Abstract
This study seeks to contribute to the critical research on financial inclusion, specifically microfinance (with a focus on microcredit), by exploring the uses and operations of microfinance in two communities in rural Bangladesh. In the case of the community with good socio-economic and access conditions, even rich people who did not need loans were strategically involved by a MFI (Microfinance Institute) through a saving program and locally shared informal rules. On the other hand, while the poorest were financially excluded, most of the financially included were repeatedly included and excluded due to the rejection of members with overdue repayments or the withdrawal of services by some MFIs in another community with poor conditions. One of the factors for such microfinance operations was fierce multilevel competition among MFIs, local branches, and fieldworkers driven by the emphasis on financial sustainability of MFIs. The discourse and dichotomy of financial inclusion/exclusion ignores the two groups’ impermanent status and obscures structural inequalities that are required to overcome the demarginalization of the poor.
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Notes
- 1.
This paper focuses on the provision of microcredit, which constitutes the main service in microfinancing, while mentioning other financial services, such as saving and insurance, as necessary.
- 2.
- 3.
Ibid.
- 4.
CGAP is Consultative Group to Assist the Poor.
- 5.
In countries with many immigrants, such as the US and those in Western Europe, microfinance services are provided to immigrants.
- 6.
Although most of the previous studies do not specify which types of MFIs they refer to, there are various types such as one of the sectors in commercial banks and cooperative. MFIs in this paper specifically mean GB or NGOs.
- 7.
- 8.
- 9.
- 10.
Ibid.
- 11.
In this study, USD 1 = Bangladesh Taka 82.8.
- 12.
While substantial foreign aid has been delivered to the government, NGOs founded by Bangladeshi nationals, including BRAC, ASA, and later BURO, have grown significantly since the 1970s, a difficult period of disasters and after independence from Pakistan. Today, these organizations have even exceeded the capacity of the government to provide primary education and healthcare. Therefore, foreign aid has been increasingly directed to NGOs rather than to the corrupt and inefficient government, also because of the global neoliberal restructuring policy.
- 13.
Although in the case of Bangladesh, the government adopts CBN method modified by the price fluctuation in the country for poverty measurement, MFIs used to regard the poor as the landless because microfinance has been traditionally provided in rural areas.
- 14.
BRAC has a different model from GB and its group consists of from 10 to 15 women.
- 15.
For example, GB provides services in more than 97% of the total villages in Bangladesh as of December, 2015 (http://www.GB.com/introduction/).
- 16.
- 17.
The community names are pseudonyms. In South Asia, caste-like social stratification is observed among Muslims.
- 18.
When I use the data by the supplementary survey, the survey period is mentioned.
- 19.
Fieldworker is a person who provides loans to and collects weekly repayment from members; therefore he/she has face to face and the closest relationship with members in MFI officers. A newly employed MFI officer usually has to work as fieldworker for certain years, after that he/she can get a promotion.
- 20.
GB has prohibited its local branches from providing information to outsiders without permission from the head office, ever since a Bangladeshi student wrote a critical paper on GB. I submitted an application to the head office but did not receive permission.
- 21.
In Jubok, BRAC provided a non-formal education programme before my survey period and a national NGO, namely Nijera Koli, organized people’s savings till 2014.
- 22.
Among them, 3% had accounts at both formal banks and MFIs.
- 23.
Other reasons were that members of BRAC had to travel to a local office located in a village far away to obtain loans and that fieldworkers of GB made them convert to its members.
- 24.
It is considered that centre heads and members did not tell me about repayment problem in order not to embarrass the defaulters and smear Jubok samaj’s reputation. For example, one of the centre heads told me that a defaulter was forced to withdraw his/her membership in 2013 but she never opened her name.
- 25.
Such a retreat of MFIs was not limited to Tobra but was also evident in other areas and seen in Karim (2008).
- 26.
The number of members does not correspond with that in Table 6.9, because the latter does not include those who revealed they had withdrawn their membership of BRAC.
- 27.
GB set monthly targets to acquire new members. On the other hand, although NGO-3 aimed to make USD 12,370 loans each month, despite high demand, most local NGOs could not expand the number of standing loans owing to lack of capital.
- 28.
GB and national-level NGOs have reduced their branches and staff since 2008 as one measure to decrease the number of active borrowers (Chen and Rutherford 2013).
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Sugie, A. (2019). Deconstructing Financial Inclusion and Exclusion in the Development Discourse: Case Studies of Microfinance Operations in Rural Bangladesh. In: Leimgruber, W., Chang, Cy. (eds) Rural Areas Between Regional Needs and Global Challenges. Perspectives on Geographical Marginality, vol 4. Springer, Cham. https://doi.org/10.1007/978-3-030-04393-3_6
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