Rural Credit Management of Grameen Bank in Rajshahi District

Abstract

The Present Study entitled "Rural Credit Management of Grameen Bank in Rajshahi District" is an empirical study by nature. The main purpose of the study is to evaluate the rural credit management of Grameen Bank in Bangladesh with special reference to Rajshahi district. The major objectives of the study are to analyze the effectiveness of rural credit management of Grameen Bank, through measuring the socio-economic impact of the advances, the factors affecting the repayment, the costs of rural credit of Grameen Bank in Rajshahi District. To conduct the study, five Grameen Bank Branches in Rajshahi were selected purposively. For this study four centers of each branch were selected purposively. Fifteen borrowers of each center are included in the study. In such a way, 60 borrowers are selected who have been attached with the bank at different length of membership. So, there are 300 borrowers of GB in Rajshahi District interviewed for this study. Each branch manager of the selected branches has also been interviewed for the purpose of collecting various information about the branch. Both primary and secondary sources of data are used. Data were collected through using two sets of questionnaire, one set for the selected borrowers and another set for the branch managers. The borrowers were interviewed by the researcher at the weekly meeting or individually. GB 's branch-wise data during 1998 to 2002 were collected from area the office for identifying the operational position of GB in Rajshahi district. The published and unpublished secondary data from different sources had been collected. To analyze the primary and secondary data, various statistical analysis like, mean value, standard deviation, co-efficient of variation, multiple regression, multiple correlation, Chi-square test, T-test, ANOV A have been adopted to lest the hypotheses of the study. Against the testing of hypotheses it is found that the Gramcen Bank's performance of rural credit operation is satisfactory, decade-wise variation in Grameen Bank's performance is significant, having significant variations in managerial performance of the sample branches. The Grameen Bank's advances have positive effects on the living standard of the borrowers. Repayment of the loan depends on numerous factors like loan amount, annual income, age, number of dependants, number of earning members, supervision or loan, number of installments, problems of selling product, asset damage etc., although the socio-economic impact of the advances varies among the beneficiaries of the branches. To determine the impact of the rural credit activities of Grameen Bank on socio-economic condition of the participants under the study, variables Like credit and other technical assistance have been considered. Among other explanatory variables amount of land, educational status, occupational status of the household head, and women's involvement in income generating activities were considered. Their impacts on changes in income, savings, expenditure and improvements in housing, health and family planning status etc. have also been measured. The performance of the Grameen Bank for the last three decades is highly satisfactory. The co-operation of the borrowers is important for better success of the bank. Bank management is highly sincere towards committing the cost of fund and achieving the target disbursement, recovery, savings and cordial customer service. The analyses show that loan recovery and number of branches affect the loan disbursement., The sample branch level analysis reveals that rural credit activities and the performance of these branches are at the satisfactory level. The financial position analysis shows that the performance of these branches is at the satisfactory level. From the study of branch level analysis, it has also been found that the performance or the lusufpur branch is highly satisfactory. The average recovery rate of credit of this branch is I00 percent. The average recovery rate was lowest in the Parila branch, but the average profit was negative in case of Durgapur branch. Therefore, it is obvious that the lusufpur branch is one of the ideal branches of Grameen Bank. The findings of the study showed significant and positive impact on the socio-economic condition of the programs participants of Grameen Bank. It has been found that after participation in the GB programs, income, expenditure, land holding, housing pattern, sanitation, drinking water, savings, children's education etc. of the borrowers have been improved. GB's rural credit programs have signifcantly and positive effect on these variables, and GB is successful to bring change in well-being of the program’s participants. Branch-wise performance variations are there but these are not significant. Out of the 5 branches Iusufpur branch has the highest recovery followed by the Puthia, Damkura, Durgapur and Parila respectively. The average cost of fund of the GB had an increasing trend during the period under study. This is due to high administrative cost, interest and burden. However, from the overall analyses, it can be concluded that the GB has operational success in rural credit management in Bangladesh with special reference to Rajshahi District. Borrowers' co-operation and co-operation of the branch people may increase the productive utilization of fund through increasing value added and socio-economic advancement of the borrowers. Attention should be given on effective cost of fund, so that it’s not a burden for the borrowers compared to the funds given by other microcredit institutions. Savings of the borrowers may be encouraged through increasing rate of interest given. Fixation of installment amount should consider the environmental opportunity for realization of cash through profitable investment made by the borrowers. Profitable sectors need to be identified by the GB and as to encourage the target group to select the profitable investment sector. Borrowers must be given good training in favour of using the available funds towards increasing return on working funds. Difficulties of the borrowers may be considered in genuine circumstances and extend the date of repayment of advances. Simple rate of interest should be reduced favouring declining balance of payment of the installments. Strengthening of MIS activities, MBO techniques, total quality management concepts, good governance must be ensured at the branch and zonal levels. Performance budgeting, segment reporting, internal evaluation system, internal control mechanisms must be introduced in different levels. Management audit, management by exception, financial evaluation, financial information system, conputerized information system may be introduced at the branch and zonal levels. It is expected that with the utmost cooperation of the Head Office, Branch Office and Zonal level people, borrowers would get ample benefits and develop the rural base of our economy.