BURO, Tangail, Bangladesh: Reaching the Poor with Savings and Credit - Case Study

Publication Date: 2000
Published by: Calmeadow
Document Type: Journal Article

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What are the challenges in serving relatively poor clients?

This paper investigates Bangladesh Unemployed Rehabilitation Organization's (BURO's) fight to improve sustainability while serving its relatively poor clients. It states that BURO in Tangail (BT) faces particular challenges related to the additional expense of offering deposit services. It says that BT has developed six types of loans and three savings products and the distinct features of the products include flexibility and variety, and unbundling of loans from savings products. It concludes however, that

• product experimentation combined with fast growth generally does not favour an increase in efficiency. Efficiency was enhanced considerably by the increase in staff productivity
• the estimated gains in staff productivity on the credit side cannot be separated from the costs of alternative ways of raising funds for lending
• the maintenance of liquid reserves to meet potential savings withdrawals creates an additional cost, since it reduces the funds available for loans that can generate incomewhich might be offset if the average savings balance grows above the reserve requirement
• the microfinance industry currently lags behind in its understanding of ways to evaluate the costs and benefits of savings products