Why some poor women in Bangladesh do not opt for micro-credit ?

Despite many positive impacts of micro-credit, some studies found that micro-credits are not reaching the extreme poor. This study is designed to find out the major causes why rural women do not join micro-credit programme. The present study conducted case studies on ten dropped out members, three non-NGO/MFI members and five NGO/MFI officials. The important causes for dropout are high interest rate, poor management of loan money by clients, management of default cases by NGO/MFI officials, starting time of repayments of instalment, improper utilisation of loan money, husband’s unacceptable interference, lack of training to utilise the money and difficulty in getting large amount of loan. On the other hand, worry of failure to repay the instalment, unwillingness to take loan and husband’s opposition are the main reasons for non-membership of micro-credit programmes. Tough membership criteria set by the NGOs/MFIs restricts the access to micro-credit option for many of the poor families. Though some NGOs/MFIs have some programmes to support the ultra poor, the coverage is limited. One important hurdle to overcome is the psychological poverty. There are many poor people who are not motivated to get involved in the process despite many NGOs/MFIs are operating at their doorsteps. Appropriate actions are needed to increase the coverage of the micro-credit programme to fight against poverty. NGOs/MFIs should focus not only on the profit but also on the true achievement in poverty alleviation.


Introduction
Bangladesh remains a poor, overpopulated and insufficiently-governed nation.About 31.5% of its population are still living below the poverty line (CIA World Fact Book, 2012).Women among rural area are even at a greater disadvantage position.They have to face a lot of social, political and economic discriminations compared to male counterparts.Women generally depend on their husbands' income because they cannot generate enough income, which can lead to gendered pattern of dependency (Goetz and Gupta, 1996).They are given low paid jobs and are victims of larger unemployment.In Bangladesh total unemployment rate in youth ages 15-24 is 9.3%, among them male is 8% and female is 13.6% (CIA World Fact Book, 2012).Women's role in economic development is usually underestimated.A major portion of the women, the most vulnerable class, who are the main target group of NGO's/MFI's women activities.
Most of the people in Bangladesh have no savings; even sometimes they have negative savings.So, they are not able to go for big investment from any formal banking institutions.To provide such credit facilities to the poor, there is good number of NGOs/MFIs at present in the country.Rural women are to a greatly benefited from such NGOs/MFIs.Many studies claimed that, women improved their present poverty situation with the help of NGO's/MFI's credit facilities.Despite these positive impacts, some studies found that micro-credit are not reaching the extreme poor.
The study is designed to find out the major causes why some rural women do not opt for micro-credit programme and will offer new dimension to solve this problems.
In contrast to the various positive impacts, other studies have found several problems and negative impact on the efficacy of micro-credit in reaching the poor.The majority of MFIs are not reaching the poorest of the poor (Wright and Dondo, 2001).
Moderately poor got more benefit from microfinance programmes than the destitute, and their impact can vary by income group (Copestake et al., 2001, Morduch, 1998;Dugger, 2004).Coleman (2001) found that programmes were not reaching the poor rather than wealthy people.Buckland (1996) found that the NGOs worked with a poor section rather than the poorest section.Alone micro-credit is not a powerful tool to help the poorest of the poor (Datta, 2004).When micro-credit reach to the poorest, it may not increase their income because of their daily consumptions (Mosley andHulme, 1998 andMorduch, 1998).Furthermore, some poor women are still outside of the micro-credit programme as they do not fulfil the membership criteria of the NGOs/MFIs working in their villages (Datta, 2004).
Dropout is a concern and a serious problem for all NGOs/MFIs in Bangladesh.Dropouts occur when borrowers cannot make any suitable investment for any suitable work.Dropouts also exist with loan default both voluntary and involuntary, due to inability to meet up the group discipline, physical inability, timely repaying loan, risk associated with credit etc (Datta, 2004).
Many of NGO-MFIs offer a very small amount of loan to the new member ranging from Tk. 2000 to Tk. 5000.No member got sufficient amount of loan to generate a small business.They cannot produce such amount of money to repay their weekly instalments (Haque and Yamao, 2009).Habib (2003) and Badiuzzaman (2006) reported that the highest proportion of the respondents got small amount of loan (below Tk.8000).
It is observed by Haque and Yamao (2009) that the rate of repayment was not satisfactory.About 51.33% of members repaid their installments regularly.But this rate was the lowest for the extreme poor group.Weekly repayment systems highly discourage extreme poor people from receiving NGOs loan because of high interest rate.These borrowers face difficulties to repay the loan in weekly installments with high interest rate (Datta, 2004).A majority of the poor do not want microcredit because they would be unable to repay loans in due time (Hashemi, 1997).Many of the microfinance programmes target women because of higher repayment rate and they take loan for their husband needs (Goetz and Gupta, 1996).
NGOs did not have any programme for the extreme poor.Field level observation investigate that the extreme poor are not the targeted group.Some households are included in such programme accidentally rather than systematically.Most of the NGOs'/MFI's programmes are unavailable to the extreme poor because such programmes are highly interrelated and often inseparable (Datta, 2004).The reason may be improper use of the loan money by the poor.A study suggested that about 24 % of the respondents did not use their loan in according to the previous mentioned purposes.Extreme and moderate poor used their borrowed money for liquidation of previous loan received and about 33.33% respondent used their loan money for their daily consumptions.NGOs have not any programme to reduce such default cases (Haque and Yamao, 2009).Islam (2009) found that the credit receivers utilized more than 70 percent of the loaned money productively on farm, non-farm business activities and the rest 30 percent was used as non productive activities such as family consumption, social function, lending to others, education, etc.Most of the borrower misused their loan money.No monitoring and follow-up services provided by the NGO-MFIs for their members in executing their activities (Haque and Yamao, 2009).

Methodology
The study conducted case studies on ten dropped out members, three non-NGO/MFI members and five NGO/MFI officials.The information was collected by the first author herself during the month April, 2011 from Lalmonirhat district of Bangladesh.The study was done to know the reason of dropout from dropout members of NGO/MFIs and the reasons of not being engaged with NGO/MFI activities from non-NGO/MFI members.All the information were recorded and translated into English.Five branch managers from five respective NGOs/MFIs (ASA, BRAC, GB, PROSHIKA and TMSS) were asked some questions and the answers were recorded properly.

Some case studies relating to micro-credit programme: provider's and clients' perceptions
The case studies are divided into three parts: (1) Views of dropout members (2) Views of Non-NGO/MFI members (3) Views of NGO/MFI Officials.

Views of dropout members
Many of the members could not come out successful in business with their loan.Most of the NGOs/MFIs just provide their members with loan but they do not take heed of how they are spending money.A woman named Amena told, "Loan always seems to be a hazard to me and it takes me a lot of mental tension.Money taken as loan never benefited me.So in future I am not going to take any loan".
Many of the members opine that it is easy to draw small amount of loan but it takes many difficulties, complications and long time to draw a large amount of loan.Moreover, NGO/MFI officials do not always believe all the members.In this connection, Amena Begum told, "They did not refuse to provide me with loan but they kept me waiting for two months without giving me any loan".
To many women the amount given as loan for the first time seems really small and it was not worthy of any help.Monowara Begum told, "I drew loan but presently I do not do that because the sum they provide is very small and we can do nothing with this small amount".
Many of the women believe that it is really tough for them to run the family and repay the debt at the same time.They have to pay instalment every week and run the family together.So sometimes, they have to curtail family expenditure.Rabea told, "I do not draw loan because it takes huge anxiety and mental restraint to pay weekly instalment and run the family together".
Many of the members may miss paying weekly instalment once or twice.It can happen but NGO/MFI officials never pay heed to their problems.They regard them as bankrupt.In this connection Sabina Yasmin told, "I used to take loan from NGO.Once I failed to pay some instalments as I had to undergo surgery, they cut off my name from the member-list and regarded me as bankrupt".
Many believe that it takes them huge hardship and hard work to repay their loan.Money taken as loan runs out very fast and consequently they have to undergo huge hazards and hardship.Bilkish told, "I did not build up any relation with NGO because money taken as loan most of the time leads their life into untoward circumstances and misery".
Through this study, it revealed that many of the members took loan only for their husbands.Some believe that loan money does not help to anyway.So, they do not want to take further loan.A woman named Alea told, "I would starve to death but I would not draw any loan or be entangled with any loan whatever.I am scared that my husband is extremely greedy for money.He always flees just after paying two or three instalments".
It was noticed that many husbands spent their wives' loan simply out of nothing.In relation to this, Halima told, "First I drew a sum of four thousand and I repaid the loan properly.But when I drew a huge sum, my husband misused the money to satisfy his lust for women".
Despite many negative scenarios of dropouts there are some cases where dropouts were for other appreciable reasons.Many members were benefited from the loan they took.Many of the members become self-reliant by the loan they took.So they are not going to take any loan in future.Anowara, an ex-member told, "My sons are working now.So I do not need any loan now.I really was benefited from the loan which I took from NGO".

Views of non-NGO/MFI members
Many of the people are not joining the NGOs activities because they feel they would not have income to repay loans.
Three non-NGO members were asked why had they not yet drawn any loan and why were they disinterested in doing so.Most of them told that money taken as loan seemed to be a hazard to them and they were not satisfied with NGOs activities.Arzina Begum told, "I am not connected to loan because it seems to be a hazard to me.I live hand to mouth.If in any way, I fail to repay my instalment, it will take me huge mental pain and harm my reputation.People will regard me as a bad woman".
Many women do not get involved in taking loan as they do not desire to take loan.So they do not become the members of any NGO/MFI.In this connection Hazera Begum told, "I do not need loan and I desire not to take it".
Many husbands do not like their wives to take loan from any NGO.So, despite their desire to take loan, they cannot avail themselves of the opportunity to do something on their own.In this connection, Rina Begum told, "My husband does not like me to take loan.He would not let me to get involved in such activities".

Views of NGO/MFI officials
Five branch managers from five respective NGOs/MFIs were interviewed.They were from ASA, BRAC, GB, PROSHIKA and TMSS.All the managers were asked the same questions.The five questions were: 1. What are the programmes you have for the poorest people? 2. What criteria a member needs to maintain as a precondition to be a member?3. What are the steps you have recourse to if any member fails to use her money properly?4. Do you have any programme relating to beggars? 5.Many members leave the NGOs/MFIs on their own and sometimes NGO's officers cut their name from the NGO's member list.Why does this happen?
The answers from various NGO/MFI managers in response to question 1 are recorded below: In response to the first question, branch manager of ASA, Lalmonirhat informed that with this loan members usually buy cows, goats, hens, geese, rickshaw as well as van, etc.In the same connection, GB branch manager told they have small loans along with DPS.
BRAC has arranged SPOP programme for the maintenance of the ultra-poor people.They are provided with training along with loan as well as counselling.They are also provided with loan for the vegetable cultivation and lease loanee.In repaying this sort of loans the members are given enough time to adapt.Branch manager of PROSHIKA, Savar told, in connection with the capacity of the specific member among the ultra-poor, the ultra poor are given loans to create job opportunity.Other than this the have no specific programme.Branch manager of TMSS, Lalmonirhal told that they have several programmes running for the poorest.Among them outstanding are micro-credit, seasonal loan, disaster loan etc.

The answers from various NGO/MFI managers in response to question 2 are recorded below:
To be a member of ASA, a member need to main following criteria: (i) A member must have the ability to earn on her own.(ii) A member should be within specific age limit.She can neither be an old person nor a child.
To be a GB member, a member has to be a permanent resident and have a specific income source.
To be a member of BRAC, a member is supposed to maintain certain criteria: (i) A member must be a married female.(ii) A member must be permanent resident.(iii) A member must have an income source.
If any one draws more than taka one million, she has to have a guarantor and submit records of land.
To be a member of PROSHIKA following criteria are to be maintained.(i) A member will have to be a poor marginal farmer.(ii) A member must not be involved in activities subversive of the state and society.
(iii) Influential person in society cannot be a member of PROSHIKA.(iv) A member's age must be from 18 to 50.
To be a member of TMSS, members need not essentially maintain any specific criteria.They provide loan on easy soft conditions.
The answers from various NGO/MFI managers in response to question 3 are recorded below: In response to the third question, ASA branch manager told that they had no such arrangements for default case.But number of such case is negligible.GB branch manager told, they take no such measures.If the member uses the loan in productive sector, he/she is given loan later.BRAC branch manager told that they had monitoring system.They always take notice whether loans are being properly used in productive sector.If any member fails to fulfil this, they are not given any loan in future.PROSHIKA does not take any measure in this regard but it has a monitoring system.TMSS has an arrangement for monitoring to address default case.Measures are taken in line with the monitoring if any reports come from the respondents.
The answers from various NGO/MFI managers in response to question 4 are recorded below: Many of Bangladeshi NGOs/MFIs do not have any programme to the poorest widows, orphans, sick people and beggars etc.
In answer to the fourth question, ASA branch manager told that they did not have any programme for the beggars.But sometimes beggars draw loans hiding their real identity.GB provides the beggars with nonrefundable Taka 500 to Taka 1000 as grant.If the sum is above the preceding figure, they are to pay in instalments.BRAC provides the beggars with loan.Beggars are given priority here.They are given sum worth Taka 2000 to Taka 5000.In this case, the beggars must have local resident.PROSHIKA has no such programme.TMSS also does not have any programme for the beggars.
The answers from various NGO/MFI managers in response to question 5 are recorded below: In response to the fifth question, ASA branch manager thinks that if the earning source of the member increases they, usually leave off the NGOs.
GB manager opines that if any member fails to pay the instalments in time, his/her name are usually cut off from the member list.If they become self-reliant, they do it of their own accord.BRAC manager opines that if they fail to satisfy their demand, they usually leave off the NGO.NGO usually cut their names off from the member list, if the members shift their residence or if there are more than one client in a single family.PROSHIKA branch manager believes that shift of residence and dealings with more than one NGO are the main reasons of frequent drop out.TMSS branch informs that they usually cut the name of a member if she does not need any loan or she does not pay her instalments in time or if any way she lends to some other man.

Discussion
This study says obviously that there are many reasons for frequent dropout; among them the important reason is the traditional dependency of women on their husbands.Yet there is both space and scope to address this and minimize the damage.In our country, in most cases women who are members of NGOs/MFIs, hand the loan over to their husbands who more often fail to use the money in productive sector.So, the cause of drop out should be analyzed properly and if the causes are within the control of NGOs/MFIs, they should take necessary action immediately.Another important aspect is the amount of money given as loan.The amount seems to them be too small to start anything worthy to bring them any tangible return.The repayment period should be started at least one month later after getting loan.The amount of loan should be raised so that the respondents can easily get loan as much as the amount they need.
Dropouts, default cases appear to be rising, many of the poor refuse to use NGO's/MFI's loans.In a study the dropout members were asked the reasons of leaving.The reported reasons were the amount of loan was too small (33%), too many meetings to attend (28%), long duration meeting (25%), not to pay for a defaulting member (25%) and the loans were very expensive (22%) (Meyer, 2002).The NGO-MIFs workers facing heavy pressure due to irregular instalments, delinquency and default, as a result many of the respondents dropout by self-exclusionary and after a few days they goes to the other NGO-MIFs and to get loan.As a result their debt increased day by day and they become more poorer and never get rid of the vicious circle of poverty (Haque and Yamao, 2009).
So, NGOs should facilitate training on income generating activities to the members so that they would be able to use loan properly and hence can repay their loan on time.Steps should be taken to create adequate income generating activities for the poor by establishing small industries in the rural areas.
Necessary financial and technical support may be provided to the rural entrepreneurs.
There are many studies which observed that micro-credit programmes have negative impact on their programmes and these programmes fail to reach the poor and do not reduce their present poverty situations (Westover, 2008).
From the current study, it is seen that management procedure varies from one NGO/MFI to another NGO/MFI.All of them do not have strong monitoring system.The percentage of the respondents who were not satisfied was the highest (40.0 percent) in BRAC and lowest (3.3 percent) in PROSHIKA and TMSS.The reason may be that most of the respondents of BRAC required someone else's request to get the loan and it seemed to be hazardous to them (Khatun, 2011).
Most of the members of NGOs/MFIs were from the poor families.So there was a chance to use the loan money to mitigate their emergency needs or to invest in unproductive sector(s).Even if the members use the loan money in sectors they are not supposed to use, some NGOs field workers do not take any measure to address the problem.Proper monitoring system enhances the proper utilization of loan and hence repaying the loan at right time, which ultimately improves the economic positions and reduce the poverty situation of the respondents.
If we consider the criteria (married, permanent residence, income source etc.) maintained by the NGOs/MFIs for the membership, it is obvious that many of the distressed and ultra poor can not be members of the NGOs/MFIs.Datta (2004) found that in the disaster prone areas, NGOs interventions are not sufficiently available in that area.There is no NGO/MFI that provides appreciable support to the members affected by disaster.No NGO/MFI has any programme worth mentioning for the beggars.Even if they have any, they are not adequate to address the gravity of the problem.Every NGO should have programme for the beggars.All the NGOs/MFIs should strengthen their monitoring system.
Larger NGOs/MFIs take on the average 15-27% interest rate using the declining or flat method.ASA and PROSHIKA charges 27 % interest rate, GB charges 20% interest rate, BRAC take 15% and TMSS take 13 % interest rate.During the interviews, it was also observed that NGO/MFI managers were not open discussing on the interest rate, whether flat or diminishing.Even we could not compare the operational cost of the NGOs/MFIs as salary structures of the higher officials were not disclosed.
Most of the NGOs have settled the interest rate between 20-30%.Only the loan disbursement is the main target in most small and big NGOs (Abels, 2001).NGOs/MFIs should charge low interest rate as it provides loan to the poor people.This can be done by minimizing the NGO's/MFI's operational cost.

Conclusion
Poverty is mostly a phenomenon of developing countries where access to resources is very limited for the people, particularly those living in extreme poverty.The government and the people of Bangladesh should join hands to meet the poverty problem right at this moment.Some non-government organizations (NGOs) on approval of the GoB have started rural development programmes to help the distressed people and to alleviate poverty from Bangladesh but some problems have been emerged.The effectiveness of microfinance institutions in poverty alleviation is still in questions and creates some debate on their activities.
From the respondents' perspective the reasons of drop out from any NGO were small amount of loan, burden of old debt, taking loan for their husbands and not repaying the instalments properly, etc.So, pragmatically NGOs are expected to revise and re-organize amount-setting procedure and at the same time notice how the clients are using the money and what purpose they are using it for.There should be partnership based activities on the part of the NGOs.Loan disbursement should not be the sole target of any NGOs.
In this study, it was recorded that most of the NGOs/MFIs had no programme for the beggars and the people affected by disasters.So each of the NGO should take appropriate programme(s) considering the beggars and the people affected by disasters and should try to improve their poverty situations which ultimately reduce the poverty situation in Bangladesh.
NGOs/MFIs set some criteria for new clients e.g., to have income source, permanent residence, and to be married, etc.These criteria restrict many of the ultra poor and exclude from the NGOs'/MFIs' programme.
On the other hand, there are some people who have negative attitude towards micro-credit and some other do not find any motivation to opt for micro-credit or other mean to overcome their poverty.We may term such poverty as 'psychological poverty'.There is little effort to address such type of poverty.There should be integrated effort to motivate these groups of people, so that they are mentally ready for changing their situation.