Are There Lessons for India from Bangladesh?

This paper examines the characteristics of three Bangladeshi MFIs and attempts to derive lessons from their growth for Indian microfinance. The paper examines the evolution of the three Bangladeshi MFIs – ASA, BRAC and Grameen - and states that:

• ASA is known for its very efficient microcredit. It is a mono-product microcredit provider. Its core product is a basic, working capital loan. Savings mobilized from clients are used to protect the core small loan portfolio, by providing security against default;
• BRAC offers a comprehensive development approach. In addition to microcredit and limited savings facilities, BRAC members have access to health care and education, human rights and legal counseling, children’s primary education and livelihood activities;
• Grameen Bank offers integrated financial services under its market-led Grameen II program. It offers a diverse range of financial services:
  • Basic loans and top-up loans;
  • A fully open access, voluntary savings service;
  • The Grameen pension scheme.

The paper concludes that:

• The Indian microfinance market remains nascent in terms of services offered to its clients;
• The Bangladesh experience suggests that MFIs can seek to differentiate themselves in terms of the services offered (Grameen and BRAC) or price, efficiency and reliability of service (ASA);
• As the Indian market matures and competition increases, MFIs will need to make strategic decisions along these lines and re-engineer their business strategies accordingly.