LAW 200 Assignment 2

8/17/2019 LAW 200 Assignment 2

1/33

LAW 200

Micro level banking may have strong forces to

reduce poverty status in a given society

Prepared For:

Barrister Arife Billah

Prepared By:

Noshin Shormily

ID – 121 0221 030

Section – 5

North South University


2/33

i

Declaration

I hereby declare that all the material presented in the paper titled “Micro level banking may

have strong forces to reduce poverty status in a given society” is my own work, except where

information is rephrased from other sources. Any information obtained from other sources,

which are published or unpublished has been acknowledged and referenced at the end of the

paper.

___________________________

Noshin Shormily


3/33

ii

Topic: “Micro level banking may have strong forces to reduce poverty status in a given

society- give a broad explanation of this issue”

Abstract

The purpose of this paper is to get an understanding on poverty and what the current situation

is. There are many financial institutions such as banks and instruments of micro finance and

micro credit. The paper discuss on how micro level banking aids in alleviating poverty in

detail. Furthermore, the emphasis is on the people who are below the poverty line and their

struggle; the circumstances, under which they live and the role of micro credit in their lives.

The overall situation of poor poverty around the world is highlighted. It also includes the

conditions that vary from rural to urban areas and why they do so. In addition the paper

includes data from various sources that clearly depicts how the past and current poverty state

is. Finally, the paper ends with the advantages of micro level banking and some of the

challenges that are faced while operating these projects.

Keywords: Micro level banking; Poverty; Poverty Alleviation; Society;


4/33

iii

Table of Content

Content Page no.

Introduction 1

Financial Institution 2

Bank 3

Micro Finance 4

Micro Credit 9

Poverty in the World 11

Poverty in Bangladesh 12

Rural Poverty 18

Urban Poverty 20

Poverty Reduction 21

Benefits and Challenges of Micro level banking 24

Conclusion 26

References 27


5/33

1

Introduction

One way of defining micro level banking could be a channel of giving out small loans to the

people who are unable to attain funds through the commercial banking medium. Poverty is a

factor which is not easily measurable. A country which is having good economic growth may

also be poor in terms of social advancement. Inability to consume the minimum amount of

calorie intake, lack of basic necessities needed to maintain proper lives are all examples of

poverty in a society. The number of people who are below the poverty line shows the extent

to how much poor a society is.

There might be a strong possibility of micro finance to reduce poverty status in a given

society. This however may vary depending on how large the micro level banking operations

are carried out. There may not be an immediate result but seeing how successful Bangladesh

has been, it would serve as a means for many more underprivileged people to come to an end

of their struggle. The important thing is to sustain the programs and help9ing these people

become financially independent. It cannot be confirmed that poverty will be totally

eliminated but could possibly reduced to significant amount. Hence there is a strong prospect

of reducing poverty status in the society.


6/33

2

Financial Institution

A financial institution is an organization that offers various types of monetary service for

customers.1 They act as a mediator between lender and borrowers along with fulfilling other

services. The supervisory body of most such institutions is the government since it is very

risky and deals with the fund of the general public. Therefore to continue and increase public

confidence they are closely monitored. Financial institutions are comprised of associations

such as all types of banks, insurance firms, trust companies etc. all forms of monetary

transaction such as deposits and withdrawal is carried out by these organizations 2 and since it

is the legal form of channeling money or transactions, it is a regular phenomena.

Commercial banks are one type of financial institution where the people can carry out their

normal transactions of deposit and withdrawal. Along with that they also offer loans like

personal and consumer loans. Another form of short term loan is the credit cards which gives

instant checking service to the client. Following are some of the other category of

organizations like investments firms, insurance companies, trusts, brokerages; amongst

nonbank are credit unions and savings and loans.3 For any country the financial sector is of

great significance for both development and growth. Having a strong segment allow the

nation to prosper and grow on.

1 Financial Institution. (n.d.). In Wikipedia. Retrieved February 28, 2015, fromhttp://en.wikipedia.org/wiki/Financial_institution

2 Financial Institution. (n.d.). In Investopedia. Retrieved February 28, 2015, fromhttp://www.investopedia.com/terms/f/financialinstitution.asp

3 Complete guide to Corporate Finance. (n.d.). In Investopedia. Retrieved March 1, 2015, fromhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspx

http://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://www.investopedia.com/terms/f/financialinstitution.asphttp://www.investopedia.com/terms/f/financialinstitution.asphttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://www.investopedia.com/terms/f/financialinstitution.asphttp://en.wikipedia.org/wiki/Financial_institution


7/33

3

Bank

A bank is “a business where people keep their money, borrow money, etc., or the building

where such a business operates.”4 It is a mediator between people who are able to provide

funds and those who are in need of support. Linking the parties and thus carrying out the

process if money creation. To define again the purpose of a bank is to maintain bank account

of the client, disburse and accumulate their transactions5 from several parties in contact.

Every country has their own central bank, but it may vary in names. They regulate, monitor

all commercial and public banks and also carry out the necessary policies.

One of the most important roles of the central bank (Bangladesh Bank for Bangladesh) is to

implement the monetary policy. By carrying out the essential aspects of strategy the growth

rate of the country can be tailored to suit the desired growth.6 Therefore banks happen to be

one of the most regulated institutions. Since they deal with the fund of public, it is implied

that utmost security must be provided.

Banks present a variety of services from cash deposit and withdrawal, demand for payment,

credit, loans, savings and current account, acts as a trustee, exchanges foreign currency and

also trades in securities services.7 While banks are revenue earning entities there are another

category of banks whose roles are somewhat more customized.

4 Bank. (n.d.). In Learners Dictionary.com, Retrieved March 1, 2015, fromhttp://www.learnersdictionary.com/definition/bank

5 Bank. (n.d.). In Wikipedia. Retrieved March 1, 2015, from http://en.wikipedia.org/wiki/Bank

6 What is the difference between fiscal and monetary policy? (March, 2002). Retrieved March 1, 2015 fromFederal Reserve Bank of San Francisco. http://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policy

7 Jamal, M. (n.d.). Functions of Bank Primary and Secondary. Retrieved March 1, 2015 from

http://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondary

http://www.learnersdictionary.com/definition/bankhttp://www.learnersdictionary.com/definition/bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://en.wikipedia.org/wiki/Bankhttp://www.learnersdictionary.com/definition/bank


8/33

4

Like Central banks which is the final option at an emergency for all commercial banks. They

do not perform the basic functions of normal commercial banks. Next is the Islamic Banks

whose whole operations are followed on the foundation of Islamic philosophies.8 Not only do

they evade the interest on funds but the proceeds produced are raised from carrying out the

financial services to clients. Today the world has become increasingly globalized with rising

competition in the industry. However not all have been fully global. The fact that local banks

exist is a benefit for small business enterprises and individuals to carry out their fringe

activities.

Micro Finance

Microfinance refers to giving out small loans to people, firms and association primary which

is concerned with the development of poor socioeconomic group.9 Microfinance is a type of

means to provide fringe resources for those who are economically not very affluent. In fact,

they do not have an alternative option of raising funds. Mostly, it is seen in under-developed

nations. Since any form of job creation or employment helps hugely in those states.

With the presence of large commercially viable banks there are also some establishments

whose sole operations is based on microfinance.

8 Bank. (n.d.). In Wikipedia. Retrieved March 1, 2015, from http://en.wikipedia.org/wiki/Bank

9 What Is a Microfinance Bank? (n.d.). Retrieved March 2, 2015 fromhttp://www.wisegeek.org/what-is-a-microfinance-bank.htm

http://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://en.wikipedia.org/wiki/Bank


9/33

5

They work to provide means of development strategy for the underprivileged by supplying

them, with small loans at a low interest rate. In turn, these loans encourage the progress of

firms and bestow the unfortunate people a path from overcoming poverty. In doing so many

people are given a chance to live a life with at least the basic minimum standard. Finally, the

objective is to present people of low income faction a prospect at becoming independent and

self contained.

The failure to return the loan has been seen to very low, mostly in nations which are at the

developing stage. According to World Bank the evaluation is found that around 0.5 billion

individuals have enjoyed the rewards from microfinance-related operations.10 Not only are

such projects helping out the lower income earning group but entrepreneurs are given

opportunity to start their own venture. By doing so, a support system is created where

families are indirectly benefitting.

Not only are these associations garnering proceeds but also participating actively in the

welfare of the citizens of the country. In many cases, the financial institute grants knowledge,

know how, resources and support to sustain the program. Professor Dr. Muhammad Yunus

was the man who began the journey of microfinance. The first microfinance bank was

initiated by him which is Grameen Bank.11

10 Microfinance. (n.d.). In Investopedia. Retrieved March 2, 2015, fromhttp://www.investopedia.com/terms/m/microfinance.asp

11 What Is a Microfinance Bank? (n.d.). Retrieved March 2, 2015 fromhttp://www.wisegeek.org/what-is-a-microfinance-bank.htm

http://www.investopedia.com/terms/m/microfinance.asphttp://www.investopedia.com/terms/m/microfinance.asphttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.investopedia.com/terms/m/microfinance.asp


10/33

6

The reason why he started this proposition was the fact that small company owners had to

give up a large amount of their proceeds to loan – issuers. In the year 1976, Professor Dr.

Muhammad Yunus started to give loan to women with the intent of empowering them. He

did so from his own personal fund to supply them with logical provisions that would support

them monetarily.

The sole objective to engage in micro finance activities is to alleviate the underprivileged

public from poverty. There are many countries which were poor and had no means of fringe

supply. Why Professor Dr. Muhammad Yunus thought of giving authority to women was the

reason that most are suffering through extreme harsh conditions. They are undermined, not

given primary schooling facilities as well as formal technical training.

The position of women in the social world has remained trivial. Therefore in order to gain a

significant place they must become financially independent. Many people express

microfinance as a means to supply the people of small earnings or who range in borderline of

to almost poor a way of having financial services. The services may range from “savings,

insurance, and fund transfers,12 along with normal credit lending. Some others define

microfinance as an approach to encourage economic expansion, employment and growth by

empowering people with new business ventures and firms.

12 Microfinance. (n.d.). In Wikipedia. Retrieved March 2, 2015, from http://en.wikipedia.org/wiki/Microfinance

http://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinance


11/33

7

Microfinance is a large group of services under which falls microcredit. The terms

microfinance and microcredit are often mixed together. Microcredit happens to be a form of

credit services to underprivileged people whereas microfinance is said to raise public above

the poverty line. Human beings have a variety of requirements; their basic needs are of

lifecycle, personal emergencies and disasters and also of investment opportunities.13

The universal fact is that often when people are in deficit they lend from others to manage

their budget. But at the end the money must be returned along with an added interest.

Therefore it is imperative that savings must be done. So microcredit must emerge in both the

credit and savings functions. Large organizations discovered that the loan given by Grameen

bank is actually from the savings account from other clients.14 To make certain that

underprivileged citizens are getting access to financial services the quantity financial

institutions should be increased.

One of the progressive practices that were sanctioned by G8 summit were to ensure people’s

need have credit, savings and transferable transactions to be met. Microfinance is not a

charitable trust facility but a means of alleviating poverty. Families who are impoverished,

deprived of earning to fulfill basic human needs are the receiver of charity. Others who are a

bit better are supported by the financial services.

13 Rutherford, Stuart; Arora, Sukhwinder (2009). The poor and their money: microfinance from a twenty-firstcentury consumer's perspective. Warwickshire, UK: Practical Action. ISBN 9781853396885.

14 Khandker, Shahidur R. (1999). Fighting poverty with microcredit: experience in Bangladesh. Dhaka,Bangladesh: The University Press Ltd. ISBN 9789840514687.

http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/International_Standard_Book_Number


12/33

8

Grameen America happens to be an initiative by Professor Dr. Muhammed Yunus which is

situated in New York and supplies “micro-loans, savings programs, financial education, and

credit establishment to low-income entrepreneurs.”15 The low income group is usually faced

with challenges by the bank in terms of their cost of giving loans and security. However, the

solitary reason of developing the concept of microfinance is to make credit available to poor

people and create impartiality.

There are some specific aspects of microfinance. They are the condition to supply credit

without security and given to people who are well below the poverty line. There has been

disparity amongst whether it is a good or poor choice. The fact that level of interest rates is

flexible and also the risk of being in high obligation could be a drawback on the organization.

Microcredit lessens poverty by bringing forth higher level of employment in the society and

higher wages. As a result health and education will in turn be positively affected. Better diet

and superior learning of the citizens is possible.

There are people who might suggest that microcredit specifically empowers women but in

countries like the US and Canada, microcredit facilitate “recipients to graduate from welfare

programs.”16 There are circumstances where microcredit has made it possible to generate

favorable growth of firms and also created self-employment opportunities. However, great

portion of the earnings goes to the interest and often the borrower is in high liability.



http://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinance


13/33

9

To many it seems that, microcredit has accomplished far a lesser amount of what its advocate

says. The unconstructive effects have not been mentioned along with the detail that

microcredit is only an aspect of the triumph of small firms.

Micro Credit

Microcredit can be defined as more or less the extension of small loans for people who are

underprivileged, without a job and have not enough even to support themselves. 17 It gives

authority to women and financial stability along with raising entrepreneurial opportunity and

reducing poverty. It is an element of microfinance dealing with variety of propositions

mainly savings.

In the year 1983, the first microcredit bank known as Grameen bank was established in

Bangladesh by Professor Dr. Muhammed Yunus. It was known as “modern microcredit.” 18

The beginning of microloans has been revised and associated to many institutes in

Bangladesh, like Grameen Bank; usually considered to be the original modern microcredit

institution. Professor Dr. Muhammed Yunus commenced this initiative of microcredit in a

town named Jobra.

17 Microcredit. (n.d.). In Wikipedia. Retrieved March 2, 2015, from http://en.wikipedia.org/wiki/Microcredit

18 Bateman, M. 'Why Doesn't Microfinance Work? The Destructive Rise of Local Neoliberalism'. Zed Books,London, 2010.

http://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredit


14/33

10

He used his personal account in distributing micro loans at low rates to the people of lower

income. BRAC and ASA went in the same path as Professor Dr. Muhammed Yunus in 1972

and 1978 respectively.19 Initially Grameen Bank was a non-profit making organization which

was dependent on government subsidies. In 2002 it was Grameen II. Professor Dr.

Muhammed Yunus was awarded the Nobel Peace Prize for his par excellence work in

serving microcredit facilities to the poor socioeconomic class, in 2006.

Today many small business owners are enjoying the benefits of microcredit and are living a

better quality life. According to a survey, it is seen that people who belong to low

socioeconomic class are secured borrowers in terms of maintaining a more valuable bond

with the bank.20 There is an ongoing debate on whether microcredit is as effective as

advocated.

19 Drake, Deborah, and Elizabeth Rhyne (eds.). The Commercialization of Microfinance: Balancing Businessand Development . Kumarian Press, 2002.

20 Kowalik, M. and Martinez-Miera, D. (2010). The Creditworthiness of the Poor: A Model of the Grameen Bank. Retrieved from http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdf

http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdf


15/33

11

Poverty in the World

Poverty is “the state of one who lacks a usual or socially acceptable amount of money or

material possessions.”21 It is a global phenomenon, where every country suffers from some

form of poverty. Almost three thousand million people live in poverty where one third is in

extreme conditions.22 They do not have the basic means of survival. A large number of the

population faces challenges in the form of minimum standard of living. Almost 750 million

of people do not have the ability to get pure drinking water.23 Women and children suffer

from malnutrition and hunger. They are even deprived from fresh water. Failure to intake

adequate amount of food leads to many diseases. Lack of proper maternal care is the cause of

many infants not surviving as well as the mother during delivery.

Social advancement is an indicator of how developed a country is. Globally every country

has some phase where the social advancement needs to be strengthened. About eighty

percent of the population in the world lives on less than $10 a day.24 Though we cannot

eliminate it instantly but initiatives are taken to tackle the problem.

21 Poverty. (n.d.). In Merriam Webstar, Retrieved March 13, 2015, http://www.merriam-webster.com/dictionary/poverty

22 United Nations Development Programme. "Sustaining Human Progress: Reducing Vulnerabilities andBuilding Resilience." Human Development Report, 2014.

23 World Health Organization and UNICEF Joint Monitoring Programme (JMP). "Progress on Drinking Waterand Sanitation, 2014 Update." 2014.

24 Shah, A. "Poverty Facts and Stats." Global Issues. Retrieved March 13, 2015 fromhttp://www.globalissues.org/article/26/poverty-facts-and-stats.

http://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.globalissues.org/article/26/poverty-facts-and-statshttp://www.globalissues.org/article/26/poverty-facts-and-statshttp://www.globalissues.org/article/26/poverty-facts-and-statshttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/poverty


16/33

12

Poverty in Bangladesh

Bangladesh has been seen an increase in the economic growth after its independence in 1971.

The real capita per income grew up to greater than 130 per cent. As a result the poverty level

was reduced significantly. However, Bangladesh still remains a low income country, which

fails to provide the basic needs for many people. According to a source almost a third of the

people in Bangladesh live below the poverty line.25 It is more critical in the rural areas

compared to the urban zones. Inadequate food intake leads to malnutrition along with lack of

health centers to ensure long life. Although Bangladesh has shown its accomplishments but

there are some discontent as well.

According to the US Secretary Henry Kissinger, Bangladesh was defines as an “international

basket case.”26 The reason for this statement was the lack of resources, high population

count, a negative impact after separating from Pakistan, scarcity of food and a high

requirement for foreign aid. After the independence the whole infrastructure of Bangladesh

was shaken up and the growth took a slow pace. However in the last two decade it has shown

a great jump. The GDP growth in Bangladesh in 1990-2000 was 4.8 and in 2000-209 were

5.927 the rate of economic growth depends on the volume and level of investments which in

turns depends on the domestic savings.

25 Rural poverty in Bangladesh. (n.d.). retrieved March 3, 2015 fromhttp://www.ruralpovertyportal.org/country/home/tags/bangladesh

26 Bari, M. R. (2008). The Basket Case. The Daily Star. Retrieved March 7, 2015 fromhttp://archive.thedailystar.net/forum/2008/march/basket.htm

27 World Bank. (2011). World Development Indicators., Washington D.C.

http://www.ruralpovertyportal.org/country/home/tags/bangladeshhttp://www.ruralpovertyportal.org/country/home/tags/bangladeshhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://www.ruralpovertyportal.org/country/home/tags/bangladesh


17/33

13

To increase growth, resources are required. In the period 1973-1998 there has been an

average growth rate of 2.6%, from 1975-2005 there has been an average growth rate of

3.33% and from 2005-2011 there has been an average growth rate of 4.2%.28 The continuous

increase in the per capita income reflects a positive performance. Two main reasons for this

were the increasing rate of investments and the lowering of population using effective family

planning plans. In improving the situation Bangladesh has shown a great strength in being

constant and flexibility in confronting political and natural uncertainties.

Social advancement is one of the indicators of progress for a developing country. They are

life expectancy at birth, infant mortality rate29 and gross primary enrollment. The life

expectancy was 42 years in 1960, 47 years in 1977 and 67 years in 2009.30 The infant

mortality rate was 145 per thousand live births in 1970 and fell to 41 in 2009.31 The

percentage of students getting primary education has increased from 54 percent in 1970 to

95% in 2009.32 Therefore the overall social progress was huge, which was a good

accomplishment for Bangladesh but yet there is more progress needed.

28 Khan, A. A. (2013, October 31). Bangladesh Conundrum: A tapestry of light and shadow. The Financial Express. Retrieved March 7, 2015 from http://www.thefinancialexpress- bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28p

29 Poverty. (n.d.). In Wikipedia. Retrieved March 7, 2015, from http://en.wikipedia.org/wiki/Poverty

30 World Bank. (1979). World Development Report. New York: Oxford University Press.



http://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Povertyhttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28p


18/33

14

According to Thomas Robert Malthus the rate of growth of population would be in geometric

progression but the average annual rate of growth of food supply even under the best possible

circumstances would be in an arithmetic progression.33 The population growth rate has been

declining since 1970-1982 with 2.6 percent to 1.8 percent during 1990-2009. It is predicted

that by the 2009-2015 period the population growth rate would sand to 1.4 percent.34

On the other hand the food production has also increased significantly during the years

following independence. The overall increase in the population growth rate during 1949-

1950 and 2008-2009 was 275 percent compared to the average annual rate of growth of food

supply was 340 percent.35 This showed that Bangladesh was well off in maintaining itself.

However the question on dependency on foreign aid does play a role. Initially after the break

off from Pakistan the whole infrastructure was shaken. It took some time for Bangladesh to

recover from that shock.

According to the record of World Bank 59 percent of the total imports were financed by

foreign aid in 1984. The ratio declined to 50 percent in 1990, 15 percent in 2003 and 6

percent in 2009. There was an accelerated decline in the past two decades.36 Not only the

foreign assistance but the overall aid available per capita also decreased.

33 Malthusian Catastrophe. (n.d.) Retrieved March 7, 2015 from

http://en.wikipedia.org/wiki/Malthusian_catastrophe

34 Khan, A. A. (2013, October 31). Bangladesh Conundrum: A tapestry of light and shadow. The Financial Express. Retrieved March 7, 2015 from http://www.thefinancialexpress- bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28p

35 Bangladesh Bureau of Statistics (various years). Statistical Yearbook of Bangladesh. Dhaka


http://en.wikipedia.org/wiki/Malthusian_catastrophehttp://en.wikipedia.org/wiki/Malthusian_catastrophehttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://en.wikipedia.org/wiki/Malthusian_catastrophe


19/33

15

For all countries which are labeled as poor has a per capita aid of $47, but in 2009 for

Bangladesh it was $8.

37

On an average all the countries which are assisted by donor have a

per capita aid of $19. By virtue of good performance the critics were proved wrong, and

Bangladesh came on as a survivor country. The quantity of growth has shown tremendous

improvement but the question arises as to how much quality has been achieved. A

sustainable growth is needed which will be continued or be maintained.

To measure the worth of actual growth we calculate the Poverty Count Index or the

Incidence of Poverty. It determines the amount of poverty in a nation; calculated by the

number of people living below the poverty line over the total population. The poverty line is

nothing but an imaginary line that divides the poor people from the non poor people. It is the

minimum amount of income or expenditure that is imperative for a person to receive for the

smallest amount of nutrition. The Bangladesh Bureau of Statistics (BBS) carries out the

Household Income and Expenditure Survey (HIES) to find out the level of poverty.

In the fiscal year (FY) 1992 the national poverty rate in Bangladesh was 58.5 percent, in FY

2000 it was 48.9 percent and in FY 2010 it was 31.5 percent. 38 We can conclude from the

following data that the level of poverty has been declining and it is decreasing at an

increasing rate. However there is doubtfulness as to whether it is as good as it seems.


38 Planning Commission, Government of People’s Republic of Bangladesh. (2011). Sixth Year Plan, Dhaka.


20/33

16

A better method would be to match the approximate development of children for getting

more information on the poverty aspect.39 A better representative would be the Global

hunger Index (GHI) which measures the depth of hunger existing in a country.

The three criteria on which the index is calculated are the percentage of people who are

malnourished (27 percent), the percentage of young children who are underweight (41.3

percent) and the rate of death of children below the age of five (5.2 percent); giving an

overall GHI of 24.2 percent.40

Next there is a debate as to how accurate the data are? The figures based on the international

poverty line and the national poverty line varies immensely. The international poverty line is

based on the $2 per day condition. For the last forty years Bangladesh has not changes their

Poverty line. The fact that poverty estimate figures are actually hugely underestimated is

establishes. The poverty head count for national line is 40 compared to the international line

which is a striking 81.3.

Another factor that is to be considered is the people who are just above the poverty line. They

are vulnerable group. Any major macroeconomic changes can cause them to become in the

poor group. These are the people who are barely surviving on the minimal of support.

According to the international poverty line Bangladesh happens to be one of the poorest

countries in the world.

39 Svedberg, P. (2000). Poverty and Undernutrition. New York: Oxford University Press.

40 IFPRI. (2011) Global Hunger Index. Washington DC.


21/33

17

The Gini coefficient measures how the income in a country is distributed amongst all the

people.41 The higher the value the greater is the difference. It is named after Corrado Gini (42)

(43) “It has a range of zero to one, where zero means perfect equality and one mean perfect

inequality.”44 From the period 1983-1984 to 1991-1992 the gini coefficient was fairly low

ranging around 0.36 to 0.388. But from 1995-1996 onward the value increased to 0.432 and

continued to rise to 0.458 in 2010.45 It shows that the condition is not well.

From a poor human development category Bangladesh rose to medium level in 2010 but

sadly, in 2011 was listed in the poorest group.46 To maintain and develop a country good

governance is imperative. If power is not correctly used, if the citizens become voiceless and

the decisions made for public concern dismiss democracy, a nation is said to have poor

governance. It is very difficult to measure governance but some of its indicators are “voice

and accountability, political stability and no violence, government efficiency, control, rule of

law and curbing corruption.”47

41 Gini Coefficient. (n.d.). In Wikipedia. Retrieved March 7, 2015, fromhttp://en.wikipedia.org/wiki/Gini_coefficient

42 Gini, Corrado (1912). "Variabilità e mutabilità" Reprinted in Memorie di metodologica statistica (Ed. PizettiE, Salvemini, T). Rome: Libreria Eredi Virgilio Veschi (1955).

43 Gini, Corrado (1921). "Measurement of Inequality of Incomes". The Economic Journal (BlackwellPublishing) 31 (121): 124 – 126. doi:10.2307/2223319. JSTOR 2223319.

44 Gini Index. (n.d.). In Investopedia. Retrieved March 7, 2015, fromhttp://www.investopedia.com/terms/g/gini-index.asp

45 Bangladesh Bureau of Statistics (2008). Statistical Yearbook of Bangladesh. Dhaka

46 UNDP. (2010). Human Development Report . New York.

47 Kauffmann, Daniel, et al. (various issues, 1998-2010). Governance Matters. World Bank: Washington DC.

http://en.wikipedia.org/wiki/Gini_coefficienthttp://en.wikipedia.org/wiki/Gini_coefficienthttp://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Digital_object_identifierhttp://dx.doi.org/10.2307%2F2223319http://dx.doi.org/10.2307%2F2223319http://dx.doi.org/10.2307%2F2223319http://en.wikipedia.org/wiki/JSTORhttp://en.wikipedia.org/wiki/JSTORhttp://www.jstor.org/stable/2223319http://www.jstor.org/stable/2223319http://www.jstor.org/stable/2223319http://www.investopedia.com/terms/g/gini-index.asphttp://www.investopedia.com/terms/g/gini-index.asphttp://www.investopedia.com/terms/g/gini-index.asphttp://www.jstor.org/stable/2223319http://en.wikipedia.org/wiki/JSTORhttp://dx.doi.org/10.2307%2F2223319http://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Gini_coefficient


22/33

18

It can be concluded that all of the issues have performed below standard. Five of the features

have shown significant decline (except rule of law). Overall globally Bangladesh can be said

t have a very poor governance. Though there should a direct link to economic growth and

governance but it is a mystery how in case of Bangladesh it is contrast. Though quality has

fallen but growth is increasing, however, it is only possible in the short run. In the long run

this might prove to be a hurdle.

In particular part of the northern section and south coastal area, are more prone to poverty

because of the challenges of climate change; such as drought, flood, erosion of soil, cyclones.

Usually, it is the poor people who are most affected by such natural calamities. Poverty

strikes both in the small towns and in large cities. However, the conditions vary greatly

Rural poverty

Over the years Bangladesh has achieved their goal in trying to reduce poverty rate despite

having such a huge population. A decreasing trend has been seen which proves to be a

positive indication. The majority of the people in Bangladesh live in rural areas where they

are deprived of proper facilities and the basic necessities for maintaining a normal standard

of living. They are faced with challenges from shortage of food, illiteracy leading to

unemployment and mainly many ailments without the facility of proper medical treatment

available.


23/33

19

Only a handful number of people have just enough means to cover their daily expenditure

and that too is very meager in amount. Therefore they are constantly at danger of succumbing

to poverty due to any kind of global or major economic changes. Women are example of one

of the main victims of poverty. From being looked down upon they also face prejudice, low

working prospect and lack of adequate amount of calorie intake. Rural poverty is caused by

the attributes of the geographic position and demography48.

Regions of Bangladesh are low-lying which puts a constant threat of flooding. Every year the

rainy season brings about flood which results in loss of homes and damage to harvest.

Agriculture being one of the most important sources of living brings despair to the poor

people. The already poor people are then faced with even more misery. Trying to restore

their broken lives becomes extremely difficult.

48 Poverty in Bangladesh. (n.d.). In Wikipedia. Retrieved March 3, 2015, fromhttp://en.wikipedia.org/wiki/Poverty_in_Bangladesh

http://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladesh


24/33

20

Urban poverty

Capital cities are the dream city of many individuals. It holds the key to better life and

prosperity. Unfortunately, it usually is the case. Urban poverty does exist, and it refers to

those people who although reside in these huge city; still face the wrath of poverty. The

people living in cities are also not relieved from poverty. Though the big cities like, “Dhaka,

Chittagong, Khulna and Rajshahi,”49 provides the citizens with good quality lifestyle, but still

faced with many challenges.

Quite a lot of the inhabitants are migrants from the rural areas in search for jobs and better

opportunity in life. Failure to fulfill their motives causes them to dwell in slums and face the

harsh realities. Neither do they have proper work nor can they maintain a good standard of

living. The town laborers have difficult jobs which has a harmful impact on their health

condition. Therefore, it becomes quite tough to rise above their socioeconomic standing

under such circumstances.

49 Poverty in Bangladesh. (n.d.). In Wikipedia. Retrieved March 3, 2015, fromhttp://en.wikipedia.org/wiki/Poverty_in_Bangladesh

http://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladesh


25/33

21

Poverty Reduction

Reducing Poverty happens to be one of the main objectives for many organizations.

Particularly World Bank has been keen in looking out for development in countries and how

they are managing the level of poverty. It is a universal challenge that is seen in all parts of

the world. There are different poverty declining strategies, amongst them one is the micro

credit or micro making facility.

Bangladesh happens to be one of the cases where micro credit has given a new prospect in

reducing poverty. With micro banking facilities and innovative social business the situation

of the poor inhabitants of Bangladesh have gradually improved.50 Accumulating income

through financial services is a wonderful concept. Grameen Bank, a bank where loans are

given out in small amounts, mainly to women and farmers in order for them to earn a

satisfactory living. These micro loans are given out at a very low interest rate so that it

becomes easier for the borrower to return them and also gain maximum benefit.

Micro savings facilities are also provided for the people who require a secured place to keep

their funds. In this way, by making people self sufficient poverty can be reduced, even

though it is very gradual. Poverty is an immense crisis in Bangladesh where one is not able to

meet up the fundamental requirements of life; where most of the people are living below the

poverty line. This can be lessened to some degree if not totally eliminated.

50 Yunus, M. (n.d.). The Problem of Poverty in Bangladesh. Retrieved from March 11, 2015 fromhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in- bangladesh

http://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladesh


26/33

22

According to UNDP local economic development requires social group to approach a way

for “income and employment generation and social protection.”51 To make it possible

financial flexibility is an important tool. Large commercial banks are not really their source

of relieve. Micro credit programs are what these people need. Decline of poverty can be

attributed to the commitment of government’s poverty reduction interventions by direct and

indirect services.52 It is intended to create a superior focus on programs which would provide

and suit the poor best.

UKAID finances many projects, one of them being the Urban Partnerships for Poverty

Reduction Project (UPPR), which along with other community in Bangladesh helps in the

progress of enhancing lives and living conditions. According to UNDP these groups knows

exactly how to recognize their main concern. Basically the plan is to empower poor women

and provide assistance in making their own judgments.

It does not simply provide empowerment but also take account of humanizing their living

conditions and support in savings and credit making. Till now facilities such as “community

development committees,” 53 availability of pure drinking water and sanitation has been

given. Women have been given the chance to go for entrepreneurial activities and make

themselves independent.

51 Poverty Reduction. (n.d.). UNDP. Retrieved March 12, 2015 from

http://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.html

52 5 Years of Remarkable Achievement in Reducing Poverty. (2014, June 24). Bangladesh Awami League.Retrieved March 12, 2015 from https://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-poverty

53 Urban Partnerships for Poverty Reduction. (n.d.) UNDP. Retrieved March 12, 2015 fromhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.html

http://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.html


27/33

23

Millions of people have been part of the Microcredit Program and it is sought to be a superior

form of expense than social services. The program is intended to serve the underprivileged

and finance with credit to them as they are abandoned by the official commercial banking

system.54 Helping with financial aid alone is not sufficient to the deprived.

Microcredit organizations generally offer funds to women in a family because of their low

power. Becoming financially independent would allow them more authority along with self

esteem. People who deliver microcredit only do so to lend money and create prospect of

investment. Organizations such as BRAC commenced on projects that are for the benefit of

the rural people.

54 Uddin, M. H. (2012, March 2). Microcredit for poverty alleviation. The Daily Star . Retrieved March 12, 2015from http://archive.thedailystar.net/newDesign/news-details.php?nid=224551

http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551


28/33

24

Benefits and Challenges of Micro level banking

Micro level banking has sought out many advantages in the alleviation of poverty. Though

there has been much dispute as to how effective the term micro credit has actually been.

Advocators suggest that though poverty has lessened to some degree by decreasing the level

underemployment and higher incomes.

The concept of giving out loans may have led many debtors to default and in response fall

into despair. However, it cannot be denied that the impact of micro level banking was also

improvement in nutrition, better education of underprivileged children. Proper monitoring is

also needed because the loan must be for the venture rather than consumption.

Then the purpose would no longer be served of micro level banking. Many projects of

microcredit have assisted in the formation of businesses; in the process they have made self

employment in mass audience. To some extent it does help in reducing poverty but it is only

one criterion.

There are still other factors that play vital parts in the overall poverty situation. To improve

the concept, of micro level banking, entrepreneurs who have a fairly good amount of

experience can be sanctioned for a relatively high loan to further develop their initiatives.

Cost of providing loans is also a factor that makes the transfer of loans difficult, therefore if

interest rates can be reduced it can help the notion better.55

55 Microcredit. (n.d.). In Wikipedia. Retrieved March 13, 2015, from http://en.wikipedia.org/wiki/Microcredit

http://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredit


29/33

25

Although there are advantages but, the elevated price of loans reduces the effectiveness of

the notion. It is recognized that empowering people is imperative for making them self

sufficient. That is by increasing the means to all resources along with credit.

Not only public but even private institutions are playing a great role in this development

plans. The micro loans have a different effect on both rural areas and urban areas. Poor

people who were not able to survive has risen above their past conditions and started to begin

a new life.

Though it is a time consuming process and the impact is not instantaneous, but still it is a

small step toward a bigger goal. Sometimes it becomes complicated as to who would be

classified as poor; as in people who are below the poverty line or people who are in such a

vulnerable group that any time they may fall beyond the poverty line.

The people who are very poor do not have the means or the experience to encounter or

partake in any kind of entrepreneurial activities. Their lack of education and skills become a

barrier to finance them. Often the funds are given away in groups which make the chances of

rate of default pretty low.

The method of micro level banking proved to be a success and worked well in Bangladesh

and is followed all over the world. The sole purpose micro level banking greatly helped in

alleviating poverty.


30/33

26

Conclusion

Micro level banking can be defined as a way to give out loans of small amount to the people

who are unable to attain funds through the commercial banking channel. There might be a

strong possibility of micro finance to reduce poverty status in a given society. To what extent

this may be victorious depends on the degree of involvement and depth of proper

governance. This arrangement may not be perfect or an instantaneous form of poverty

reduction but if conformed to the ground concept, there is a good chance that it will be more

successful than what it has been. Bangladesh is a developing country, where micro credit has

seen success along with many other countries around the globe. Micro credit programs

provide small loans to people and help them fight poverty. It is a means for those

underprivileged people to come to an end to their struggle and hardships. The significant

thing is to support them on becoming independent. Though it cannot be said that poverty will

be completely eliminated but using this tool of micro level banking, there could be possible

substantial reduction in poverty status in the society.


31/33

27

References

5 Years of Remarkable Achievement in Reducing Poverty. (2014, June 24). BangladeshAwami League. Retrieved March 12, 2015 from

https://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-poverty

Bangladesh Bureau of Statistics (2008). Statistical Yearbook of Bangladesh. Dhaka

Bangladesh Bureau of Statistics (various years). Statistical Yearbook of Bangladesh. Dhaka

Bank. (n.d.). In Learners Dictionary.com, Retrieved March 1, 2015, fromhttp://www.learnersdictionary.com/definition/bank

Bank. (n.d.). In Wikipedia. Retrieved March 1, 2015, from http://en.wikipedia.org/wiki/Bank

Bari, M. R. (2008). The Basket Case. The Daily Star. Retrieved March 7, 2015 fromhttp://archive.thedailystar.net/forum/2008/march/basket.htm

Bateman, M. 'Why Doesn't Microfinance Work? The Destructive Rise of Local Neoliberalism'. Zed Books, London, 2010.

Complete guide to Corporate Finance. (n.d.). In Investopedia. Retrieved March 1, 2015, fromhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspx

Drake, Deborah, and Elizabeth Rhyne (eds.). The Commercialization of Microfinance: Balancing Business and Development . Kumarian Press, 2002.

Financial Institution. (n.d.). In Investopedia. Retrieved February 28, 2015, fromhttp://www.investopedia.com/terms/f/financialinstitution.asp

Financial Institution. (n.d.). In Wikipedia. Retrieved February 28, 2015, fromhttp://en.wikipedia.org/wiki/Financial_institution

Gini Coefficient. (n.d.). In Wikipedia. Retrieved March 7, 2015, fromhttp://en.wikipedia.org/wiki/Gini_coefficient

Gini, Corrado (1921). "Measurement of Inequality of Incomes". The Economic Journal

(Blackwell Publishing) 31 (121): 124 – 126. doi:10.2307/2223319. JSTOR 2223319.

Gini, Corrado (1912). "Variabilità e mutabilità" Reprinted in Memorie di metodologicastatistica (Ed. Pizetti E, Salvemini, T). Rome: Libreria Eredi Virgilio Veschi (1955).

Gini Index. (n.d.). In Investopedia. Retrieved March 7, 2015, fromhttp://www.investopedia.com/terms/g/gini-index.asp

https://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttp://www.learnersdictionary.com/definition/bankhttp://www.learnersdictionary.com/definition/bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://www.investopedia.com/terms/f/financialinstitution.asphttp://www.investopedia.com/terms/f/financialinstitution.asphttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Gini_coefficienthttp://en.wikipedia.org/wiki/Gini_coefficienthttp://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Digital_object_identifierhttp://dx.doi.org/10.2307%2F2223319http://dx.doi.org/10.2307%2F2223319http://dx.doi.org/10.2307%2F2223319http://en.wikipedia.org/wiki/JSTORhttp://en.wikipedia.org/wiki/JSTORhttp://www.jstor.org/stable/2223319http://www.jstor.org/stable/2223319http://www.jstor.org/stable/2223319http://www.investopedia.com/terms/g/gini-index.asphttp://www.investopedia.com/terms/g/gini-index.asphttp://www.investopedia.com/terms/g/gini-index.asphttp://www.jstor.org/stable/2223319http://en.wikipedia.org/wiki/JSTORhttp://dx.doi.org/10.2307%2F2223319http://en.wikipedia.org/wiki/Digital_object_identifierhttp://en.wikipedia.org/wiki/Gini_coefficienthttp://en.wikipedia.org/wiki/Financial_institutionhttp://www.investopedia.com/terms/f/financialinstitution.asphttp://www.investopedia.com/walkthrough/corporate-finance/1/financial-institutions.aspxhttp://archive.thedailystar.net/forum/2008/march/basket.htmhttp://en.wikipedia.org/wiki/Bankhttp://www.learnersdictionary.com/definition/bankhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-povertyhttps://www.albd.org/index.php/resources/special-reports/1300-5-years-of-remarkable-achievement-in-reducing-poverty


32/33

28

IFPRI. (2011) Global Hunger Index. Washington DC.

Jamal, M. (n.d.). Functions of Bank Primary and Secondary. Retrieved March 1, 2015 fromhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondary

Kauffmann, Daniel, et al. (various issues, 1998-2010). Governance Matters. World Bank:Washington DC.

Khan, A. A. (2013, October 31). Bangladesh Conundrum: A tapestry of light and shadow.The Financial Express. Retrieved March 7, 2015 from http://www.thefinancialexpress- bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lh bHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28p

Khandker, Shahidur R. (1999). Fighting poverty with microcredit: experience in Bangladesh.Dhaka, Bangladesh: The University Press Ltd. ISBN 9789840514687.

Kowalik, M. and Martinez-Miera, D. (2010). The Creditworthiness of the Poor: A Model ofthe Grameen Bank. Retrieved fromhttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdf

Malthusian Catastrophe. (n.d.) Retrieved March 7, 2015 fromhttp://en.wikipedia.org/wiki/Malthusian_catastrophe

Microcredit. (n.d.). In Wikipedia. Retrieved March 2, 2015, fromhttp://en.wikipedia.org/wiki/Microcredit

Microfinance. (n.d.). In Investopedia. Retrieved March 2, 2015, from

http://www.investopedia.com/terms/m/microfinance.asp

Microfinance. (n.d.). In Wikipedia. Retrieved March 2, 2015, fromhttp://en.wikipedia.org/wiki/Microfinance

Planning Commission, Government of People’s Republic of Bangladesh. (2011). Sixth Year

Plan, Dhaka.

Poverty. (n.d.). In Merriam Webstar, Retrieved March 13, 2015, http://www.merriam-webster.com/dictionary/poverty

Poverty. (n.d.). In Wikipedia. Retrieved March 7, 2015, fromhttp://en.wikipedia.org/wiki/Poverty

Poverty in Bangladesh. (n.d.). In Wikipedia. Retrieved March 3, 2015, fromhttp://en.wikipedia.org/wiki/Poverty_in_Bangladesh

http://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://en.wikipedia.org/wiki/Malthusian_catastrophehttp://en.wikipedia.org/wiki/Malthusian_catastrophehttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Microcredithttp://www.investopedia.com/terms/m/microfinance.asphttp://www.investopedia.com/terms/m/microfinance.asphttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Microfinancehttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Poverty_in_Bangladeshhttp://en.wikipedia.org/wiki/Povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://www.merriam-webster.com/dictionary/povertyhttp://en.wikipedia.org/wiki/Microfinancehttp://www.investopedia.com/terms/m/microfinance.asphttp://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/Malthusian_catastrophehttp://www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdfhttp://en.wikipedia.org/wiki/Special:BookSources/9789840514687http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.thefinancialexpress-bd.com/old/index.php?ref=MjBfMTJfMjFfMTFfMF8xNDFfOTgxNTY=&feature=c3BlY2lhbHNOZXdz&na=QW5uaXZlcnNhcnkgSXNzdWUgMjAxMSAoUGFydCBUd28phttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondaryhttp://www.business-science-articles.com/articles/business/76-functions-of-banks-i-primary-and-secondary


33/33

Poverty Reduction. (n.d.). UNDP. Retrieved March 12, 2015 fromhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.html

Rural poverty in Bangladesh. (n.d.). retrieved March 3, 2015 from

http://www.ruralpovertyportal.org/country/home/tags/bangladesh

Rutherford, Stuart; Arora, Sukhwinder (2009). The poor and their money: microfinance froma twenty-first century consumer's perspective. Warwickshire, UK: Practical Action.ISBN 9781853396885.

Shah, A. "Poverty Facts and Stats." Global Issues. Retrieved March 13, 2015 fromhttp://www.globalissues.org/article/26/poverty-facts-and-stats.

Svedberg, P. (2000). Poverty and Undernutrition. New York: Oxford University Press.

Uddin, M. H. (2012, March 2). Microcredit for poverty alleviation. The Daily Star . RetrievedMarch 12, 2015 from http://archive.thedailystar.net/newDesign/news-details.php?nid=224551

UNDP. (2010). Human Development Report . New York.

United Nations Development Programme. "Sustaining Human Progress: ReducingVulnerabilities and Building Resilience." Human Development Report, 2014.

Urban Partnerships for Poverty Reduction. (n.d.) UNDP. Retrieved March 12, 2015 fromhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.html

World Bank. (1979). World Development Report. New York: Oxford University Press.

World Bank. (2011). World Development Indicators., Washington D.C.

What Is a Microfinance Bank? (n.d.). Retrieved March 2, 2015 fromhttp://www.wisegeek.org/what-is-a-microfinance-bank.htm

What is the difference between fiscal and monetary policy? (March, 2002). Retrieved March1, 2015 from Federal Reserve Bank of San Francisco.http://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policy

World Health Organization and UNICEF Joint Monitoring Programme (JMP). "Progress onDrinking Water and Sanitation, 2014 Update." 2014.

Yunus, M. (n.d.). The Problem of Poverty in Bangladesh. Retrieved from March 11, 2015from http://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladesh
http://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttp://www.ruralpovertyportal.org/country/home/tags/bangladeshhttp://www.ruralpovertyportal.org/country/home/tags/bangladeshhttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://www.globalissues.org/article/26/poverty-facts-and-statshttp://www.globalissues.org/article/26/poverty-facts-and-statshttp://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.muhammadyunus.org/index.php/media/articles-by-professor-yunus/219-the-problem-of-poverty-in-bangladeshhttp://www.frbsf.org/education/publications/doctor-econ/2002/march/fiscal-monetary-policyhttp://www.wisegeek.org/what-is-a-microfinance-bank.htmhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/operations/projects/poverty_reduction/urban-partnerships-for-poverty-reduction--uppr-.htmlhttp://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://archive.thedailystar.net/newDesign/news-details.php?nid=224551http://www.globalissues.org/article/26/poverty-facts-and-statshttp://en.wikipedia.org/wiki/Special:BookSources/9781853396885http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://www.ruralpovertyportal.org/country/home/tags/bangladeshhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.htmlhttp://www.bd.undp.org/content/bangladesh/en/home/ourwork/povertyreduction/overview.html

Documents

LAW 200 Assignment 2