Islamic Microfinance Bangladesh Experience Mohammad Abdul Mannan Managing

Islamic Microfinance: Bangladesh Experience Mohammad Abdul Mannan Managing Director & CEO Islami Bank Bangladesh Limited

Demography & Area Population Literacy GDP Per Capita Inflation (PP/Average) Reserve Export Import Foreign Remittance : 147, 570 km 2 : 168. 9 million : 61. 5% : $ 205. 3 billion (44 th) : $ 1, 314 : 5. 65% /6. 10% : $ 27. 5 billion : $ 31. 6 billion : $ 43. 2 billion : $ 15. 3 billion Next 11 emerging economy Gained the status of Lower middle income country 2

Banking Sector 3 • • State owned Banks Specialized Banks Foreign Banks Private Banks : 5 : 3 : 9 : 39 (Islamic Banks-8) (Conventional Banks-31) • • • Total Banks Branches Manpower Total Deposits Total Credits Number of Deposit Accounts : 56 : 9263 : 160, 000+ : $100 billion : $87. 7 billion : 76. 80 million 3

Islamic Banking in Bangladesh • Full Fledged Islamic Banks : 8 • Islamic Banking Branches : 19 • Islamic Banking Windows : 25 • Number of Branches : 960 • Deposit : $20. 8 billion • Investment : $18. 8 billion • Manpower : 27837 4

Microfinance in Bangladesh • Bangladesh-the birthplace & hub of microfinance • Grameen model by Noble Laureate Prof. Dr. Md. Yunus Started in 1983 • Microfinance inroads in finance landscape of country Features: • General Credit program • Group based approach/ membership system • Centre based arrangement • Individual Savings • Insurance coverage 5

Microfinance Activities in Bangladesh No. of MFIs Clients Loan Portfolio Growth Recovery Rate Savings : around 2100 : 30 million : US$ 5. 5 billion : 15% : around 96% : US$ 4. 1 billion US$ 1 = BDT 78. 5 6 6

Market Share of Microfinance in Bangladesh Sl. Name of MFI Establis Investment Share hment Saving s Share 1 Grameen Bank 1976 1, 234. 92 23% 2, 427. 38 60% 2 BRAC 1974 1, 436. 60 26% 515. 46 13% 3 ASA 1992 1, 284. 46 23% 568. 54 14% 4 RDS (IBBL) 1995 265. 00 5% 87. 77 2% 5 BURO BD 1990 249. 06 5% 79. 36 2% 6 TMSS 1980 177. 11 3% 58. 01 1% 7 SSS(Society for social service) 1986 110. 18 2% 52. 54 1% 8 UDDIPON 1984 76. 61 1% 30. 81 1% 9 Others (MFIs) - 649. 08 12% 233. 37 6% 10 National position - 5, 483. 01 100% 4, 053. 24 100%

Islamic Microfinance While, total Islamic Microfinance clients in the world is about 1 million. More than Half of them is in Bangladesh and over 80 percent of them is concentrated in Indonesia, Bangladesh and Afghanistan. Islamic Microfinance in Bangladesh is mostly operated by---- • • IBBL’s Rural Development Scheme(RDS), founded in 1995 SIBL, Al-Arafah Muslim Aid Bangladesh operating since (1991) Al Falah A’am Umayan Sangasta(AFAUS), Dinajpur in 1989 TMSS Islamic Microfinance (TIMF) started in 2008 RESCUE started operation in 1991 in Rangpur district Noble Foundation and Literary society, Bogra. 8

Islamic Microfinance: RDS Model IBBL’s Rural Development Scheme(RDS), founded in 1995 9

IBBL: At a Glance � Asset Size : USD 9, 294 Million � Branches : 304+ � Manpower : 13622 Market Share � Import : 11% � Export : 10% � Remittance : 27% � SME : 17% � Employment generation : 2. 5 million people � Highest Taxpayer in Banking sector US$ 1 = BDT 80 10

Sector-wise Business Exposure Industry 32. 36% : Trade : 35. 98% Real Estate : 8. 35% Agri. & Agro Industry : 11. 99% Micro Credit(RDS) : 3. 64% 11

Share of IBBL in country’s Microfinance Share of IBBL's Microfinance to PCBs 52. 05% Share of IBBL to SCBs & PCBs 25. 85% Share of IBBL to PCBs Retail microfinance IBBL share in country microfinance through banking & public institutes 98. 90% 8. 05% Source: Credit Development Forum 12

RDS model of IBBL (Rural Development Scheme) q Launched in : 1995 q Mode of Finance : Baim, HPSM & Musharaka q Investment Size : US$ 145 – US$ 714 q Male Members : 15% q Female Members : 85% q Rate of Recovery : 99% IBBL covers 50% world Islamic microfinance US$ 1 = BDT 80 13

Key Information on RDS Particulars 2015 No of Village 18, 615 No. of Member Cumulative Disbursement (Million BDT) ( Million USD) Outstanding National Rank (Million BDT) ( Million USD) 9, 47, 305 7 130445. 12 $310 position among 2100 MFIs of the Country 20798. 82 $264 Share in IBBl’s to total investment 3. 64% Members Savings 6, 890 $87. 77 (Million BDT) ( Million USD) th US$ 1 = BDT 78. 5 14

RDS: Special Features Shariah based micro-finance Collateral free Farming and off-farming activities Job Creation Welfare and ethical services Quard facilitates for sanitation Lowest profit rates 15

Target Group Farmers Sharecroppers Persons engaged in off-farm activities Fishermen Women and distressed people 16

Trends of Savings and Investments (Million US$) 265 300 221 250 175 200 50 58 42 30 65 23 100 90 88 150 73 132 0 2011 2012 Savings 2013 2014 2015 Investment 17

RDS Expansion: Village coverage 20000 18615 19000 18086 18000 17163 17000 16000 15371 15000 14000 12857 13000 12000 110000 11482 10751 2009 2010 2011 2012 2013 2014 18 2015

523, 941 3, 335 200, 000 74, 315 400, 000 911, 470 217, 425 600, 000 733, 520 800, 000 560, 499 1, 000 836, 227 1, 200, 000 9, 47, 305 Increase of Members - 1996 2000 2005 2010 2011 2012 2013 2014 2015 42170 19

RDS: Sector-wise Investment Others, 1% Off-farm Activities, 37% Crops, 24% Nursery/Forestry, Agricultural 1% Equipment, 2% Livestock, 10% Rural Housing, 15% Poultry/Bird, Fisheries, 4% 1% Rural Transport, 5% 20

Size-wise Investment: Fig. taka in million 9% 3% Upto $190 13% 41% $191 to 380 $381 to 640 $641 to 1275 $1276 to above 34%

Graduation RDS to MEIS and SME 22

IBBL’s Integrated Approaches to Financial Inclusion IBBL follows a Finance Plus Approach Nutrition Health Finance Education 23

IBBL’s Integrated Approach to Microfinance and Financial Inclusion (RDS & UPDS Model) RDS Financial Inclusion UPDS CSR Social Inclusion Training Micro. Investment (Upto Tk. 75, 000) Micro-Enterprise (Upto Tk. 400, 00) Ultra-Poor (Financed through Qard coming from charity fund) Health Service - Medical Camp - Circumcision Camp -Medical Assistance -Welfare Gift -Qard for housing, sanitation & Tube well Relief & Rehabilitation Environment Education - Pre-primary - Maqtab - Adult Education - Award & Scholarship 24

IBBL’s Integrated Approaches to Financial Inclusion RDS Graduation Process ◊ Graduated from RDS Tk. 75, 000 du a tio n MI G ra ↑ ◊ Stay at least 3 years ◊ Investment with Collateral S I E M n atio Gradu ↑ MEIS Investment Size $1000 - $5000 Tk. 5000 SM E Investment Size ($1000) e ($65) n e stm e Collateral Free Investment iz t. S E SM Inv 00 ) 0 , 00 00 , 0 $1 0 ($5 25

Qard Program for RDS USD$ 12. 74 million (Tk. 100 crore) fund creation -Qard for distressed members & the ultra poor -Revolving basis -Qard for 1(one) year 26

Non-Financial Services(Welfare activities) • • • Training for the beneficiaries and centre leaders; Health awareness development program; Relief Distribution Program 27

Non-Financial Services(Welfare activities) • Sanitation program; • Treatment assistance for the poor members; 28

Non-Financial Services (Welfare activities) • • • Education program Scholarship Award Program Distribution of education materials Waiver of the liabilities of incapable members; Plantation program 29

Future Plan • Extending RDS activities to all the 86, 000 villages of the country. • Addressing the ultra poor by developing Quard/Charitable Fund. • Extensive investment in SME sector in the rural areas in view to create huge employment. • Encouraging bio-gas and solar panel in the rural house-holds. continued-----

Future Plan • Ensuring zero level drop-out of the children of RDS members from primary education. • Attaining 100% coverage of the beneficiaries in respect of pure drinking water and sanitation. • Ensuring health safety-net of RDS beneficiaries. • Extending massive plantation especially in the coastal areas. • Alleviate poverty from the country

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