Chapter 1.

0
Introduction:
Rural Development Scheme (RDS) has started its journey in 1995 to meet up
the investment needs of the rural poor. It is also to create opportunity for
employment generation in the rural areas with a view to reducing poverty.
After successful endeavour of RDS in the rural areas, the Bank has introduced
Urban Poor Development Scheme (UPDS) since May 2012 to address the
investment needs of the urban poor mostly live in urban slum areas. Now,
RDS is being operated in 228 branches and UPDS in 24 branches, i.e in total
252 branches covering 64 districts, 490 Upazillas and 19,418 villages of the
country along with 3 City Corporations like Dhaka, Sylhet & Chittagong. So
far, Tk. 161,891.28 million has been disbursed under the Schemes since
inception, outstanding of which is Tk. 24,476.99 as on 31 December 2016.

Islami Bank:
Islami Bank is a financial institution which is guided and operated as per
islamic Shariah. Interest is the main culprit of islami banking and always the
prohibit interest in their everyday operations.
As per OIC ''Islamibank is a financial institution whose rules,procedure &
statutes expressly state its commitment to the principles of islamic shariah and
to the banning of receipt and payment of interest in any one its operation.''

Islami Micro- Finance:

To understand Islamic micro finance, we need a minimal understanding of the
principles on which Islamic finance is based. Four principles which are
derived from the Shari’ah laws (Islamic jurisprudence) and are seen by most
scholars to form the core of modern Islamic finance are important also for the
Islamic micro finance:
* The prohibition of interest
* Risk-sharing: lenders share in the profits and the losses of the business they
fund.
* Calculations of the time-value of money and sheds light on the wisdom
behind banning riba.
1
* The prohibition of Gharar: ghrar means uncertainty or ambiguity created by
the lack of information or control in an economic transaction.
The concept of IM adheres to the principles of Islam and is a form of socially
responsible investment. Investors who use their wealth for IM projects only
involve themselves in halal projects which benefit the community at large.
Such projects include zakat, which is charity based, or trade and industry
projects to develop a country's economy.
Islamic Micro Financial institution is at the central of economic growth and development of
most societies today because of its key roles in developing human resources. It also makes
significant contributions towards poverty alleviation and bridging the gap between the rich
and the poor. The debates were mostly centered on interest charge, saying that if the interest
was removed, there would be nothing to balance out demand and supply in the economies.

1.1 Limitation of the study:

No study is free from limitations. This research work has also encountered
some inevitable limitations. The limitations that were faced are as follows:
1)There is no micro finance scheme of others islamic banks in Bangladesh, so
comparative position could not be analyzed.
2)Some essential data could not be gathered because of confidentiality
concerns.
3)Many procedural matters were conducted directly in the operations by the
top management level, which may also give sort of restrictions.
4)The respondents were mainly women and most of them were illiterate. They
were conservative also. So it was hard to collect primary data properly as the
research required.
5)This study is based on RDS of IBBL in Fultala SME Branch. The branch has
invested about 2500 members and since this investment is only within 16
kilometres area around the bank. So it is hard to know the usefulness of this
sort of investment to all the people under this scheme.
6)Due to the time limitation the numbers of respondents were taken only 50.
The findings would be more accurate if the researcher could consider more
respondents.

2
1.2 Background of the research
Previous studies on the impact assessment of micro-credit programmes in
Bangladesh have been narrow in their focus. PKSF (2005) studied the impact
of micro-credit on the members of partner organizations of PKSF and found
that absolute poverty was reduced by 9% during 1991 to 2000; moderate
poverty declined by 5% during 2000 to 2004. Chowdhury and Bhuiya (2004)
examined the impact of credit programme on the Bangladeshi borrowers under
the BRAC projects and found positive impacts on human well-being, survival
rate and schooling of children. Amin, Rai and Ropa (2003) conducted a study
on the International Journal of Banking and Finance, Vol. 7, Iss. 1 [2010], Art.
7 on the effect micro-credit clients of Grameen Bank, BRAC and ASA. They
observed that the micro-credit programme was more successful to reach the
poor, but less successful to reach the vulnerable poor. Zaman (2001) assessed
the impact of micro-credit on poverty alleviation and women empowerment.
He found positive impact on income, decision making ability and in reducing
gender disparity. Bangladesh Institute of Development Studies (BIDS)
conducted impact study on the micro-credit borrowers under the partner
organizations of PKSF. This study showed positive impact on the income of
micro-credit participants in comparison to non-program participants (BIDS,
2001). Khandker (2000) assessed the impact of micro-credit on saving and
found that microcredit increased voluntary saving, which was more
pronounced in the cases of women than men.
However, all of these studies simply assessed the impact of interest based
micro-credit programmes which did not consider shari’ah (Islami rules and
regulations) related lending in investment and none of them assessed moral
and ethical development of the clients. This study will assess these aspects of
micro-finance undertaken by the clients of rural development scheme
functioning across the country. Unlike other micro-credit programmes, this
scheme emphasized clients’ ethical and moral development activities in its
micro-credit programme.
Therefore, this study will assess a different type of micro-credit programme
than the conventional ones, using modern econometric techniques. Another
point is that the size of the rural households in Bangladesh is generally large
3
and they have a low level of literacy. Rural development is hampered due to
lack of credits, lack of training, weak infrastructure and poor transport
systems. The weak resource base coupled with a faster growing population is
aggravating the poverty level of the country. Determination of the above
factors which are most relevant in explaining poverty alleviation will have
important implications for retaining micro_ finance policy. This will also help
to locate appropriate clients for the RD-micro-finance. Therefore, the other
objective is to examine the linkage between clients moral and ethical
behavioral changes as well as their income and demographic and investment
factors.
Source: http://epublications.bond.edu.au/ijbf/vol7/iss1/7
Islamic micro-_ finance programme and its impact on rural poverty
alleviation: 119-138 121

4
 Chapter 2
Literature Review
2.1 About Micro -Finance and evaluation of micro finance:
The broader definition of micro finance includes not only micro credit but also
other financial services, which can be offered to the poor. Micro finance is the
provision of a broad range of financial services such as deposit, loans,
payment services, money transfers, and insurance to poor and low9income
households and, their micro enterprises. Interested economists found soon that
not only small credits but also other services connected with lending could
improve economic lives of the poorest (Bauer, Chytilova &
Morduch,2008).Most MFIs connect their credit services also with educational
or savings programs or business trainings, retraining scheme or technical
trainings, Logically, the investments can turn out to be more profitable when
he people have access to training, which can enhance their skills. Historically,
the goal of micro finance was the alleviation of poverty. For many years,
micro finance had this primary social objective and so traditional MFIs
consisted only of non-governmental organizations (NGO), specialized micro
finance banks and public sector banks. Although the Micro finance sector has
reached a maturity stage over the last three decades, but the capacity of
operational level staffs has not enhanced to that extent (Hassan & Islam,
2008). Every market economy relies upon the financial intermediary function
to transfer resources from savers to investors. In many developing countries
such as Bangladesh, due to the complexity of commercial banks getting
investment has led to non-conventional forms of lending (Ceaser and Epstein,
2000).

Micro finance gives access to financial and non-financial services to a very

low income people in order o start their income generating activities. The
individual investment and savings of the poor clients even though very small
but have created a disciplined micro finance which has created financial
products and services that collectively have enabled the low-income people to
become clients of a banking intermediary. The characteristics of micro finance
products can be stated as follow
5
a) Little amount of investment and savings.
b) Short-term loan (usually up to the term of one year).
c) Payment schedules attribute frequent instalments (or frequent deposits).
d) Instalments made up from both principal and profit, which amortized in
course of time
e) Easy entrance to the micro-finance intermediary saves the time and money
of the client
f) The clients who pay on time become eligible for repeat investment with
higher amount.
g) No collateral is required contrary to formal banking practices. Instead of
collateral, micro finance intermediaries use alternative methods, like the
assessment of clients’ repayment potential by running cash follow analyses,
which is based on the stream of cash flows, generated by the activities for
which loans are taken. (Micro finance industry report: Bangladesh, 2009).

2.2 Evolution of micro-finance:

The micro-finance trend in Bangladesh with the 1976 founding of Grameen
Bank of Bangladesh(GB) which become the most prominent of the industry’s
successes. The rapid expansion of GB has drawn a considerable amount of
interest that is focused upon the success, problems, and prospects of this
emerging organization (Wells,1998; Navajas and Schreiner,2000). The
development of the micro finance sector in Bangladesh divides into four
phases since the mid 1970’s.
1)Action research phase in the 1970’s.
2)Micro finance development phase in the 1980’s.
3)Expansion phase in the 1990’s.
4)Increased competition and formalization from 2000 onwards.

2.3 Difference between islami & conventional Micro-Finance: The

mechanism of lending in IM differs from conventional micro finance due to
the prohibition of interest. Unlike conventional micro finance, IM offers an
interest-free way to give small loans to people who are poor and in need. IM
gives the investor a chance to get involved in worthwhile projects which could
essentially play a significant role in targeting poverty and alleviating it in
6
many countries around the world. IM primarily relies upon the provision of
financial services to the poor or developing regions which are subject to
certain conditions laid down by Islamic jurisprudence. It represents the
merging of two growing sectors: micro finance and the Islamic finance
industry. It has the potential to not only be the solution for an increased
demand to help the poor but also to combine the Islamic socially responsible
principles of caring for the less fortunate.

2.4 Difference between conventional and Islamic MFIs

Indicators Conventional MFIs Islamic MFIs
Source of fund External, client’s savings External, client’s savings,
Zakat, awqaf
Financing Interest-based Islamic modes of financing
Financing the Ultra poorest are left out Ultra poor are targeted
Poorest
Fund Transfer In cash In kind
Target Group Women preferred Any member of family
Targeting objective Women empowerment Family empowerment
Deduction at Yes No
inception of
contract
Work incentive Material Material and spiritual
Social development Secular Religious
program

Source: A. Raquib & Mohammad. (2004), Islami Banking:

Tattha*Proyog*Paddhati, Al-Amin Prokashan, Dhaka

7
 Chapter 3
Objectives and Methodology of the research

3.1 Objectives:
This study shows the real condition of poor people and the impact of micro
finance provided by Islami Bank Bangladesh Ltd. The study is to congregate
upon the ideas of micro-finance to increase performance of IBBL. The study
provides a platform for Islamic micro-finance organizations to provide finance
for the poor people.
The Objectives of the study are based on findings and impact of Islamic
micro-finance (RDS) performance since growing competency of micro credit
organizations have developed in our country. It is important that Islamic
micro-finance values differ from others.
Specific objectives are:
(1) Documentation of the performance of Islamic Micro finance through RDS
& UPDS program of Islami Bank Bangladesh limited.
(2) Assessing the impact of Micro Finance on Socio Economic Condition of
RDS&UPDS clients.

3.2 Research Methodology

The whole procedure of research methodology was conducted through
following steps:
The secondary data collected through Head Office of Islami Bank Bangladesh
Limited as the performance data only preserved in Head Office Data center or
only access by the Head Office executives. Other relevant data was collected
from various websites and referred books.

3.2.1 Primary Sources:

Face to face interview with RDS clients.
There was a set of questionnaire.
Face to face interview with the beneficiaries through questionnaire.
70 respondents were selected conveniently from RDS & UPDS clients.
The population size was nearly 2800 from which only 70 sample were
selected conveniently.
8
3.2.2 Secondary Sources:
Annual Report of Islami Bank Bangladesh Ltd.
Brochures of Islami Bank Bangladesh Ltd.
Prospectus of Islami Bank Bangladesh ltd.
Policies and guidelines of Islami Bank Bangladesh Ltd.
Published or unpublished of personally collected data from officers
Secondary information was gathered to facilitate and enrich the study from
various published paper and documents available in website, and from
personal visit to the study area.
The data have been edited, accumulated and classified according to
similarities and finally tabulated. In case of data analysis and interpretation:
Graph, mean value/simple average, and percentage are considered.

3.2.3 Data Analysis

The necessary data for prepare this report have been collected from both
primary and secondary sources. The collected data was rechecked before using
it. Since, this report contains primary and secondary data, the secondary data
have been documented through tables, charts and graphs and the primary data
given input in to the SPSS program and taken result through tabular and
percentile format after and before change in the parameters.

In this stage the primary data have been edited, accumulated and classified
according to similarities and finally tabulated. In case of data analysis only
percentile result has been considered.

9
 Chapter 4
Results and Discussion

4.1 Performance of RDS & UPDS at glance as on 31.12.2016

Performance
Sl. Particular
RDS UPDS Total
01 Designated Branches 228 24 252

02 Number of employees under RDS & UPDS 2,458 115 2,573*

03 Members 970,750 28,390 999,140

04 Clients (members enjoying investment) 564,873 17,979 582,852

05 Disbursement during the year 2016 30,348.61 1,097.55 31,446.16

06 Cumulative disbursement since inception 158,731.40 3,159.88 161,891.28

07 Outstanding investment 23537.73 939.26 24,476.99

08 Amount of Overdue 98.34 13.04 111.38

09 % Overdue on total outstanding 0.42% 1.39% 0.46%

10 Savings 7,758.18 194.46 7,952.64

11 % of Savings on outstanding investment 33% 21% 32%

12 Classified investment 134.67 18.70 153.37

Figure
Taka in million
Table:1 Performance of RDS & UPDS at glance as on 31.12.2016
(source: IBBL information system)
*including 44 APO as PO in charge

10
4.2 Target & Achievement under RDS & UPDS in the Year 2016
Figure Tk. In million

Achievement
Sl Position Target for
Description in 2016 % of achievement
No. 2015 2016

1 Members 947,305 999,411 999,140 100%

2 Clients 569,820 721,961 582,852 81%

3 Outstanding 20,798.82 23,000.00 24,476.99 106%

Table: 2 Target & Achievement-2016 (source: IBBL,Internal Information

System)
Area Coverage & Financial Inclusion
Gro
Sl. Particular 2012 2013 Growth 2014 Growth 2015 Growth 2016
wth
0
01 Branches 207 230 11% 244 6% 251 3% 252
%
733,52 999,14 5
02 Members 836,227 14% 911,470 9% 947,305 4%
0 0 %
4
03 Villages 15,507 17,104 10% 18,086 6% 18,615 3% 19,418
%
*0.
04 Centres 24,883 26,887 8% 27,874 4% 28,822 3% 28,960 5
%
RDS &
UPDS 4
05 2,190 2,423 11% 2,511 4% 2,481 (1)% 2,573
Employe %
es
Table:3 (source:IBBL,Internal Information System)
*132 New Field Officers have been posted to the branches at December 2016.
Therefore, they could not be able to perform in the year 2016.
4.3 Member inclusion:
Each of the members in a Centre represents a family. They are included in the
RDS center by opening a savings account with Tk.10/-only. Thereafter, they

11
 deposits Tk.30/-per week as a compulsory savings under RDS & Tk.50/-under
UPDS attending in the Center Meeting held in a particular place of the locality
as chosen by the members and conducted by the Field Officers.

Member Position

1200000 1085536
999140
911470947305
1000000
836227
800000 733520
617324
Member

600000 533536 Member Position

336000
400000

200000

0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Year

Chart:1 Year wise member position(2009 to 2017 (source: IBBL,Internal

Information System)
4.4 Savings Program under RDS & UPDS:
The members under the Schemes deposit compulsory weekly savings at least
Tk.30/-in RDS & Tk.50/-in UPDS per week. The members are also
encouraged to open MSS (Pension Scheme Deposit) with minimum Tk.100/-
specially designed for the members of RDS & UPDS to develop their future
financial strength gradually. Savings of the members was Tk.7,952.64 million
as on 31.12.2016. (Taka figure in million)
Type of Growt Growt Growt
2012 2013 2014 2015 2016 Growth
Deposit h h h
MSA 2,895.05 3,750.86 30% 4,572.49 22% 5,315.64 16% 5,974.73 12%
MSS 428.09 780.60 82% 1,154.66 48% 1,617.25 40% 1,977.91 22%
Total Savings 3,323.15 4,531.46 36% 5,727.15 26% 6,932.89 21% 7,952.64 15%
Total 24,476.9
10,390.71 13,730.92 32% 17,379.97 27% 20,798.82 20% 18%
Investment 9
% of savings
32% 33% --- 33% --- 33% --- 32% ---
on investment
Table:4 Year Wise Savings Position(2012-2016)
(source: IBBL,Internal Information System)
12
 Year-wise savings position in graph

Year Wise Savings Position

10000 8836.52
9000 7952.64
8000 6932.89

Amount of Savings
7000 5727.15
6000
4531.46
Savings Position 5000
4000 3323.15
2555.23
3000 1783.56
2000
950.56
1000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
Year

Chart:2 Year wise saving position.

Source: IBBL,Internal Information System

4.5 Investment Program under RDS & UPDS:

4.5.1 Types of investment:
There are 02 types of investment facilities are being provided to the
beneficiaries under the schemes. These are: (a) Micro-investment (MI)
(collateral-free investment maximum Tk.75,000/- provided to the RDS-UPDS
members) and (b) Micro-enterprise Investment (MEI) (collateral based
investment up to maximum Tk.500,000/- provided to the graduated micro-
clients and local micro-entrepreneurs).

4.5.2 Quard-E-Hasana (profit-free loan) has also been extended to the

eligible RDS & UPDS members for setting up tube-well, sanitary latrine and
rehabilitation of disaster victim members. Hardcore poor of the project areas
(other than RDS & UPDS members) are provided with the Quard-E-Hasana
for self employment purpose.

13
4.5.3 Modes of Investment:
Investments are provided to the clients under RDS & UPDS ensuring buying
and selling as per Shariah approved modes of finance. Most of the investments
are allowed under Bai-muajjal mode. Hire Purchase under Shirkatul Meelk
(HPSM) and Musharaka modes of finance are also applied in the RDS &
UPDS investment. Mode-wise investment position as on 31.12.2016 is shown
below :

% on
No. of Outstanding total
Sl No. Particulars
clients (million taka) outstandi
ng
1 Bai-Muajjal 573,365 22096.17 90.28%
2 Musharaka 1,489 64.21 0.26%
Hire Purchase under
3 Shirkatul Meelk 7,998 2316.61 9.46%
(HPSM)
Total 582,852 24,476.99 100%
Table: 5 Mode wise outstanding
(Source: IBBL,Internal Information System)
4.5.4 Investment Clients:
Among the members of the schemes who are enjoying investment facilities at
a particular point of time are called clients. According to microfinance
practice 100% members do not availing investment at a time. It is a
continuous process. A portion of the members are always in waiting to take
investment decision by themselves. Last 5 years’ position of the clients is
shown below:

14
Sl. Particular 2012 2013 Growth 2014 Growth 2015 Growth 2016 Growth

506,50
01 MI Client 421,703 472,146 12% 501,559 6% 500,216 (1%) 1%
4

02 MEI Client 53,063 60,089 13% 57,985 (4%) 69,604 20% 76,348 10%

582,85
03 Total Client 474,766 532,235 12% 559,544 5% 569,820 2% 2%
2

% of MEI
04 clients on total 11% 11% - 10% - 12% - 13% -
clients

Table: 6 Year wise position of clients (2012 – 2016)

(source: IBBL,Internal Information System)
Year-wise position of clients in chart

Chart: 3 Year wise position of clients (2009 – 2017)

(source: IBBL,Internal Information System

15
 4.5.5 Year-wise Investment outstanding:
5(five) Years’ comparative position of growth in micro investment (MI) and
micro-enterprise investment (MEI) under the scheme is shown below:

Sl. Particular 2012 2013 Growth 2014 Growth 2015 Growth 2016 Growth
Outstanding 10,254.7 11,781.6 13,645.
01 6,036.74 7,956.89 32% 29% 15% 16%
(MI) 6 0 88
Outstanding 10,831.
02 4,353.97 5,774.03 33% 7,125.20 23% 9,017.21 27% 20%
(MEI) 11
Total 10,390.7 13,730.9 17,379.9 20,798.8 24,476. 18
03 32% 27% 20%
Outstanding 1 2 7 2 99 %
% MEI in total
04 42% 42% -- 41% -- 43% -- 44% --
investment
(Taka figure in million)
Table: 7 Year wise investment outstanding (2012 -2016)
(source: IBBL,Internal Information System)
Year-wise investment outstanding in graph

Year wise investment position

30000
24476.99
25000
20798.81
Outstanding amount

20000 17379.96
MI
15000 13730.92 MEI
10390.71 Total
10000
5136.52
5000 3966.3
2899.52

0
2009 2010 2011 2012 2013 2014 2015 2016
Year

Chart-4: Year wise investment position (2009 – 2017)

(source: IBBL,Internal Information System)

16
4.5.6 Sector-wise Investment:
Investments under the Schemes are extended especially in the agriculture
sector. However, a significant investment has also been extended in different
income generating off-farm activities, rural housing & transport. It is viewed
that 34% investment was extended in different sub-sectors of agriculture,
20% in rural housing, 5% in rural transport and 42% in different off-farm
activities.

Sector wise investment under RDS has manifested in the following table
(Fig. Taka in million)

Sector-wise performance as on 31.12.2016

Sl. Particulars
Number of Outstandi
Share Share
clients ng
1 Crop 121,013 21% 3,607.02 15%

2 Live stock 79,234 14% 2,617.66 11%

3 Fisheries 19,186 3% 940.68 4%

(Pisciculture)
4 Rural Transport 30,084 5% 1,104.07 4%

5 Rural Housing 62,247 11% 4,931.75 20%

6 Off-Farm 246,534 42% 10,393.53 42%

Activities
7 Agricultural 24,554 4% 882.28 4%
Tools
Total 582,852 100% 24,476.99 100%

Table: 8 Sector Wise investment 2016

(source: IBBL,Internal Information System)

17
 Sector-wise investment in graph as on 31.12.2016

Chart-5 Sector Wise investment

(source: IBBL,Internal Information System)
4.5.7 Size-wise Investment:
It is depicted that 34% of the clients are availing initial ceiling of Micro
Investment i,e Tk.20,000/- . Size-wise investment clients and outstanding
investment there against are shown in the following table:
Fig. Taka in million
Sl. Range Client Share Outstanding Share
1 1 – 20,000 199,445 34% 2,447.70 10%
2 20,001 – 30,000 112,576 19% 2,202.92 9%
3 30,001 – 50,000 128,852 22% 4,161.09 17%
4 50,001 -100,000 101,516 17% 6,608.79 27%
5 100,001 – 200,000 27,809 5% 3,916.32 16%
6 200,001 – 300,000 4,818 1% 1,713.39 7%
7 300,001 – 400,000 3,402 1% 1,223.85 5%
8 400,001 - Above 4,434 1% 2,202.93 9%
Total 582,852 100% 24,476.99 100%
Table:9 Size Wise Investment2016(source:IBBL,Internal Information System)
18
 4.6 Recovery of investment:
Recovery trend during last 5 years has shown in the following table:

Sl. Particular 2012 2013 2014 2015 2016

01 Overdue under MI 24.03 29.31 62.77 72.79 73.12
02 Overdue under MEI 5.39 11.40 26.37 36.75 38.26
03 Total overdue 29.42 40.70 89.13 109.54 111.38
04 Outstanding of MI 6,036.74 7,956.89 10,254.76 11,781.60 13,645.88
05 Outstanding of MEI 4,353.97 5,774.03 7,125.20 9,017.21 10,831.11
06 Total outstanding 10,390.71 13,730.92 17,379.97 20,798.82 24,476.99
07 % of overdue in MI 0.40% 0.37% 0.61% 0.62% 0.54%
08 % of overdue in MEI 0.12% 0.20% 0.37% 0.41% 0.35%
09 % of total overdue 0.28% 0.30% 0.51% 0.53% 0.46%
10 Rate of recovery 99.72% 99.70% 99.49% 99.47% 99.54%
(Fig. Taka in millions)
Table:10 Recovery of investment 2012 -2016
(source: IBBL,Internal Information System)

4.7 Year-wise Performance of Field Officers:

Figure Taka in million
Sl Particulars 2012 2013 2014 2015 2016
No. of Officials under
1. 2,174 2,422 2,511 2,484 2,529
RDS & UPDS
Average No. of
2. 337 345 363 381 395
Member per FO
Average No. of client
3. 218 220 233 229 230
per FO
Average outstanding
4. 4.78 5.67 6.92 8.37 9.68
per FO
Table11: Year wise performance of officer 2012-2016
(source: IBBL,Internal Information System)

19
 4.8 Size wise investment achieved by the Field Officer:
Size wise performance of Field Officers up to December-2016 is furnished
below:

Sl. Range of Investment No. of Officials Investment Outs. Remarks

01 15.00 million & above 141 2,447.70
02 12.00 million to below 15.00 million 351 4,650.63
03 10.00 million to below 12.00 million 673 7,343.10
04 8.00 million to below 10.00 million 809 7,098.33
05 5.00 million to below 8.00 million 402 2,692.47
07 Below 5.00 million 153 244.76
Total: 2,529 24,476.99
(Fig. Taka in Million)
Table:12 Investment achieved by officers (source:IBBL,Internal Information
System)

4.9 Musharaka Investment:

To diversify investment mode, Musharaka investment was introduced under
the scheme in 2008. Investment position against the mode up to December
2016 is shown below:
Figure Tk. In million
Sl. Particulars 2013 2014 Growth 2015 Growth 2016 Growth
01 No. of Branches 88 88 -- 87 -- 114 31%
02 No. of existing clients 217 425 96% 520 22% 833 60%
03 Cumulative disbursement 59.95 77.42 29% 97.45 26% 201.97 107%
04 Investment outstanding 12.28 20.76 69% 23.84 15% 64.21 169%
05 % in total investment 0.12
0.09% -- 0.11% -- 0.26% --
%
Table:13 Musharaka investment (source:IBBL,Internal Information System)

4.9.1 Quard-E-Hasana:
Quard-E-Hasana (Loan without profit) is provided to the RDS & UPDS
members for setting up Tube well up to Tk.10,000/-, Sanitary Latrine up to
Tk.6,000/-. Quard-E- Hasana is also provided to the members in difficulties
20
due to sudden accident, natural disaster, severe illness etc. up to Tk.10,000/-.
Disbursed of Quard against rehabilitation of the members in the Year 2016
was nil. Other than RDS & UPDS member, the ultra poor people of the
working areas are provided with Quard-E-Hasana up to Tk.5,000/-. All of the
Quards are given for 01 (one) year duration only.

Position of quard disbursed in the year 2016 is stated below:

Figure Tk. in million
Number of
Sl Particulars Unit/Beneficiarie Amount disbursed
s
1 Quard for Tube-well 6,299 50.99
2 Quard for Sanitary Latrine 3,068 16.25
Quard for rehabilitation of RDS
3 -- --
Clients
4 Quard for the Ultra Poor 3,702 17.82
Total 13,069 85.06
Table: 14 Position of quard disbursed in the year 2016 is stated below

4.9.2 Graduation from Micro Investment clients to Micro Enterprise

Investment Clients:
Under the Schemes Micro Investment (MI) clients are nurtured to develop
financially. Apart from investment, they are provided with capacity building
training, counselling and other nonfinancial services. We assess the graduated
clients considering the following criteria:
1. The clients who have availed Micro Investment above 0.50 lac; the
highest ceiling of investment under RDS and transferred to MEIS.
2. Clients who have availed maximum ceiling of MEIS and already
transferred to mainstream by availing Commercial Investment under
SME.

21
 Table:15 Graduated cumulative clients up to December 2016 is mentioned
below:
Sl. Number of
Particulars
No. clients
Graduated clients who availed Micro Investment above
0.50 lac; the highest ceiling of MI and transferred to
1 128,090
MEIS from MI after availing maximum ceiling under
RDS.
Clients who have availed maximum ceiling of MEIS
2 5,315
and already transferred to mainstream.
Total 133,405
Table:15 Graduation of clients (Source:IBBL,Internal Information System)
4.9.3 Non-financial Services (welfare) under the Schemes:
Poverty alleviation needs a combination of financial and non-financial
services together. So, different non-financial services have extended under the
Schemes from the year 2012 in the areas of (1) Education, (2) Training, (3)
Health, (4) Relief & Rehabilitation and (5) Environment.
Non-financial Services or welfare activities under RDS & UPDS is
accomplished as per yearly budgetary allocation for the purpose approved by
the competent authority.
Performance of Welfare Activities at a glance as on 31.12.2016
(Fig. Taka in million)
Jan’2016 to Dec’2016 Since inception to 2016
Sl. No. Description
Beneficiaries Amount Beneficiaries Amount
1 Education Program 48,221 75.47 175,730 254.83
2 Training Program 211,018 28.34 633,240 84.82
3 Health Program 50,191 38.70 189,706 148.79
Relief & Rehabilitation
4 3,379 33.66 15,361 101.14
Program
5 Environment Program 690,246 25.90 5,607,824 106.21
Grand Total 1,003,055 202.07 6,621,861 695.79
Table:16 Performance of Welfare Activities

22
 Program-wise description is stated hereunder:
4.9.4 Education Program:
Under Education Program, there are three types of activities like (1)
Scholarship (for the children of the beneficiaries secured GPA-5 in the SSC &
HSC examinations), (2) Academic Award (to the meritorious children of the
members from class I to class IX) and (3) Establishment of Pre-primary
School, Furqania Maqtab & Adult Education Centre in the project areas.
Performance under Education Program from January 2016 to December
2016

Activities Number Beneficiary Amount

a. Scholarship -- 1,073 25.38
b. Academic Award -- 28,743 24.81
c. Pre-primary School 353 9,234 15.06
d. Maqtab 346 9,171 10.22
Total 699 48,221 75.47
(Fig. Taka in million)
Table: 17 Performance under education program(source:IBBL,Internal
Information System)
4.9.5 Training Program:
There are three types of training activities under the Program like (a) Skill
Development Training (b) Self-employment Training and (c) Centre Leaders’
Training. Activities under Training Program during the year 2016 at a glance
are shown in the following table:
(Fig. Taka in million)
Activities Number of Beneficiary Amount
programs
a. Center Leader Training Program 92 21,570 9.52
b. Skill Development Training 3,560 188,970 16.74
c. Self-employment Training - 478 2.08
Total 3,652 211,018 28.34
Table:18 Training Program(source:IBBL,Internal Information System)

23
4.9.6 Health Program:
Under Health Program, there are four types of activities like (1) Conducting
medical camps {general, eye & circumcision (Khatna camp)}, (2) Medical
Assistance and (3) Assistance to Mother & Newborn Babies. Activities under
Health Program during the year 2016 at a glance are shown in the following
table: (Fig. Taka in million)
No. of Beneficia
Activities Amount
programs ry
a. Medical Camp 142 23,016 4.27
b. Eye Camp 50 4,991 1.37
c. Circumcision (Khatna) Camp 28 659 0.81
d. Medical Assistance - 1,826 12.55
e. Welcome Gift for the Newborn - 19,699 19.70
Babies
Total 220 50,191 38.70
Table:19 Health program(source:IBBL,Internal Information System)

4.9.7 Relief & Rehabilitation Program:

Under the program, 3 types of assistance are being provided to the poor and
distressed members like (a) Financial assistance to the distressed client, (b)
Relief & Donations and (c) Quard for Rehabilitation.
Activities under Relief & Rehabilitation Program during the year 2016 at a
glance are shown in the following table:
(Fig. Taka in million)
Activities Benefi
Amount
ciary
a. Financial Assistance for distressed clients 1,541 22.36
b. Financial Assistance for Sons’ & Daughters’ Marriage 1,156 8.82
c. Financial Assistance for Burial/Funeral Expenses 578 1.45
d. Disaster Relief Assistance (Fire, Cyclone, Flood etc.) 104 1.04
Sub-Total 3,379 33.67
Table:20 Activities under Relief & Rehabilitation Program
(source:IBBL,Internal Information System)

24
4.9.8 Environment:
The Bank has been observing Plantation Program during the rainy season
almost every year since 2003. Each of the RDS members have provided with
one sapling free of cost and encouraged to implant two others by their own.
Since 2003, the Bank has distributed about 6,621,861 saplings. This year we
have distributed 690,246 saplings among the RDS members and different
educational institutions in the working areas with the cost of Tk. 25.90
million.

4.10 Comparative position of RDS with other major MFIs:

Data Source:
“Bangladesh Microfinance Statistics-2016” latest publication of Credit &
Development Forum (CDF) published on August 2016.
Leading 07(seven) Micro Finance Institutions (MFIs) along with national
aggregation as of December 2016:
No. of Investme
Name of Year of No. of Employee Membe nt Rate of
Sl. Client
MFI Estab. Branch (In Micro r (mill. recovery
Credit) Taka)
RDS
1 1995 252 2573 999140 582852 24476.99 99.47%
(IBBL)
Grameen 8,806,7 6,856,4
2 1976 2,568 21,651 96,422.30 99.88%
Bank 79 48
717,81
3 TMSS 1980 622 5,193 842,401 15,641.42 97.82%
9
6,902,0 5,898,4 109,652.8
4 ASA 1992 2,932 24,125 98.73%
24 66 6
BURO 1,305,3 873,50
5 1990 804 6,089 23,256.42 97.68%
BD 78 0
5,377,9 5,298,6 113,106.4
6 BRAC 1974 2,083 18,031 98.72%
51 51 4
PROSHI 714,66
7 1976 220 1,812 986,570 2,012.16 94.32%
KA 6

25
 Others 8,66
11,06 140,938
8 (504 - 9,155 63,419 4,69 -
3,871 .94
MFIs) 5
National 36,232, 29,594, 521,829.3
9 - 18,635 142,801 98.56%
position 279 065 6
RDS Position
10 6th 6th 6th 7th 5th 2nd
among 7 MFIs
Table:21 Comparative position of MFI
To understand the role of Islami micro-finance in poverty alleviation,
interviews/survey was conducted and the data are represented in tabular forms
and analyzed.

4.11 Data analysis of primary data collected from various respondents.

Age Distribution
Frequency Percent Valid Percent Cumulative
Percent
18 or below 1 1.4 1.4 1.4
19 to 25 6 8.6 8.6 10.0
26 to 32 16 22.9 22.9 32.9
Valid 33 to 39 27 38.6 38.6 71.4
40 to 46 14 20.0 20.0 91.4
47 to 51 6 8.6 8.6 100.0
Total 70 100.0 100.0

The research result shows that most of the respondents are within the level of
33 to 39 years of old and 26 to 32 years of old who are mature enough to take
any decision or use fund positively.

26
 Level of Education
Frequency Percent Valid Percent Cumulative
Percent
ssc or below 54 77.1 77.1 77.1
hsc 11 15.7 15.7 92.9
graduate 1 1.4 1.4 94.3
Valid
post 4 5.7 5.7 100.0
graduate
Total 70 100.0 100.0

Most of the clients of RDS are less literate or SSC level or below SSC who are
deprived from other loans and advances provided by Banks and Financial
institutions. RDS program work with those deprived people.

Amount of Taking Loan

Frequency Percent Valid Percent Cumulative
Percent
5000 to 15000 13 18.6 18.6 18.6
15000 to 30000 15 21.4 21.4 40.0
30000 to 50000 18 25.7 25.7 65.7
Valid 50000 to 70000 16 22.9 22.9 88.6
70000 to 100000 6 8.6 8.6 97.1
above 100000 2 2.9 2.9 100.0
Total 70 100.0 100.0

Most of the loan taken by the RDS clients are within the range of 15000 to
70000 and the loan starts from minimum amount tk.5000.

27
 Taking loan from any other MFI
Frequency Percent Valid Percent Cumulative Percent
yes 10 14.3 14.3 14.3
Valid No 60 85.7 85.7 100.0
Total 70 100.0 100.0

Most of the clients are satisfied with the loans and services provided by the
RDS program and they don’t take loan from any other Micro Finance
Institutions in Bangladesh.

Purpose of Taking Loan

Frequency Percent Valid Percent Cumulative
Percent
Animal 19 27.1 27.1 27.1
Husbandry
Fish Culture 18 25.7 25.7 52.9
Valid Trading Business 11 15.7 15.7 68.6
House Building 19 27.1 27.1 95.7
others 3 4.3 4.3 100.0
Total 70 100.0 100.0

The research shows that most of the first loans taken by the clients are for
housing purpose and after fulfilling their basic needs they go for further
earning to increase their income and standards of living. Secondly most of the
loans are for animal husbandry business as it is done with small capital and
withi the housing area so it is perfectly suitable for them.

28
 Comparative position of RDS client after and before:
Before Joining After
Area of Comparison
RDS Joining RDS
No Schooling 42(60%) 6(8.60%)
Schooling of Children
Govt. Primary/Secondary 28(40%) 64(91.4%)
No Recreation 28(40%) 1(1.4%)
Recreation Facilites Mobile 20(28.6%) 22(31.4%)
TV or Radio 22(31.4%) 45(64.30%)
Cinema Hall 0 2(2.9%)
No Land 29(41.4%) 8(11.4%)
Own Cultivable
Up to 15 39(55.7%) 45(64.3%)
Land
16-30 2(2.9%) 4(18.6%)
(Decimals)
31-45 0(0%) 4(5.7%)
Above 45 0(0%) 0(0%)
Up to 20000 16(22.90%) 13(18.6%)
Approx Annual 20001-40000 24(34.3%) 19(27.10%)
Expenditure (BDT) 40001-60000 11(15.7%) 20(28.6%)
60001-80000 19(27.10%) 18(25.7%)
Above 80000 0 0(0%)
Not Aware 34(48.6%) 0(0%)
Citizen Rights
Aware 36(51.4%) 41(58.6%)
Fully Aware 0 29(41.4%)
Nil 9(12.%) 0(0%)
Homestead Up to 5 54(77.1%) 45(64.3%)
(Decimals) 6 to 10 6(8.60%) 21(30.0%)
Above 11 1(1.40%) 4(5.70%)
Normal Food 56(80%) 0(0%)
Fooding
Medium Food 14(20%) 66(94.30%)
Standard
Rich Food 0 4(5.7%)

Clothing 0 - 2000 28(40%) 0(0%)

(Yearly 2001 - 4000 41(58.6%) 37(52.9%)
Expenditure)পোশাক ব্যায়। More than 4000 1(1.40%) 33(47.10%)
Health & Fakir/Kabiraj 17(24.3%) 0(0%)
Medical Quack Doctor 41(58.6%) 9(12.9%)
Facilities MBBS or Expert 12(17.10%) 61(87.10%0
Source of Public Tube-well 53(75.7%) 7(10.0%)
Drinking Personal Tube-well 16(22.90%) 62(88.60%)
water Pond water/Nearby 1(1.40%) 1(1.40%)
source

29
Nature of Sanitary Latrine 38(54.30%) 68(97.10%)
Latrine Unsanitary Latrine 32(45.7%) 2(2.90%)

The comparative situation in the socio economic condition of RDS &UPDS

clients after and before taking loan have been shown here. The data have been
collected from 70 respondents of khulna Sub urban area who are the member
of Micro Finance program of IBBL. Then we input the data in the SPSS
software and we have found the above result. The result shows that after
taking loan and being member of RDS they have improved their socio
economic condition in most of the parameter. The RDS program affected
positively in their socio economic conditions which meet up the second
objective of this research.

RDS differ from other MFI

Frequency Percent
yes 61 87.1
Missing No 9 12.9
Total 70 100.0

Most of the respondents think that RDS & UPDS are different from other
micro finance organization that is it is not as like as other conversational MFI
in Bangladesh.

Charge Rate of Return

Frequency Percent Valid Percent Cumulative Percent
yes 15 21.4 21.4 21.4
Valid No 55 78.6 78.6 100.0
Total 70 100.0 100.0

A little portion of the respondents think that RDS & UPDS charge high rate on
their investment and maximum people think that applicable rate of return is
not too high for them and it is reasonable rate of return.

30
 Necessity of Modification
Frequency Percent Valid Percent Cumulative Percent
yes 29 41.4 41.4 41.4
Valid no 41 58.6 58.6 100.0
Total 70 100.0 100.0

From the above result we see that almost 40% of the beneficiaries think that
,some changes need for existing Micro Finance Program of Islami Bank
Bangladesh Limited. And rest 60% think that, no change needed for this
program that is it is running well.

31
 Chapter 5
Conclusion

Only RDS & UPDS program of IBBL have been considered to evaluate or
assess the performance of Islamic micro finance specially of islami bank
banglades limited as no other mentionable established micro finance
organization are available in our country. We have also tried to assess the
performance through various indicator of primary respondent and also
compare with secondary data,we collected from various reliable sources. By
analyzing the primary and secondary data we have concluded that the
performance of Islamic Micro Finance of Islami Bank Bangladesh limited is
numerically and descriptively excellent and pioneer in micro finance arena of
Banladesh. We see most of the first loan taken from RDS and UPDS are for
basic needs like House Building, Business goods etc and next the tried to
enhance their income through effective business. Most of the respondents
expressed their happiness with Islamic Micro finance as because Islamic micro
finance system is conducive for the clients and they are not crucial as like as
other conventional Micro Finance. Moreover, they extend their helping hand
to the sufferer through various humanitarian program and products. Most of
the clients socio economic conditions have improved after getting loan from
RDS and UPDS. Schooling of children, recreation facilities, cultivable land,
citizen rights, fooding, clothing, hygiene etc have changed positively for
almost hundred percent clients. There are lots of training program are arranged
every year to train the clients about how to increase business efficiency.
Above all this Islamic Micro Finance not only improve the socio economic
condition of some people of the society but also it contributes a lot in the
national economy through increasing income and employment of the deprived
people of the society

32
 Reference:
A. Raquib & Mohammad. (2004), Islami Banking:
Tattha*Proyog*Paddhati, Al-Amin Prokashan, Dhaka.
BIDS (2001), Final Report on BIDS Study on PKSF’s Monitoring and
Evaluation System (MES), October, Bangladesh Institute of
Development Studies, Dhaka.
Bagsiraj, M. I, (2009) “Financial and Economic Crisis: An
Alternative Indian Approach”, Radiance Viewsweekly, Vol. XLVI
No. 38, 2009-01-04
Bateman, Milford, (2010) “Why doesn’t Microfinance work? – The
Destructive Rise of Local Neoliberalism”
Benihani, Shams, (2012) “Poverty Reduction: Scaling up the local
innovations for transitional changes”
Chowdhury, A.M.R. and Bhuiya, A. (2004), “The wider impacts of
BRAC poverty alleviation programme in Bangladesh”,Journal of
International Development,Vol.16No.3,pp.369-86.
Chapra, Umer, (2009), “The Global Financial Crisis: Can Islamic
Finance Help?”
Chen, G. (2013), “Comparing Branchless Banking in Bangladesh and
Pakistan”, CGAP
Fernando,J.L.(2006), Introduction to Microfinance: Perils and Prospects,
Routledge, NewYork, NY.
Giish,M.and Mehta,P.(2003),“Crop diversification: an empirical
analysis onKangra Farms of Himachal Pradesh,India”,Asia-Pacific
Journal of Rural Development, Vol.13No.2.
Hannan S.A( 2002), Islami Orthaniti:Darshan O Karmakaushal (Islami
Economics:Philoshophy & Strategy) Al-Amin Prokashon,Dhaka.
Khandaker,
S.R.(2000),“Savings,informalborrowing,andmicrofinance”,TheQuarterl
y Journal of the Bangladesh Institute of Development Studies,
Vol.26Nos2/3, pp.49-78.

33
Khandaker, S.R.(2003),Micro-finance and Poverty: Evidence Using
Panel Data from Bangladesh,
Khaled, Mohammed. (2011, July 7). “Islamic Microfinance
Challenge: A Summary” CGAP
Latif,M.A.(2001),“Microcredit and savings of rural households in
Bangladesh”, The Quarterly Journal of the Bangladesh Institute of
Development Studies,Vol.27No.1,pp.51-71.
Mahmood,T.(2006),“Effectiveness of microcredit for poverty
alleviation under agricultural intensification projects in Bangladesh”,
PhD thesis, School of Graduate Studies, University Putra Malaysia,
Mahmud,K.T.(2006),“Impact of credit on income and employment of
women members of Savar Thana under world vision project”, MS
thesis, Bangabandhu Sheikh Mujibur Rahman Agricultural
University,Gazipur.
Mannan, M.A (2007) Islami Bank Babostha, Central Shariah Board
for Islamic Banks of Bangladesh,Dhaka.
Consultant Limited, Dhaka
Rahman, M. M, (2010), “Islamic Microfinance program and its
impact on rural poverty alleviation, International Journal and
Finance”
Zaman, H. (2001),“Assessing the poverty and vulnerability impact of
micro-credit in Bangladesh: a case study of BRAC”, World Bank
Policy Research Working Paper No.2445, World Bank, Washington,
DC.
http://epublications.bond.edu.au/ijbf/vol7/iss1/7
Islamic micro-_ finance programme and its impact on rural poverty
alleviation: 119-138 121
http://www.islamibankbd.com (accessed 3rd July, 2017).
https://en.wikipedia.org/wiki/Poverty_in_Bangladesh#Rural_and_urb
an_poverty
https://en.wikipedia.org/wiki/Islamic_banking_and_finance

34
 Appendix
Questionnaire

Age (Years): □ 18 or below □ 19 to 25 □ 26 to 32 □ 33 to 39 □ 40 to 46 □ 47 to 51

□ 52 to 58 □ Above 59
Education Level: □ S.S.C or below □ H.S.C □ Graduate □ Post Graduate □ Others

3.How much did you take loan5000-15000□15000-30000□30000-

50000□50000-70000□70000-100000

Have you taken any loan from any other micro finance institution
If yes then which MFI?

For which purpose did you take loan

Below You need to approximate the changes that have come to your socio-
economic condition before and after borrowing from RDS:
Before After
Area of Comparison
Joining RDS Joining RDS
No Schooling
Schooling of Children
Govt. Primary/Secodary
No Recreation
Recreation Facilites Mobile
TV or Radio
Cinema Hall
No Land
Own Cultivable
Up to 15
Land
16-30
(Decimals)
31-45
Above 45
Up to 20000
Approx Annual 20001-40000
Expenditure (BDT) 40001-60000
60001-80000
Above 80000
Not Aware
Citizen Rights
Aware
Fully Aware

35
 Nil
Homestead Up to 5
(Decimals) 6 to 10
Above 11
Normal Food
Fooding
Medium Food
Standard
Rich Food

Clothing 0 - 2000
(Yearly 2001 - 4000
Expenditure More than 4000
Health & Fakir/Kabiraj
Medical Quack Doctor
Facilities MBBS or Expert
Source of Public Tube-well
Drinking Personal Tube-well
water Pond water/Nearby
source
Nature of Sanitary Latrine
Latrine Unsanitary Latrine

15.Do you see any difference of RDS from other micro credit schemes?

16.Does the RDS charge over profit/interest?

17.Do you think that RDS of IBBL need any modification

36