(Focus Writing) Digital Micro-Credit of Bangladesh -Bangladesh enters the era of digital microfinance

(Focus Writing) Digital Micro-Credit of Bangladesh -Bangladesh enters the era of digital microfinance

The demand for micro-credit from countless poor families in rural society has been an ongoing reality since time immemorial. Debt was a necessity for the poor people who were constantly fighting against poverty and various risks. In particular, microcredit has made an undeniable contribution to the transformation of the rural economy of Bangladesh, especially in the development of the rural non-agricultural sector, poverty alleviation, the inclusion of women in the economic sector, establishment of development implementation strategy association concept, and elimination of social inequality in a larger sense. In this case, digital microfinance will play a leading role in alleviating poverty and social inequality.

Bangladesh enters the era of digital microfinance

Although the financial transaction services have reached the hands of the people of the country, there has been an opportunity to take loans for so long. In addition, the banks have invested the money received in rural areas in the city. But even for a small amount of money, the people of the village have resorted to borrowing at high-interest rates from moneylenders and various non-governmental organizations (NGOs). This time the situation is coming to an end. Customers of Bikash, the country's largest mobile phone financial services company (MFS), will now be able to take microloans through their mobile phones. Private sector The City Bank Limited will provide digital loans to its customers. Through this, Bangladesh is entering the era of digital microfinance.

> By launching this loan, Citybank is reaching out to a large number of people in the country. Because Bikash has about five and a half crore customers. And you don't have to go to any branch, sub-branch, or agent of the bank for a loan. Citybank and development officials have dubbed the new service a "digital nanny lane."

> For so many days only money has been sent and money has been deposited in the name of financial inclusion. Everyone has agreed to collect deposits from the village. As a result, there was an ethical problem with financial inclusion. Now, through development, the loan of Citybank will reach everyone. This will meet the demand for instant loans and free the people of the country from high-interest rates. This will be another step forward in the implementation of Digital Bangladesh. The country's economy will change.

Features of Digital Microfinance:

The main feature of this loan is that you will not need any documentation while applying. Loans can be obtained within a few seconds of clicking through the bKash app. Loans ranging from Tk 500 to a maximum of Tk 20,000 will be available at 9 percent interest. The maximum term of the loan is three months. Bangladesh Bank in July last year allowed Citybank to give loans to Bikas customers on a trial basis. Accordingly, Citybank provided loans ranging from Rs. 500 to Rs. 10,000 to 35,000 bKash customers. About 6 crore rupees was given as a loan at 9 percent interest and 2 percent fee. About 98 percent of these loans are repaid. Only 4 percent are defaulters. In view of this, Citybank gave final approval to launch a digital loan. Bangladesh Bank. The annual interest rate on this loan is 9 percent. And the loan fee will be 5 percent of the loan.

Digital Microfinance Requirements:

Regarding the need for digital microfinance, Mustafa K. Mujeri, former chief economist of Bangladesh Bank and executive director of the Institute for Inclusive Finance and Development (INM), said, “Such micro and instant loans are very much needed for the country. Because the people of the village are now dependent on high-interest rates. To make this initiative a success, it is necessary to provide the necessary policy support. If more banks are interested in such initiatives, the people of the country will get benefits.

> The spread of this new service will immediately put an end to the dependence of others for a small amount of money. Now you have to pay up to 25 percent interest on the loan taken from the NGO. The interest rate of Mahajani loans is also quite high. It came to an end.

> It is known that the first digital loan was launched in Kenya in 2012. Then it spread to different countries in Africa. Now, this digital loan for six amounts of money is quite popular in different countries.

How do get this loan?

Citybank officials said that artificial intelligence (AI) decides whether a customer is eligible for a loan by looking at the transaction reports and usage patterns of bKash. Citybank lends immediately to those who are eligible for these micro-loans. By clicking on the bKash app, the loan application passes the artificial intelligence review and the loan money goes away immediately as the customer's bKash.

> To get a loan, the customer has to click on the 'Lane' icon from his development app. KYC will then be allowed to share the information with Citybank. You need to choose how much money you want to borrow and how long the loan will last.

> Then you have to agree to the terms of the loan. Give the development pin to the customer within a few seconds The loan money will be deposited as development.

However, not everyone will get a loan. Those who get it, they will get it immediately. There is no need to re-apply for this with anyone. Kamal Qadir, Chief Executive Officer (CEO) of bKash, said, “Every day a vegetable seller needs a working capital loan. He will buy vegetables from the wholesale market in the morning with a loan and sell them all day long. Then shades again. This is Citybank's microfinance service for Bikash customers, which does not require a guarantor.

Finally, entering the era of digital microfinance after the Five G era has brought the digitalization of Bangladesh to the world stage in a new way. Many possibilities have been opened for the benefit of inter-transaction services between banks and MFS. Using effective platforms like bKash and a huge customer base, commercial banks can launch creative new services. This will make it easier for the customers to reach Ara. The digital nanny lane will further expand the scope of financial inclusion.