2 NGF - Nowabenki Gonomukhi Foundation

A three layer vegetable garden under the Micro-finance Program

NGF Microfinance Programmme

When NGF started its journey, it observed that the poor were deprived of the facilities to borrow, save and invest in productive activities for the lack of access to the formal banking system. Moreover, the formal banking sector also requires collateral. If the rural poor are provided with credits at reasonable manner, they become able to be involved in various income-generating activities and thus become economically self- reliant. Micro-Finance program of NGF trough this process activates a self-sufficient credit service for the targeted poor people.

Targets of Beneficiaries

  1. Marginal, Landless poor people focusing in women;
  2. People who own > 0.5 acre of land;
  3. People who earn their living by selling manual labor;
  4. The Ultra-poor who live below poverty line;
  5. Small entrepreneurs and small business holders;
  6. Permanent households;
  7. Member’s age between 18-55 years;

 

Goal of Micro-Finance Program

The goal of Micro-Finance program is to extend financial support to the targeted participants/beneficiaries for creating employment opportunity, running income-generating activities and thus establishes a sustainable earning adequate income for ensuring food, shelter, health, education, water & satiation and environment development services as well as establishing NGF as a non-profitable & self-sustainable organization.

Objectives of Microfinance Program

  • To empower the poor/ultra poor women through their direct involvement.
  • To create self employment and scope of wage employment through   formation & enhancement of enterprise.
  • To create positive environment that encourages savings among members.
  • To alleviate poverty in Bangladesh and build up leadership of poor women in the community.
  • To reduce dependency on lending.
  • To increase empowerment and social status of women.
  • To utilize the local resources at the optimum level.
  • To enhance individual business capacity & competency of entrepreneurs.
  • To develop NGF as a sustainable development organization.

Key Strategy and Approaches

  • Participatory management approach.
  • Special emphasis on sustainability of its program participants.
  • Implementing cluster-based development activities through mobilizing all sort of local resources and provide need based information & technologies to the program participants and communities.
  • Special emphasis on human resource development for ensuring better service delivery.
  • Special priority on ultra poor and growing entrepreneurs.
  • Ensuring self employment and scope of wage employment through proper delivery of different loan product.
  • Ensuring information & technology transfer to the program participants for safety-net of the investment.
  • Establishing and maintaining linkages & partnership with Govt./NGO/ private organization and national/international donor agencies.
  • Special emphasis on women’s empowerment

 The Stages of Microfinance Program[

Monitoring, Follow-up and Reporting all stages

  • Area selection and feasibility study.
  • Identification of target people.
  • Staff orientation & training.
  • Loan product fixation.
  • Savings mobilization.
  • Fund arrangement/ mobilization.
  • Training on different trade/scheme
  • Loan disbursement.
  • Loan realization.
  • Year based evaluation.
  • Impact study, modification of loan product, introduce new product based on the demand of program participants.

 

 

Savings Program

NGF was initiated through savings activities-Savings is always encouraged for accumulation of fund and rid of poverty. In fact, Savings activities (accumulation of tiny amount from individual participant) are being operated in NGF in order to mitigate Group member’s crisis moment and promote their livelihood through door-step service. To create and increase own fund into the income generating activities of the program participants, it is not possible without the habit of savings. For this reason, NGF used to adopt some steps to make the participants savings oriented. The group participants have passbook and they get interest on their savings as per savings interest policy of NGF.

 

Objectives of NGF Savings Program

  • To minimize financial crisis & poverty eradication of group participant.
  • To change program participant’s attitude and make them savings minded.
  • To ensure future protection of group participant.
  • To reduce dependency on lending.
  • To increase the financial confidence of program participants.
  • To ensure and increase participatory investment in the IGAs.

Type of Savings Product

  • General savings
  • Voluntary savings
  • Terms savings

 

Member’s welfare Fund/Risk Fund

NGF introduced welfare/risk fund provision for its program participants. The cited welfare/risk fund has been created in order to exempt a member’s family from the burden of debt in the event of the death of a client or the guardian of the member.

Description of loan Products

Micro -Finance as a fruitful instrument of poverty reduction and NGF addresses this issue successfully by using various need based loan products for financial services according to demands of people with different levels of poverty and enterprises.

1. Jagoron (Rural Micro-Credit)

Rural Microcredit (RMC) program, now renamed Jagoron focuses broadly on rural development. The target group of Jagoron is the rural poor who own an arable land less than 50 decimals or a total asset that is materially worth less than the value of one acre of land. The initial idea was to provide finance in favour of off-farm activities but with time and gradual expansion on-farm activities have also been supported finance in Jagoron program. Rural micro credit participants take different types of income generating activities under Jagoron program. NGF support both men and women under the Jagoron program .Every poor participant of Jagoron program has access to loans for the development of various sectors of income generating activities (IGAs) that include small trade, goat rearing, cow rearing, beef fattening, poultry rearing, homestead farming, paddy husking, fishing and fish culture, local transport, aquaculture, grocery, tailoring etc.

2. Buniad (Micro-credit for Ultra poor)

Ultra Poor Program, now renamed Buniad focuses on needs of extreme poor or ultra poor people of our country having no or very little access to the traditional microcredit services due to the existing rigidity of usual microcredit products. The ultra poor program is a separate intervention of NGF throughout its working areas. The program also provides different non-financial support like primary healthcare services, technical services for implementing income generating activities (IGAs), capacity building training, and support to the disaster-stricken people, awareness building on nutrition and social issues to the targeted participants according to their needs. Woman headed family, beggar, day labors, divorced women, widows; child labors headed family parents, floating people, street dwellers, slum dwellers, homeless people, house servants, floating sex-worker and landless farmers, elderly and disabled people with no source of income are enrolled under this program. With the financial & non-financial support of NGF, the participants under  Buniad program are now involved in different kinds of  off-farm &  on-farm income generating activities that  secured income and improved livelihood.

3. Agrosor (Micro-Enterprise (ME)

Micro Enterprise (ME) program, now renamed as Agrosor focuses on graduated borrowers who have taken more than two (2) loans from NGF Jagoron Program and have developed successful enterprise are eligible for Agrosor loans. Microenterprise is very essential to reduce poverty in view of the fact that it is the key to income generation & employment creation. These entrepreneurs are playing a vital role in developing in rural and national economy. According to the present Agrosor Loan policy, its loan size ranges from BDT 50,000 to BDT 10,00,000 as per the needs of the entrepreneurs. Apart from the graduated borrowers of Jagoron program, potential individual entrepreneurs also take loans for the enterprise. NGF provides need based capacity/skill development training to the entrepreneurs to help them manage their particular enterprise more competently.

4. Sufalon (Agriculture Sector Micro-Finance (ASM)  & Seasonal Loan (SL)

Seasonal Loan & Agriculture Sector Micro-Finance program, now is renamed Sufalon program focuses on the  agriculture sector micro-finance for adoption of agriculture sustainable income generating activities (IGA) and Poultry & livestock technologies by the moderate poor and acquisition of agriculture, livestock knowledge to improved livelihoods and food security of moderate poor households and empowerment of women as well as seasonal based agriculture/ crop, poultry and livestock’s development (IGA), seasonal small business throughout the year with mainstream credit support.  The target participants of Sufalon are distinct and selected very carefully. Special concentration is given to the disbursement of loan on time while the repayment of loan starts after harvesting. The important role of Sufalon is to provide skill development training and transfer modern technologies to the traditional farming system to enhance their skills and productivity.

5. Enrich (Income Generating Activities Loan, Livelihood & Assets Creation Loan)

NGF has been started Income Generating Activities Loan, Livelihood & Assets Creation Loan since 2010, under the Program ‘ENRICH’ (Enhancing Resources and Increasing Capacities of Poor Households towards Elimination of their Poverty) project is a Near Total Development approach to household- focused poverty eradication.

6. Sahos (Disaster Management Loan -DML)

NGF has been started since 2007 the Livelihood Restoration Program (LRP), EFRRAP -Emergency 2007 Flood Restoration and Recovery Assistance Program) funded by PKSF for disaster mitigation. The members who have suffered natural and manmade disaster and who have the treat to face disaster would be benefited from this loan program. At present each member receives Tk.1500-15000 loan to take preparation pre and post disaster control. The affected members are using the loan money for food security, medical support, house repairing, re-installation of tube-well, reconstruction of latrines, post disaster rehabilitation etc.

Revolving Refinance Scheme Loan (RRS):

 NGF has been set up to financial support to the low income people to offset the effect of the Covid-19 that severely affected their business through Bank supported loan program titled Revolving Refinance Scheme Loan (RRS). RRS loan has been used for providing loans to small and micro-entrepreneurs and professionals, blacksmiths, potters, fishermen, landless farmers, hawkers, shopkeepers and rickshaw pullers. As per June 2023 NGF has disbursed BDT 60126000 to 2730 pandemic hit people.

Livelihood Restoration Loan (LRL -2nd Phase):

NGF has been implementing PKSF supported loan program tiled Livelihood Restoration Loan -LRL -2nd Phase. LRL aims to revive the economic activities of the poor people affected by Covid-19 by creating self-employment opportunities. Under this program NGF has providing assistance to generate self-employment and invigorate the economic activities of the following five pandemic hit groups in the rural areas; 1) Agriculture and related entrepreneurs 2) Small and Cottage industry related entrepreneurs 3) Trained Youth 4) unemployed Youth and 5)  Returning Migrant Workers. As per June 2023 NGF has disbursed BDT 40082000 to 1391 pandemic hit people.

Agrosor (RAISE) :

Agrosor (RAISE) Loan component aims to enhance economic inclusion of low-income youth and micro-entrepreneurs in urban and peri-urban areas. The services include skill-acquisition through informal apprenticeship, business management training, and access to credit, among other interventions. The project participants are low-income, less educated youth living in urban and peri-urban areas.

Agrosor (MFCE) :

Agrosor (MFCE)Loan component aimsto enhance sustainable employment creation by providing financial and institutional support to the microenterprises. NGF is delivering the loan by maintaining cluster basis microenterprises of its working area.

Microfinance Program management

The micro finance program is executed through 43branch offices divided into 7 areas under the supervision of a strong and experience management team headed by the Director (Microfinance). One Area Manager remains responsible for implementation of the program in his area. On the other hand Branch Office is managed by 1 Branch Manager, 1 Accountant cum MIS officer and required number of PO (Program Organizer). One PO looks after 12 to 18 groups having 350 to 400 group members. They work 6 days a week and conduct weekly meetings with group members collecting weekly repayments of loan and savings, delivering development messages, writing group resolution on loan proposal, return of savings etc. Branch Manager keeps close eye on activities performed by PO and regularly checks documents and records maintained by them through on-site inspection. He is required to visit and monitor two group meetings a day. He fills out check list of his activities at the end of the day and files it in his office with his signature on it for inspection by his superiors at later date. He also takes one day each week from a PO performing his job instead, while giving the latter other assignments either in office or with other staff. This gives him the opportunity to independently scrutinize PO’s work and have thorough ideas/opinion about strength and weakness of his staff. Based on his findings he takes actions whatever is necessary to improve staff’s performance and redress inconsistencies. Similarly, Area Manager performs in-depth analysis of performance of microfinance lending operation in a branch once every week/month and prepares back-to-office report on his visit and sends a copy of it to head office. The central management team members review the report in presence of Area Manager and give him their feedback on the report. Apart from in-depth monitoring, Area Manager makes frequent visits to branch office in order to verify loan applications and assess its progress of microfinance lending operation on random basis. He also holds meetings with branch office staff reflecting on current issues/problems and suggesting their solutions. Besides he reviews audit reports, share information/office orders, reminds the staff about achieving targets and realization of overdue loan. In order to give them leverage to work freely following office rules and policies, Accountants are made reportable directly to Branch Manager. Area Manager makes his time and effort to branch accounts and gives instructions for corrections of error and mistakes. He also penalizes Branch Manager & Accountant by imposing fines for negligence of duties and mistakes.

Head office is also included in the cycle of regular tracking of events and development in the field. The Director (Microfinance) regularly keeps track of defaulted loans on daily basis. If the trend is found on the rise then, he speaks to the concerned staff including Area Manager and gives instruction to put a rein on the situation.   Another activity, which he performs on regular basis, is reckoning days when field staff returns from the field in time after completing collection of loan and savings from the group members in each branch office. Coming very late after completion of field work, gives signal of brewing problems that may eventually put micro finance operation into risk. In such situation the Director (Microfinance) raise alarm and asks for immediate attention to the problem. Besides, he maintains charts showing   achievements of each branch office in regard to volume of portfolio & group savings, no. of borrowers, realization of overdue loan etc. on weekly basis. Making frequent field visits to oversee micro lending operation is also a part of his routine   duties. He shares his experience and observation with staff at different management levels in monthly meetings which meeting has been chaired by the Executive Director. Composite reports   are   prepared by compiling all the reports   received from branch offices by MIS Officer and Manager (Finance & Accounts) of head office.  Copies of the reports are finally submitted to PKSF and MRA.

Portfolio analysis

NGF could maintain quality of its portfolio (principal outstanding) and put its micro finance operation on a sound footing through policy adaptation, staff development, optimization of staff work load, introduction of performance based salary package etc. Fy-2022-2023 OSS (Operating Self Sufficiency) was calculated at 107.97%. The net cumulative surplus amounted is BDT 222.88 core.

Quality of portfolio

There were continuous efforts to increase volume of good loan and at the same time keeping a check on loan defalcation. This helped in putting a cap on loan defalcation. The PAR (Portfolio at Risk) is calculated at 8.8% which is high the allowable limit of 05%. PAR has been raised high due to hamper Covid-19 on current loan realization from client.

Source of fund

Source of fund of the total portfolio, 38.90 % constituted Group Savings, 33.46% PKSF loan, 10.80% own fund, 9.04% Bank Loan and Member insurance & others 1.20 and Loan loss reserve fund 6.60%.

Provision and risk coverage

 Cent percent Loan loss provision is made on loan products at risk according to the standard procedure and MRA (Micro-credit Regularity Authority) rules. Whereas NGF kept its efforts high for recovery of loans fallen overdue, it also at the same time ramped up proper screening of loan application including selection of borrowers.