Poor people’s access to formal financial institutions is denied for they lack collateral and other security. The formal banking system deprives them of the right to borrow, save and invest in profit rearing activities and it is a major reason why poor people remain poor. Microcredit programs thus help them get financial help without collateral or other security.
Muslim Aid Bangladesh started its journey in 1991 immediate after the Cyclone in the southern part of the country. In its 20 years of work in Bangladesh, Muslim Aid Bangladesh has supported 1.5 million people by helping during and after disasters as well as implementing development programs in education, health, income-generating activities, water and sanitation, and capacity building for the grassroots level partners.
Muslim Aid started its microcredit program in 1993 with a noble vision to help the poorest section in the community to reduce the poverty line of the country. Later, it extended its operation by starting small and medium enterprises, agro-based microfinance programs and a special microfinance project for the ultra poor. Muslim Aid partnered with Islamic Development Bank (IDB), ShahJalal Islami Bank Limited (SJIBL), Institute of Microfinance (InM), Credit Development Forum (CDF) and got licensed by Microfinance Regulatory Authority (MRA) of Bangladesh Government.
Muslim Aid Bangladesh is the Pioneer of Islamic Microfinance program based on Shariah principles that emphasize equitable and justifiable resource distribution and social development. The program has purely a social mission and is intended to economically empower poor and low income people in developing countries. The Islamic microfinance products that Muslim Aid is presently implementing include Qard, Murabaha and Bi-Muajjal. Muslim Aid Microfinance program conceives some discrete features which are more acceptable to the participants as well shariah complains. Currently, Muslim Aid microfinance programs reach 70,512 beneficiaries from 1,593 villages in 30 districts of Bangladesh.
Muslim Aid Bangladesh offers various types of credits, savings and investment security products to its members in the rural as well as urban areas. Borrowers of MAB invest the sanction money in different Income Generating Activities (IGAs) run by themselves. They repay the investment installments from a portion of profit. After the payment of the installments, they get opportunity to use the profit for themselves. A large number of them are gradually becoming self- reliant through the Income Generating Activities (IGAs). Employment opportunities are also created for the extremely poor through these projects.
Among the services offered, MAB propose the formation of samities. A samity consists of 20-30 members generally, with an average of 20 people in each samity. MAB provide collateral free loan to its members. There is group liability in MAB’s credit program, the group is responsible for delinquency.
Muslim Aid microfinance program provides two types of financial products:
– Micro-Investment: microcredit investment for poor with small service charge, IDB Fail Khair service charge free program, ultra poor investment with no charge
– Micro-enterprise investment
Savings is also an important component of microfinance programs. MAB has been successfully operating a mandatory savings programs. Members are allowed to deposit higher amounts with the mandatory savings. They still can withdraw money in case of crisis.
Finally, Muslim Aid offers non-financial support. They give training that aims to transfer the necessary skills, knowledge and awareness to beneficiaries. This has for ultimate objective to assist the beneficiaries in confronting and eventually overcoming constraints that cannot be addressed solely by the financial aspects of the program.
Muslim Aid microfinance program is achieving both program and beneficiary sustainability. In Bangladesh, for instance, about 6,000 microfinance beneficiaries have got out of poverty by achieving self-reliance. On the other hand, the overall program is attaining financial sustainability with gradual expansion and staff experience. In 2011, the program achieved significant progress in cost recovery from the income of the program.