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BURO | Career
Financial
Services
BURO
Bangladesh offers both Financial and Non Financial Development
Services [read more on development services] to
its intended customers. As Financial Service, BURO Bangladesh has wide
variety of Schemes that is supporting economic activities to generate employment and income to reduce income inequality among the disadvantaged and the poor.
All Financial
Service of BURO Bangladesh can broadly categorized as:
Loan Products
The loan products have been developed in response to the demand of its customers and specifically designed to assist their economic activities – they are market-led and customer responsive. As a result, BURO Bangladesh has many comparative advantages.
General
Loan: The loan is intended to allow rural and urban poor households to finance their economic activities and build a strong capital base. General Loans are working capital loans given to poor and disadvantaged households. General Loans range from
BDT 5,000 to BDT
45,000, depending on the economic activity, the borrower’s management capacity, and demand for the product and/or services in the market. The loans are repayable within a year in 46 installments at an annual interest rate of
15 percent.
Micro-Enterprise Loan: BURO Bangladesh has developed its micro-enterprise loan for the
15-20% of entrepreneurs capable of graduating from groups, as well as entrepreneurs in the community, Micro-enterprise Loans are individual loans that are assessed on the basis of household cash flow, business projections and the reputation of the borrower amongst her/his business peers/in the community. The size of the loan depends on the size of the businesses and the comparative advantages that the entrepreneurs have. With the Micro-enterprise Loan borrowers are expected both to provide equity and to generate wage labor employment (other than family labor).
Micro-enterprise loans range between BDT 50,000-BDT
300,000, repayable within one-three years in 46-138 installments at an annual interest rate of
15 percent.
Agriculture Loan: The loan is exclusively for agricultural activities and is designed to increase the farm activities enhancing the livelihood of the poor rural and peri-urban households. The agricultural loan also enhances food security of the households. The loans are disbursed to landless and marginal farmers in organized groups. Agricultural loans of
BDT 10,000 – BDT 50,000 are given for one year, depending on the activity, land-holding etc., repayable in
46 installments with an annual interest rate of
15 percent.
Hand Loan: The loan is intended to serve as a “social security net” and was designed implemented after the Customer Consultative Group Discussions and Client Satisfaction Surveys conducted by BURO Bangladesh. The hand loan is designed to protect customers from shocks to their household economies and the erosion of their financial, physical and social assets. Hand loans are used to finance important festivals (Eid, Puja, Christmas, marriages etc.), health care and child education. The hand loan is a small loan of
BDT 3,000, repayable within 3 months at an annual interest rate of
15 percent.
Disaster Loan: In extreme emergencies such as cyclone and floods, BURO Bangladesh provides disaster relief with support from leading donor agencies. However, instead of offering large-scale or long-term charitable activities, the organization places emphasis on the promotion of self-help and self-reliance of disaster-affected rural communities, encouraging and helping households to stand on their own feet. The disaster loan ranges from
BDT 3,000 – BDT 5,000 with an interest rate of
10 percent to be repaid over one
year.
The disaster loan is intended to reduce the effect of shocks to the households’ financial and physical assets immediately after natural disasters. The disaster loans meet affected households’ immediate needs for cash and thus to respond to their situation.
Water & Sanitation Loan: Environmental health concerns continue to be an ominous factor contributing to diseases and poverty. Access to safe drinking water which is also free from arsenic contamination and to hygienic sanitation will reduce sickness and thus increase the labor productivity. The tube-well loan facilitates access to safe water for drinking and other purposes. The sanitary loan is offered to customers seeking to install sanitary latrines in their homesteads. Both the sanitary and tube-well loans range from
BDT 3,000 – BDT 10,000 repayable within a year with an interest rate of
15 percent.
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Savings Products
All savings are payable to the customers on demand. Savings is not held as security for loan. Strong, accountable governance, sound asset management and an enabling legal and regulatory environment are three cornerstones for large scale savings mobilization. The organization offers savings services to all its clients (whether they choose to borrow or not), with the basic objectives of:
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The poor people have a formidable capacity to save and BURO Bangladesh duly recognizes this fact. It provides a secured place for keeping savings, increasing financial strength and capital growth of the customers with a view to reducing their dependency on external resources; and |
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Improving the sustainability of the institution by developing a relatively stable means to finance its loan portfolio. |
In accepting savings from poor people, BURO Bangladesh discharges a fiduciary responsibility. It has worked hard to:
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Strengthen the governance and management functions to optimize the security of the savings products offered by the institution; |
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Assess, understand and respond to the demand for a variety of differentiated savings products and offer a range of liquid and illiquid products; and |
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Develop and implement policies, procedures and processes that optimize systems of internal control and risk management. |
General Savings: Small depositors usually value convenient, easy access and relatively secure delivery savings services above all else. In some environments, to be useful to women, the delivery systems must respond to their restricted mobility and availability of time. Customers also value privacy, preferring systems that do not reveal to other customer how much they save and withdraw. The general savings account is like a current account, where customers can save or withdraw on demand. The general savings account requires a nominal minimum balance of BDT 10. The general savings account customers have the following advantages:
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Savings of any amount from BDT 10 – BDT 2,000 at the Kendra (group) meeting in the village; and deposit any amount above
BDT 2,000 at the branch; |
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Withdraw savings at any time on demand, and |
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Receive compounded interest at the rate of 4.5 percent per annum of their general savings account balance. |
Regular Voluntary Savings: Poor people often value regular, disciplined savings systems as a way of building up useful lump sums that can be invested or used for social obligations such as marriages, funeral or children’s education. These products respond to the poor’s demand for illiquid savings systems that protect their money from frivolous spending and allow the slow, but steady accumulation of a lump sum. BURO Bangladesh pays a significantly higher rate of interest on these regular voluntary savings than on the general savings account.
The Regular Voluntary Savings account allows savers to determine the amount and time of deposits and withdrawals. In the Regular Voluntary Savings account, clients agree to regularly deposit a set amount for a set period of time, after which they can withdraw the entire amount plus the interest. The savings account offers the following advantages to the customers:
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Customers can choose to deposit on a weekly or monthly basis according to their income/ cash flows. |
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Customers can choose to deposit weekly savings in the range of
BDT 10 – BDT 250; and monthly savings in the range of
BDT 40 – BDT 1,000. |
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At the end of the period, customers receive more than the total deposited amount. |
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Customers can (and often choose to) open more than one account in the same name simultaneously. |
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Interest is paid on a compound basis in the range of
7 to 8 percent. |
Time Savings: In some occasions, the customers earn lump sum amount at a time from business or sales. Under the circumstances, the organization allows such customers to deposit a maximum of amount of
BDT 5,000 in this account for varying period with interest rate within the range of
6% to 8%.
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Micro-Insurance Product
Customers’ security fund has been promoted with two objectives viz. the social objective, and the commercial objective. The social objective recognizes social protection of the customers is necessary to reduce the vulnerability of households to income and consumption shocks. The commercial objective is to increase the stability and profitability of poor households through reducing the impact of customer risk on loan and savings portfolios, generating additional revenue, supporting risk management, and reducing customers’ vulnerability to economic stresses.
The poor and micro-entrepreneurs and small & marginal farmers (vulnerable poor) customers have to pay premium of
BDT 50 to BDT 200, while the very poor customers are required to pay
BDT 30. The premiums are one-time payment in a year. The insurance yields three benefits after the death of the customer. First, cash benefits will be
100 times of the premium chosen. Secondly, the entire
outstanding loan of the clients will be waived and thirdly, after the death of the principal loan guarantor, the family of the guarantor will also receive half of the cash benefits.
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Remittances Delivery Channel
The increased volume of remittance funds, sent mostly to low-income families, has prompted a heightened interest of customers that will lower the costs of these transfers and raise their economic impact. By providing remittance service, microfinance institutions can attract new clients and provide greater value to existing clients. BURO Bangladesh is developing a remittance product in collaboration with a consortium of banks.
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