1. BRAC and prevention of client overindebtedness: experiences from Bangladesh
Maria May
Will replace photos

2. Outline The "almost" crisis in late 2000s
Sector's response and the results
Now what?
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

3. Bangladesh’s NGO movement
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

4. Three MFIs comprise ⅔ of market
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

5. Trends in total number of loans
Graph from A microcredit crisis averted: the case of Bangladesh

6. Trends in branch offices and staff
Graph from A microcredit crisis averted: the case of Bangladesh

7. Immediate responses Additional scrutiny of loans
Stronger risk management framework
Emphasis on quality
Consolidation of branch network
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

8. Introduction of risk management framework
Monitoring
Loan Review
Audit
Branch Review
Financial risk mitigation
Compliance check
Operational risk mitigation
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

9. Multiple loans not always bad for clients
Regular passbook (“own savings”)—compulsory; 5% at the time of dispursement, minimum of 200 per month; 6%, technically could take it out anytime
Special savings team
Monthly deposit scheme—working towards a target
Double deposit—principle doubles; put it in once, get double after 7
Fixed deposit—fixed interest rate; one year
Monthly profit scheme—getting interest every month

10. Growth slows, but doesn’t stop
Graph from A microcredit crisis averted: the case of Bangladesh

11. Trend: BRAC Microfinance Bangladesh
Particulars
2011
2012
2013
2014
Portfolio (Mil)
$ 644
$773
$894
$1093
Savings (Mill)
$ 272
$ 320
$349
$405
Disbursement (Mil)
$ 1,052
$1,250
$1,270
$1,545
PAR (>30 days)
7.9%
5.9%
6.5% 5%
Operating self sufficiency needed

12. Limited scope for growth

13. How to survive in a post-growth era?
Competing on product fit, convenience
Customer service and loyalty
Client protection and financial education

14. Working with clients on financial decisions

15. Thoughts for discussion
In many cases, poor people benefit from access to multiple sources and types of credit; multiple loans not a perfect proxy for overindebtedness
MFIs don't always need to rely on regulators to identify emerging crises; whole sector has a responsibility
Importance to build in checks and balances, especially during (or right around) the growth phase
System needs to prioritize honest discussion with informed customers

16. Thank You