The impact of NGOs on the village economy is increasing, but the bank is still lagging behind. According to recent studies of Bangladesh Development Research Institute (BIDS), 5 percent of the people of the village borrow from NGOs, 25-5 percent of people borrow from Mahajans, and less than 5 percent of the bank.
Studies show that the interest rate of the Mahajans is 5 percent, NGOs rate 20 to 20 percent, and the bank's interest rate is lowest. However, as the availability of the bank is low, the rural people are still dependent on NGOs and Mahajan.
Studies have shown that when a new NGO starts operations in a village, the tendency to borrow from the Mahajans decreases by 5 percent and interest rate on average is reduced by 20 percent. The competition of NGOs is making positive changes in the rural economy.
The research report was released in the BIDS conference room in Agargaon on Thursday. Professor Shyam Chowdhury, director of the Australia-South Asia Research Center, presented the research titled 'Micro Loan Competition and the presence of the Mahajan: theory and evidence'. The research was conducted on 4 villages in 4 districts of the country.
BIDS acting director general Dr. Kazi Iqbal. Sajjad Zahir, Executive Director of the Economic Research Group and Managing Director of the Rural Work-Aid Foundation (PKSF) spoke. Fazlul Quader.
Professor Shyam Chowdhury said that even though there are many banks and micro -credit institutions (MFIs) in Bangladesh, the Mahajans have a significant presence. Because the rural people do not have the opportunity to have credit cards or other formal financial services like the city. The people of the village are often forced to borrow from the Mahajan as a result of sudden financial crisis, such as need for treatment or loss of agriculture. Due to the slow pace of the banks, they cannot easily reach there.
According to the study, on average, there are five or six NGOs or micro-lending organizations in each village. When a new NGO is entered, the demand for Mahajan's loan is reduced, but the presence of the Mahajans will not be completely dissolved.
Managing Director of PKSF. Fazlul Quader said, “Due to the deadline and conditions of distribution of micro -credit, the rural borrowers often seek refuge in the Mahajan. If there is more coordination between banks and NGOs, this problem will be greatly reduced. '
