Micro Credit Practices of the Organized Sectors in Bangladesh

Micro Credit Practices of the Organized Sectors in Bangladesh

Executive summary

Microcredit lending programmes have certain salient features that distinguish them from conventional banks. Microcredit was invented as a strategy for survival of the poor. The mission of Microcredit has been guided by:

• Reaching the poorest
• Reaching and empowering women
• Building financially self-sufficient institutions
• Ensuring a positive measurable impact on the lives of the clients and their families.

In order to accomplish the above mission organized sectors like as: Nationalized commercial banks (NCBs), Private commercial banks (PCBs), Development banks, NGOs, Co-operatives, Ministries, and Directories & Divisions had taken extensive Programme of rural credit and micro financing activities for the last couple of years.

NGOs contribution is significant in this sector with high recovery records. A total of tk.55,207.28 crore credit has been extended by the leader NGOs up to June 2007. Where as their total recovery amount was tk. 48,446.10 crore. That is almost 88% of the total disbursement.

The govt. of Bangladesh with its mandate to alleviate poverty has taken Microcredit programmes as one of the best interventions through 13 different ministries, directorates and divisions. Total disbursement of Microcredit up to 2007 was tk. 8668.99 crore and recovery was tk. 7333.4 crore. With some exception all of the agencies are doing better over time for the development of the rural poor and destitute people. But in this case more efficiency and transparency is required.

Nationalized banks and other development banks also contributes a lot and disburse total of tk. 12502.93 crore and recovery was tk.12255.82 crore. Human resources development and proper monitoring is very important in this case to ensure the ultimate vision.

Problems of screening, incentives and reinforcement should be solved by the group lending approach to get the real fruit of rural and Microcredit that will be an effective tool for poverty alleviation and development of low income groups of people.

Microfinance & Microcredit: overview

Microfinance has evolves as economic development approach intended to benefit low income women and men. The term refers to the provision of financial services to low-income clients including the self employed.

Financial services generally include savings and credit however some microfinance organizations also provide insurance and payment services. In addition to financial intermediation many MFIs provide social intermediation services such as group formation, development of self confidence, and training in financial literacy and management capabilities among members of a group.

Thus micro-finance includes both financial intermediation and social intermediation. Micro finance is not simply banking it is a development tool.

Microcredit program in Bangladesh is implemented by NGOs, Grameen Bank, different types of government-owned banks, private commercial banks, and specialized programs of some ministries of Bangladesh Government etc. Despite the fact that more than a thousand of institutions are operating microcredit program, but only 10 large Microcredit Institutions (MFIs) and Grameen Bank represent 87% of total savings of the sector (around BD taka 93 billion) and 81% of total outstanding loan of the sector (around BD taka 157.82 billion). Near about two hundred thousand people are employed in MFIs and Grameen Bank. Around 30 million poor people are directly benefited from microcredit programs. Through the financial services of microcredit, these poor people are engaging themselves in various income generating activities. At present, financial service of BD taka 160 billion (approx.) is being rendered among 30 million poor people which help them to be self-employed that accelerates overall economic development process of the country.

Microcredit Institutions have been providing various social and financial services to the poor to alleviate poverty from the society for the last three decades. However, they remained outside any central supervisory system. To bring microcredit sector under regulatory framework, the government of Bangladesh enacted “Microcredit Regulatory Authority Act, 2006” on July 16, 2006 with effect from August 27, 2006. Microcredit Regulatory Authority (MRA) has been established under this Act which is empowered and responsible to monitor and supervise the microcredit activities of the MFIs.

Microfinance activities

• Usually microfinance activities involve the followings:
• Small loan, typically for working capital
• Informal appraisal of borrowing and investments
• Collateral substitutes such as group guarantees or compulsory savings
• Streamlined loan disbursement and loan, monitoring
• Secure saving products.

Although some MFIs provide enterprise development services such as skill training and marketing and social services such as literacy training and health care these are not generally included in the definition of microfinance.

Providers of microfinance funds

Microfinance provides by the following agencies.

Formal sector

1. Central bank

2. Banks

§ Commercial banks

§ Merchant banks

§ Savings banks

§ Rural banks

§ Postal banks

§ Labor banks

§ Cooperative banks

3. Development banks

§ State owned

§ private

4. Other NBFIs

5. Govt ministries and divisions

Microfinance also provides by different semiformal and informal sectors.

Clients of microfinance funds

Microfinance clients are typically:

• Self employed(male & women)
• Low-income entrepreneur(male & women). They may be:

• Traders
• Street vendors
• Small farmers
• Service providers( hairdresser, rickshaw drivers, artisans etc)

Causes of microfinance growth

Microfinance is growing for several reasons:

1. The promise of reaching the poor. Microfinance activities can support income generation for enterprise operated by low-income households
2. The promise of financial sustainability. Microfinance activities can help to build financially self sufficient, subsidy free, often locally managed institutions
3. The potential to build on traditional system. This can make microfinance services more attractive to a large number of low income clients.
4. The growing number of success stories. There is an increasing number of well- documented 7 innovative success stories in setting as diverse as rural; Bangladesh, urban Bolivia and rural Mali.
5. The availability of better financial products as a result of experimentation and innovation. Like as:

§ Collateral free group lending

§ Character based approach

§ High frequency of repayment collection

§ Use of social and peer pressure for better use & repayment

§ Staff incentives

§ Lowering transaction costs through group sharing

Microfinance & rural banking operations of organized sectors

Organized sectors

Microfinance and rural banking activities when done by an agency regulated by rules of law is called organized sector. Organized sectors involves in microfinance activities are:

• Nationalized commercial banks(NCBs)
• Private commercial banks (PCBs)
• Development banks
• NGOs
• Co-operatives
• Ministries, Directories & Divisions

Nationalized Commercial Banks (NCBs)

Sonali Bank

Overview

Overview of the Bank Sonali Bank Limited, the largest & leading commercial bank of the country, came into being in 1972 immediately after the emergence of Bangladesh as an independent state. A fully state-owned enterprise, the bank has been discharging its nation-building responsibilities by undertaking government entrusted different socio-economic schemes as well as money market activities of its own volition, covering all spheres of the economy. Sonali Bank Limited singularly enjoys the prestige of being the agent of the Central Bank of Bangladesh in such places where the guardian of the money market has chosen not to act by itself.

Sonali Bank Limited is governed by a Board of Directors consisting of 9(nine) members headed by a Chairman.

The Bank is headed by the Chief Executive Officer & Managing Director, who is a well-known Banker and a reputed professional. The head office of the bank along with its corporate structure is located at Motijheel, Dhaka, the main commercial center of the capital.

Some notable features of the Bank are as follows:

Vision

Socially committed leading banking institution with global presence.

Mission

Dedicated to extend a whole range of quality products that support divergent needs of people aiming at enriching their lives, creating value for the stakeholders and contributing towards socio-economic development of the country.

Rural Credit

Bangladesh is primarily an agricultural country. A major portion of her population ( about 85%) live in the rural areas. About 75% of the active rural population depend on agriculture as the main source of their livelihood. Agriculture contribute about 22% to the GDP. Majority of the farmers are either small or marginal. So Credit plays a paramount role to augment the capital base to support agriculture production. With this end in view. Sonali Bank Limited the largest state owned commercial bank has been playing a vital role in the socio-economic development & poverty alleviation since 1973. Keeping in view that Credit is one of the many inputs that complete the cycle of agricultural production Sonali Bank extending rural credit through 1179 branches over the country.

Sonali Bank Limited introduced indirect rural credit in 1973 through the then IRDP (Now BRDB) there after continuing lending in the following programs:

01) Crop Loan (Special Agricultural Credit Program)

As per Government decision this program was introduced in 1977 to increase crop production (credit to subsistence and marginal farmers as well as share-cropers for raising seasonal crops). Now this program is continuing through 707 branches among the farmers of 1639 unions. Recently Sonali Bank Limited introduced Revolving Crop Credit Limit System from one branch of each district.

02) Special Investment Program
This program was introduced in 1993 for creating self employment by establishing small & medium farms (Poultry, Dairy & Fishery) through bank finance. Under this program credit is extended through 236 selected branches over the country. Maximum ceiling of loan is Tk. 5.00 Lac

03) Farming & off farming program
This program was introduced in 1994 to involve unemployed rural people in income generating activities (Poultry, Dairy, Fishery, Horticulture, Nursery, Beef fattening) by establishing small & medium farms through bank finance. Credit is extended through all branches over the country. Maximum ceiling of loan is Tk.15.00 Lac

04) Krishi Khamar Rin Karmasuchi (Proiect)
This program was introduced is 1993 for creating new employment, increase national income & Socio economic development by establishing medium & big project (Poultry, Dairy & Fishery) through bank finance

05) Pond Fisheries credit Program
This program was designed to extend bank credit for pisciculture in derelict ponds/Tanks/water bodies in 1977 Credit is extended through 200 branches over the country. Maximum ceiling of loan is Tk.5.00 Lac

06) Fertilizer Dealers Credit Program
This program was introduced to extend bank credit among the approved fertilizer dealers operating at primary distribution point of BADC for lifting their quota of Fertilizer from BADc for ultimate distribution among the farmers in 1981

07) Sugarcane production loan program in mill Zone area
This program was introduced in 1975 to increase sugar production. Under this program credit is extended to 11 (eleven) sugar mills for ultimate disbursement among their affiliated farmers.

08) Social Forestation Program
This program was introduced in 2004 to increase forestation and to reduce greenhouse affect. Credit is intended through all branches over the country. Maximum ceiling of this program is Taka 5.00 lac.

Micro credit

Poverty alleviation has appeared to be the focal point of all policy formulation and development issues of the nation. As such, it has been globally accepted as an effective strategy for poverty alleviation in one hand and generating employment opportunities on the other.
In commitment to reduce poverty in urban, semi-urban and rural areas, Sonali Bank Limited has started functioning in Micro Credit through a full pledged micro credit division in its Head Office in the year 2003. Presently, 32 projects/programmes are being run under the control and supervision of this Division. Among all others programmes, Bank-NGO Linkage program and Credit for Urban Women Micro Enterprise Development (CUMED) in Dhaka City, Goat rearing, Lamb rearing, Fruit, Herbal, Medicinal and Nursery Project, Micro- enterprise program- ‘Unmesh’ in Moulavibazar district, MSFSCIP in Kurigram district, Loan for Disable Persons etc. deserve special mention for channelising the financial resources into the various potential avenues of microfinance.
Sonali Bank Limited jointly with Swanirvar Bangladesh, BRDB and ADB has been providing huge investible funds into the different Upazillas within the country. 152 Upazillas have been covered by the Rural Livelihood Programme (RLP). Further, this Division has provided taka 179.09 crore to 68 NGO’s under its widely accepted Bank-NGO Linkage Programme on whole sale basis and whose recovery rate is 100%. Specially, for the disable people Disable Loan Programme has been undertaken to bring the disable section of the people under the micro credit facilities.

The Goat Rearing Programme undertaken by this Division has been running with a remarkable impact in reducing the rate of massive- scale rural poverty. Sonali Bank has already disbursed 46.47 crore upto 31 December, 2007.
Further, in order to create employment opportunities and to generate income of the rural people two loan schemes under the name and style ” Rural Small Farming Loans scheme ” and “Rural Small business loan” scheme have been introduced in-2004 . In both the programs there is a provision of collateral free loan upto Tk. 50,000/- . In 2006 a new program has been introduced named ‘‘ Daridra Bimochane Sahayta Karmasuchi’’for the extremely ‘Monga’ affected rural people. Moreover, in 2007 a special program has been introduced for SIDR affected 12 areas in which there is a provision of collateral free loan upto TK.20,000/-.
Upto December 2007, Tk. 3299.47 crore has been disbursed under various project/ programs of this Division where as this disbursement figure was Tk. 3056.63 crore upto December 2006. The key features of some running projects/Programs of Micro Credits given as follows: – Features:

Micro-Credit Programmes

Credit disbursement

• Micro credit disbursement scenario

Credit recovery

• Micro credit recovery scenario

Rate of recovery

• Micro credit rate of recovery scenario

Sonali bank is the largest nationalized commercial bank of the country. Microcredit disbursement level going down over time but positive is their recovery rate. In some cases they recovered more than their specified target. That is above 100 %(> target).

Agrani Bank Limited

Agrani Bank Limited, a leading commercial bank with 867 outlets strategically located in almost all the commercial areas throughout Bangladesh, overseas Exchange Houses and hundreds of overseas Correspondents, came into being in 1972 immediately after the emergence of Bangladesh as an independent state. It started functioning as nationalised commercial bank taking over assets and liabilities of the erst while Habib Bank ltd and commerce Bank ltd. functioning in the East Pakistan.

It has been corporatised on 15th November.2007 and emerged as Agrani Bank Limited(ABL) taking over assets, liability and goodwill of Agrani Bank.

Agrani Bank Limited is governed by a Board of Directors consisting of 11(eleven) members headed by a chairman. The Bank is headed by the Managing director & Chief Executive Officer; Managing director is assisted by Deputy Managing Director and General Managers.

The bank has 7 Circle offices, 30 Divisions in head office, 52 zonal offices and 867 branches including 10 corporate and 40 AD( authorized dealer) branches. The corporate and AD branches are authorized to deal in Foreign exchange business.

The authorized capital of the Bank is Tk. 800 crore.

Present Capital Structure

Authorized Capital :Tk. 7000 million (US$ 120.70 million)

Paid up Capital: Tk. 1250 million (US$ 21.55 million)

Break up of paid up Capital

(a) Government shareholding: 93.23%

(b) (b) Private shareholding :6.77%

Number of Branches

Rupali Bank operates through 492 branches. It is linked to its foreign correspondents all over the world.

Mission

The bank participates actively in socio-economic development of the country by performing commercially viable and socially desirable banking function.

Bangladesh is mainly a land of agriculture. A vast majority of our people live in the rural areas and their main source of income is agriculture and agro-business. To produce agricultural output, promote agro-business, facilitate agro-based services, create and sustain employment opportunities, Rupali Bank Ltd. is disbursing agricultural loan/rural credit through its 401 branches all over the country.

Sectors of Financing

Rupali Bank Ltd. extends credit to the following rural sectors:

• Fishery
• Livestock
• Shrimp culture
• Poverty Alleviation Programme
• Micro Credit
• Agricultural product processing and marketing

Micro-credit Programme

Credit disbursement

• Micro credit disbursement scenario

Credit recovery

• Micro credit recovery scenario

Rate of recovery

• Micro credit rate of recovery scenario

Agrani banks disbursement level of Microcredit is going up gradually. Simultaneously the recovery level and the rate of recovery. This is the most performing bank among nationalized sectors in case of Microcredit Programme.

Janata Bank Limited

Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk. 800 crore (approx. US$ 116.79 million), paid up capital of Tk. 259.39 crore (approx. US$ 37.87 million) and reserve of Tk.292.67 crore (approx. US$ 42.73 million). The Bank has a total asset of Tk. 24406.11 crore (approx. US$ 3562.94 million) as on 31^st December 2007. Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were nationalized and renamed as Janata Bank Limited.

· Janata Bank Limited operates through 848 branches including 4 overseas branches at United Arab Emirates. It is linked with 1198 foreign correspondents all over the world.

• The Bank employs more than 13(Thirteen) thousand persons.
• The mission of the bank is to actively participate in the socio- economic development of the nation by operating a commercially sound banking organization, providing credit to viable borrowers, efficiently delivered and competitively priced, simultaneously protecting depositors funds and providing a satisfactory return on equity to the owners.
• The Board of Directors is composed of 11 (eleven) members headed by a Chairman. The Directors are representatives from both public and private sectors.
• The Bank is headed by the Chief Executive Officer & Managing Director, who is a reputed banker.
• The corporate head office is located at Dhaka with 10 (ten) Divisions comprising of 37 (thirty seven) Departments.

Micro Enterprize & Special Credit

The Micro Enterprise & Special Program Division (MESPD) is responsible for implementing of (i) Micro Credit Programs related with the poverty reduction, (ii) Special credit programs related with employment generation and (iii) Financing of agro-based industries.

Bank has different micro-credit programs of its own & in collaboration with other agencies. For successful implementation of these credit programs specially poverty reduction credit programs it requires close supervision and monitoring. Considering Bank’s manpower/field staff it is not always possible to ensure intensive supervision at the grass root level. To make the micro credit programs time & cost effective bank has initiated linkage program using intermediaries/collaborating agencies (GOs & NGOs). Collaborating agencies are responsible for organizing the target groups (conducting survey, formation of groups, providing training etc.) including supervision and recovery of credit.

Microcredit Programme

Credit disbursement

• Micro credit disbursement scenario

Credit recovery

• Micro credit recovery scenario

Rate of recovery

• Micro credit rate of recovery scenario

Disbursement of Microcredit increases at a decreasing rate in the early year but increasing at the later period. But their rate of recovery or the recovery level is not up to the mark. They have failed to recover their targeted amount.

Rupali Bank

Micro-credit Programme

Credit disbursement

• Micro credit disbursement scenario

Recovery level

• Micro credit recovery scenario

Rate of recovery

• Micro credit rate recovery scenario

Micro credit Programme of Rupali bank ltd was highest in 2005 &2006 but decreased from 2007. It is a matter of satisfaction that their recovery level and rate of recovery is going up over time. Though they have failed to recover their targeted amount up to 2006.

A number of Microcredit programmes have been initiated by the sate owned nationalizes commercial banking sector.

A large number of projects are in extending credit opportunities under Sonali bank. Approximately 8.1 million poor families have the opportunity of employment through these programmes. Microcredit programmes are targeted primarily for enterprising women without nay collateral securities. In addition physically handicapped and acid burn victims are given Microcredit on a soft term basis. Apart from its banking vision Sonali ban is directly contributing to the social capital development and empowerment of women

Janata bank model branch Programme uses area surveys for identifying self-employment opportunities and providing Microcredit to the rural poor for income generating activities especially in

• Small businesses
• Cottage industries
• Irrigation
• Seasonal crop raising
• Fisheries and
• Live stock etc.

Other nationalized banks have also come forward in the Microcredit sector with their diversified products.

Private Commercial (PCBs) & Specialized Banks

Islami Bank Bangladesh Ltd

Establishment and overview

Islami Bank Bangladesh Ltd was incorporated as the first Shariah based interest free bank in South –East Asia on the 13^th March 1983 as a public ltd company with limited liability under the companies act 1913.

Corporate information (31.12.07)

Mission

• To establish Islami banking through the introduction of a welfare oriented banking system
• To ensure equity and justice in the field of all economic activities
• To achieve balanced growth and equitable development through diversified investment operations particularly in the priority sectors and less developed area of the country
• To encourage social economic uplift and financial services to the low income community particularly in the rural areas.

Vision

• To establish and maintain modern banking techniques to ensure the soundness and development of the financial system based on Islamic principles
• To become the strong and efficient organization with highly motivated professionals
• To encourage savings in the form of direct investment
• To encourage investment particularly in projects which are more likely to lead to higher employment.

Management of IBBL

A Board of directors consists of directors, now, 13 in number elected from and amongst the foreigners and local shareholders provides the policy guidelines to Islami Bank Bangladesh Ltd. The BOD for smooth and effective operations of the bank form an executive committee consisting the members of the board. Besides a management committee consisting of the senior executives headed by the chief executives looks after the actual operations of the bank.

Performance highlights

• The large network of branches among private commercial banks
• On-line banking facilities in 95 branches
• 3.8million deposit customers
• Over 5 hundred thousand investment cust9omer
• 55% of total investment in industrial sector
• Employment generation for more than 1 million people
• Poverty alleviation through investment to more than 5 lac people
• Highest taxpayers in banking sector f Bangladesh

Deposits Mobilization

The year 2007 was another successful year of mobilization of deposit. Total deposit stood at tk.1,66,777 million as on 31^st December 2007 as against tk. 1,32,419 million of the preceding year registering an increase of tk. 38,358 million or 25.57% growth as compared to the growth rate of 16.7% of the banking sector during 2007. The percentage of growth rate of deposit was 26.67%

The share of deposit of IBBL in banking sector as on 31.12.2207 was as 7.48% from 7.74% as on 31.12.06.

Total trend of deposits (mn):

• Graphical presentation of deposit trends

Investment

Investment of the bank increased to tk. 1,74,058 million as on 31.12.2007 from tk. 1,13,575 million as on 31.12.2006 showing an increase of tk. 60,483 million or 40.42% growth as against 17.24% growth of investment of the banking sector. This increased investment growth of the bank in 2007 is due to the thrust given to promote investment for effective utilization of depositors fund. Te percentage of increase of investment of IBBL in 2006+ was 25.26%.

The share of investment of IBBL in banking sector as on 31.12.2007 increased to 8.27% from 7.67% as on 31.12.2006.

Total trend of investments (mn):

• Graphical presentation of investment trends

Welfare oriented Investment (Special scheme)

In addition to the normal commercial and industrial investment operations many special investment schemes like:

• Rural Development scheme
• House-hold durable scheme
• Investment scheme for doctors
• Transport investment scheme
• Micro industries investment scheme
• Agricultural implements investment scheme
• Housing investment scheme
• Real estate investment scheme
• Mirpur silk weaver investment scheme
• Poultry investment scheme
• Small business investment scheme

The schemes have been implemented and being expanded to meet the specific and welfare oriented needs of the different segments of people of the country.

The bank since its inception has been working for the upliftment and emancipation of the under privilege downtrodden and neglected sections of the population and has taken up various financing schemes for their well being. The objectives of these schemes are to raise the standard of living of low income group.

Outstanding amount of investment as at the end of year under different welfare schemes (tk. million):

Rural development scheme (RDS)

Islami bank Bangladesh ltd launched its RDS in 1995 to cater to the investment needs of the agriculture and rural sector of the country to create opportunity for employment and raising income of the rural people with a view to alleviating poverty. The scheme has been aimed at achieving an integrated growth in rural areas and gradually developing villages within 16 kilometers radius of the selected branches.

By this time the scheme expanded its operation through 129 branches of the bank in 10,023 villages of the country under 220thanas of 61 districts.

The rural poor are provided investment facilities in agriculture and 343 selected off-farm economic activities in the rural areas starting from tk. 10,000 to a maximum lt. of tk. 2,00,000.Morever the scheme is working in the area of consciousness rising of its members in order to establish moral and social standard. Year-wise data for the last 5 years on performance of the scheme are given below:

Household Durables scheme

Among the above schemes the objective of household durable scheme is to increase standard of living and quality of life of fixed income group by providing them investment facilities to purchase different household durable items.

As on 31.12.2007 investment under household durable scheme was tk. 1371.31 million among the 27,010 investment clients as against tk.699.95 million among the 27349 investment clients in 2006.

Role of IBBL in development of SMEs

SMEs play n important role in the economic and social life and can generate a large number of employments in the traditional and non-traditional sectors. Keeping this in view IBBL has set up a separate division named Small enterprise and consumer investment decision with effect from 01.01.2006 for small enterprises financing in compliances with the Bangladesh bank guidelines. Moreover IBBL is financing medium enterprises through two other divisions named project investment decision (PID) and general investment division(GID)

Investment in SMEs

The investment of IBBL in the SMEs was tk.17163.2 million as on 31.12.2007, which was abut 9.86% of the total investment of the bank. The quantum of investment of the economy and contribution to increase the per capita income of the people by creating employment opportunities

Micro-credit Programme

Other commercial and specialized banks are also continuing micro-credit programmes to alleviate poverty and create self-employment side by side with nationalized commercial banks.

Up to June 2006, the total number of beneficiaries’ was 11, 60,3,97 and the cumulative disbursement of credit was Tk.1667.57 crore. The status of micro-credit disbursement

Programme of other commercial and specialized banks is shown in Table .

Credit disbursement

• Micro credit disbursement scenario

• Micro credit disbursement scenario

Credit recovery rate

• Micro credit rate of recovery scenario

• Micro credit rate of recovery scenario

Micro credit disbursement level of Islami bank Bangladesh ltd is satisfactory compare to other private banks like as: NB, SIBL,Pubali ,Trust and some other specialized bank like BASIC and Ansar VDP bank. Ansar VDP bank also contributes a lot for the rural development of the country. In case of recovery level or rate of recovery IBBL, SIBL and Ansar VDP is better.

Micro credit disbursement and recovery level of trust bank is not worth mentioning.

Development Banks (DBs)

Bangladesh Krishi Bank

The major occupation of the people of Bangladesh is “Krishi”. Krishi is a Bengali word which means “Agriculture”. About 85% of the population depends directly or indirectly on agriculture which contributes a significant portion to GDP.

The primary objective of BKB is to provide credit facilities to the farmers for the development of agriculture and entrepreneurs engaged in development of agro-based and cottage industries.

The Bank is guided in accordance with the policies and principles of the Government of the Peoples Republic of Bangladesh. BKB has an authorized capital of Tk. 10,000 Million (Taka Ten thousand Million) only and paid up capital of Tk. 4000 Million (Taka Four thousand Million) only which is fully paid by the government. The Bank started commercial functioning since 1977 to generate more loanable fund from the idle rural and urban savings and invest them for the betterment of our economy.

The Bank operates its function through its 950 branches (except Rajshahi Division) of which 820 are rural and 130 are urban. It has 15 foreign exchange (Authorized dealer) branches. In the field level the Bank has 8 Divisional,21 Chief Regional and 30 Regional offices for close supervision of the branch activities. For smooth operation, s a part of internal control and compliance system, the bank has also 56 field level audit offices of which 5 at Divisional and 51 at Regional levels. In the Head Office the Bank has 4 Divisions headed by General Managers and 28 Departments including Local Principal Office and Training Institute headed by Deputy General Managers.

The existing strength of Bank’s manpower is 9526 against the approved strength of 11968 as on 31 March, 2008.

The Bank has a Board of Directors comprising of 11 members. The Board is headed by a Chairman. The Directors represent both public and private sectors and are appointed by the government. The Board Chairman is generally an experienced professional/ex-professional who has wide acceptability and rapport.

Poverty alleviation and Micro-credit Programs/Projects

Bangladesh Krishi Bank was established under BKB Order`1973 with the objective of strengthening rural economy by extending credit support to agricultural and agro-based sectors. In consideration of the importance of Micro-Credit and with the objective of generating employment as well as encouraging social development BKB has undertaken several Micro-Credit programs of its own and also in collaboration with local and foreign agencies. The programs have been designed to cover all segments of poor population whether skilled or unskilled such as small and marginal farmers, landless labourers, destitute women, disabled, unemployed youth and rural artisans etc. About 1417047 beneficiaries have been provided with Tk. 14469.90 million since its inception (upto 30 September,2008).

Considering the needs of the target groups since late seventy`s BKB has been implementing a series of Micro-Credit programs out of which 10 programs have recently been completed and 31 programs are in operation at present. These diversified micro-credit programs are being implemented by BKB to achieve the following objectives:

To engage rural people in development process of the country.

To eliminate exploitation done by the money lenders.To create employment opportunities through income generating activities.

To empower the rural women to establish their own rights.

To improve the living standard of the rural people.

To alleviate poverty of the poor people.

· To make easy access to institutional credit facilities and resources.

· To mobilize rural savings.

To make optimum utilization of rural resources.

To engage inactive human resources of the rural areas in productive/economic activities.

BKB`s on going Micro-Credit Programs under poverty alleviation is given below:

1. Credit program for the landless and Marginal Farmers

2. Beef fattening Joint Program:

3. Swanirvar Credit Program

4. Small Farmers & landless Labourers Development Project (SFDP)

5.South Asian Poverty alleviation program

6. United Nations Capital Development Fund(UNCDF)

7. Rural Women Employment Creation Project ADB Loan No 1067 BAN(SF)

8.BKB-NGO Micro Credit Program

9. Credit Under National Poverty Alleviation Program through Goat Rearing

10.Milching Cow Credit Program for the Women

11.Special Micro Credit Program for the Disabled

12.Monipuri Small Traders Credit Program:

13.Special Credit Program for the Rakhains under the district of Cox`s Bazar:

14.Establishment of Breeding Farm of Black Bengal Goat Program:

15.Community Based Resource Management Project

17. Poverty Alleviation through Production and Improvement of Sheep