Major Microfinance Products/Components
Since the poor do not constitute a homogeneous group, one-size-fits-all types approach with microfinance will not be effective for all categories of the poor. Padakhep addresses this problem by offering differentiated financial services designed according to the needs of different people living at different levels of poverty. The microfinance program has the following major products (interventions) each targeting specific sections of population.
Jagoron is the major component of microfinance program of Padakhep which was initiated to make microcredit available for the poor helpless people living in rural and urban areas who do not have access to the conventional credit facilities. Under Jagoron, rural microcredit borrower, majority rural disadvantaged women, undertake various income generating activities that helps improve their socio-economic condition leading to creating self-employment opportunity.
Poor people without no or very limited resource migrate to urban areas from villages for getting employment. Some of them start small business mostly without adequate capital. Unfortunately they frequently stop their business due to shortage of requisite capital. Jagoron is also extending financial support to these groups of people for creating opportunity to invest in diversified economic sector for increasing their income. Jagoron make microcredit available for the urban poor for employment generation.
Microcredit is enhancing the capacity and socio-economic status of the IGA operators through gradual development. Progressive and experienced microcredit borrowers need larger amount of credit to expand their existing enterprises or to diversify them and turn themselves into micro entrepreneurs. Padakhep has introduced a program to finance the credit needs of progressive borrowers under a separate umbrella called the Agrosor. Loan ceiling primarily was fixed up Tk.30,000 to Tk.10,00000 only for samity members. After successful use of loan, loan ceiling is going up gradually (phase-by-phase). Many of them are gradually increasing their potentiality to run business from small to larger ones. After a certain period, they become micro entrepreneurs. In order to increase their knowledge and skill, these types of members are provided with training on 'Micro Entrepreneurship Management and Development'. The program not only helps the poverty alleviation of the borrower families, but also creates wage employment for the poor.
Padakhep has introduced SAHOS as disaster management loan to assist the people of disaster-prone areas, who are victims especially of natural disasters (cyclones, floods, etc.) and also disasters created due to economical and political instability. Members, specially affected by heavy flood, cyclone and other natural and man-made disasters are allowed to get this interest-free and long-term based loan.
The ultra poor (UP) people who are excluded from normal microfinance program due to their existing non-credible status (i.e. vagabonds, beggars, wage labourers, disabled, street archers, homeless etc.) are brought under the folds of this program for increasing their livelihood and gradually graduating them to other microfinance program of Padakhep for larger financial support. To involve them in the process of microcredit they have been able to build their capacity. Most of them have created self employment by utilizing microcredit fund and raised their daily income.
In Bangladesh, marginal and small farmers have very limited access to credit from banks and tend to be excluded from current microfinance program, which targets the landless poor. Farmers operate a major part of the total area of agricultural land in Bangladesh. Because of strong links between poverty reduction, agricultural growth and growth of the rural economy, it is important to provide financial services to small-scale and marginal farmers.
Padakhep is implementing agriculture and seasonal credit program in the name of SUFOLON to reduce dependency of the marginal and small farmers on the money lenders, increase the agricultural production, improve the livelihood and ensure food security by providing credit and technical assistance to the marginal and small farmers. The agricultural credit is given to them in order to procure their farm inputs such as seeds, fertilizer, irrigation water, pesticides etc. during cultivation period and also give them technical support. The seasonal loan is given for short period (less than one year) depending on the agricultural season and can be repaid by the borrowers in one single installment after sale of the product. Every borrower is eligible for receiving 2 loans, regular and seasonal, so that they have regular income source for family consumption.