSS started Remittance Transfer Program in order to deliver foreign money to its group members in an easy and fast way. The program was introduced on 16 July 2011. Presently, SSS has been implementing the program in association with Western Union, Express Money, Moneygram and RIA. The Remittance Transfer Program is extended to the entire working area. Members of the organization and other people in the society are being specially benefitted by getting this kind of services. Remittance has been received mostly from KSA, UAE, Kuwait, Oman, Lebanon, Yemen, Syria, Qatar, USA, UK, Malaysia, Australia, Singapore.
The policies and work-strategies, training and technical assistance of SSS have made its credit program more dynamic and effective to the group members. The overall activities are eventually moving towards ultimate destination of inclusion in order to include people from all sectors of society in financial services. Member-friendly credit program of SSS has made itself popular and development-oriented. The mentionable achievements of SSS during 2016-17 are presented below:
Component-wise Progress of Credit Program:
During 2016-17, SSS has disbursed Tk. 2,762.50 crore among 6,86,202 group members under its main components including agriculture in rural and urban economy, fisheries, livestock and poultry rearing, small and cottage industry, small business, services, employment abroad and so on. The cumulated loan disbursement is Tk. 12,803.47 crore. As on 30 June 2017, total credit outstanding is Tk. 1,506.34 crore. Overall credit recovery rate is 99.68 per cent and average per head credit disbursement is Tk. 40,250.
During 2016-17, the amount of credit disbursement has increased to 39.25 per cent and number of group members to 9.24 per cent in comparison with 2015-16. Figure-2.3 presents component-wise analysis of credit disbursement in the last year.
Program and Project-wise Progress: In 2016-17, SSS has facilitated its credit activities under 11 programs and projects.
Progress of Savings Program:
Overall progress of savings: During the last fiscal year, SSS has collected savings of Tk. 424.05 crore from its group members. As on 30 June 2017, the cumulative savings outstanding stands at Tk. 577.10 crore. During 2016-17, 25.18 per cent more savings has been collected in comparison with 2015-16.
Progress of Security Fund Activities: During 2016-17, Tk. 28.81 crore has been recovered under the security fund activities. As on 30 June 2017, the outstanding amount of the security fund stands at Tk. 68.26 crore. SSS spent as much as Tk. 14.59 crore under the component.
Progress of Remittance Transfer Program: During 2016-17, SSS has transferred Tk. 12.34 crore of 4,126 group members under the program. During 2016-17, 216 per cent more money has been transferred and there is a 198 per cent increase in group members in comparison with 2015-16.