Paris Microfinance Network

BRAC Reassures Borrowers After Cyclone Sidr Devastation

BRAC, one of the largest microcredit programmes in Bangladesh, has been reassuring borrowers caught up in the aftermath of Cyclone SIDR that they will help them every step of the way to rebuild their business and livelihoods.
BRAC is the largest NGO in the world and was founded in Bangladesh in 1972 by Fazle Hasan Abed, BRAC Chairman. It has programmes in Asia and Africa as well as the UK and USA and is largely self-financing.

BRAC estimates that more than 150,000 homes belonging to BRAC borrowers were completely destroyed in the cyclone and a further 270,000 borrowers have been seriously affected. 80% of these people had outstanding loans with an average loan of 7000 Taka (US$102).

BRAC has suspended loan repayments for at least two weeks and will take a few weeks to restart normal loan repayment meetings.

“Those borrowers who can’t pay, will not be forced to pay. There is no compulsion. Inevitably BRAC will have to absorb some losses. Out of about 300 crore loans (approx US$44 million) outstanding in that region, there may have to be some write offs. We are constantly reviewing the situation.” said Fazle Abed, Chairman and Founder of BRAC.

BRAC has also suffered fatalities and reports that 281 village organisation members tragically lost their lives on the night of the cyclone. Their families qualify for BRAC’s death payment of 5,000 Taka (US$73) and the immediate cancellation of any outstanding loans.

Read more on the BRAC Blog....

New Microfinance Lending Site: myELEN.com

Launching in November, the online portal myELEN.com will be the first institution to bring microfinance to the Czech Republic. While microfinance has become a relatively common phenomenon in the United States, the myELEN project will be unique in Europe when it launches in several weeks’ time, says Linda Hanyková, executive director of Microfinance, the company behind the My Electronic Loan Exchange Network (myELEN) project.

Loans granted through myELEN would range between 5,000 Kč and 157,000 Kč ($267–8,396). The site will also allow investors to make donations or interest-free loans. Through myELEN.com, investors can lend money to selected Mexican entrepreneurs — farmers, food venders, weavers, grocers — or associations of entrepreneurs, which are listed on the Web site along with their photos and business plans. Though it does bear an ethical streak, most investments made through the site will return annual yields between 5 percent and 10 percent, depending on the amount of money invested.

Annual rates by microfinance institutions in Mexico run between 40 percent and 110 percent. However, local banks and other lenders charge even higher rates while providing little educational and counseling assistance to borrowers. Rates charged by myELEN would depend on the individual business and amount loaned, Hanyková said.

Today, myELEN cooperates with only one microfinance partner based in Mexico, an NGO named FIPS. But the project’s idea is to work with many other reliable microfinance institutions in Mexico and elsewhere, so that investments are diversified to reduce the risk of unrecoverable loans, said Tomáš Hes, an economist and one of myELEN’s founders.