The Effectiveness of Microcredit Programs and Prospects of Islamic Microfinance Institutes (IMIFs) in Muslim Countries: A Case Study in Bangladesh
This paper examines microfinance members’ views on schemes offered by various MFIs in Bangladesh. It explores the possibility of establishing Islamic MFIs (IMFIs) as an alternative to conventional MFIs.
The paper is based on a study in which questionnaires were administered to members of 3 MFIs in Bangladesh. It identifies seven key socioeconomic factors that affect microcredit beneficiaries’ opinions on the effectiveness of MFIs. These include:
- Changes in income and standard of living;
- Cost of credit, loan risk and repayment policy;
- Obligations such as training, meetings etc. which may be against religious sentiments of beneficiaries, particularly women;
- Interest rate which may be against Islamic sentiment;
- Opportunities for utilizing loans.
The results reveal that overall client satisfaction with MFIs and their microcredit products is negative. The report states that Islamic MFIs have potential in the present sociocultural and religious context of many Muslim countries including Bangladesh.