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Programe> MICRO FINANCE
Background of Micro Finance Program

IDF launched its micro-finance program in the Chittagong Hill Tracts at a small para (sub-village) of Shoalok mouza of Bandarban Hill district in 1993, with a view to poverty alleviation and sustainable socio-economic development for the poor, landless and underprivileged people through small scale Income Generating Activities (IGA).

This poor people of CHT lacked access to institutional or informal sources of credit, and a very high rate of interest ranging from 250%-1000%. The asset-less poor people do not have access even to informal sources of credit. Most small farmers who took credit from informal sources (money lenders) ended up as landless.
 
IDF started its journey with a small seed capital of US$ 7,500.00 from Grameen Trust. Initially, the tribal people were suspicious about the purpose of IDF. But in one-year time, they realized that IDF was really working for the betterment of the poor people. Then a lot of people from neighbouring areas started coming to IDF to be included in its micro finance program in spite of fragile law and order situation in the area.

The fund received from Grameen was too small to meet the growing demand. Under these circumstances, IDF approached various donors for support. Swedish International Development Co-operation Agency (Sida) responded immediately to support IDF for testing and expanding the model in the whole of the CHT area in the framework of a long-term (8 years) sustainable plan. IDF implemented the project successfully, which subsequently attracted other donors and they come forward to support IDF to fight against poverty through micro finance program.


Eligibility Criteria for Membership (Micro Credit)

Must be a woman
18-55 years of age
Must have a permanent nature of inhabitance
Married, divorcee or widow
Landless having income below poverty line preferably bottom 50%
Major income of the family come from manual labor
Have cultivable land not more than 5.0 acres in case of hills
Have cultivable land not more than 0.50 acre in case of plain land
Hard working, motivated and cooperative
Willing to make financial base through savings and proper use of credit
Must abide by the rules and regulations set by the organization.
Willing to help fellow group / center members when they are in problem


Group Formation and Recognition

5 eligible like-minded (but not relations) persons from the same locality with similar economic and social status can form a group. Each group elects its own chairman and secretary. The Field Organizers with the guidance of Branch Managers help poor people to organize themselves into small groups.

Once a new group is formed by eligible women. the field workers provide them an intensive training on credit discipline, rules, procedures and group management. The group members are required to pass a test on the above subjects and be able to write their names before the group is recognized. The respective Area Manager is responsible for assessing the quality and giving recognition to the group. After the recognition, the group is kept under observation for about a month to see if the members are conforming to the discipline of the program.


Loan Disbursement

After the observation and training period is over, two members of the group are selected for taking loans. The loan utilization and repayment behavior of the first two loanees are observed for a month or two. If these members behave properly, the remaining members of the group become eligible for receiving loan.

Loan Term

1 Year on equal 46 weekly installment
No installment is collected on holidays
Full repayment must be within 52 weeks
Service & other charges 12.5% flat
Service & other charges waive if the loan is repaid before


Group Guarantee

In case of any members fails to pay weekly installment in the weekly meeting, the members of her group as well as the center become responsible for the repayment and they manage the installment by themselves. The system ensures greater solidarity among the members and also helps efficient operation.