Association for Social Advancement

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ASA
Formation1978 (1978)
Founder Md. Shafiqual Haque Choudhury
TypeNon-profit, self-sufficient microfinance institution
PurposeASA programs focused on awareness-raising and group formation for the poor aiming at integrated development through asserting rights of the poor, education, mini-irrigation, primary health, credit for income generation, etc.
Headquarters Dhaka, Bangladesh
Key people
Md. Ariful Haque Choudhury (President)
Staff (2013)
21,422 [1]
Website asa.org.bd

The Association for Social Advancement is a non-governmental organisation based in Bangladesh which provides microcredit financing.

Contents

History

The association was established in 1978 by Md. Shafiqual Haque Choudhury and a team of people who were then working for other established NGOs, [2] but who themselves were arguing for a more radical way to alleviate the exploitation of rural villages caused by the 1971 Bangladesh atrocities. [3] The founding framework of ASA was aimed at empowering rural landless villagers from the "bottom up" through "people's organizations". [3] These were run by volunteers who advocated that a consciousness for solidarity amongst the village poor would lead to collective social action. [4] ASA has currently over 5.3 million members forming different groups with special emphasis on saving practice and 21,477 employees engaged in disbursing and collecting loans and savings deposits. [5]

For many years, ASA sought to combine social development (in health, education, nutrition, and sanitation) with credit provision, but in 1991, these were abandoned, and ASA shifted its focus solely to microcredit lending. [6] This was because they wanted to stop “donor dependence” and become specialised and financially self-sufficient. Since then, it has become a fully self-sufficient microfinance institution – operating mainly in Bangladesh, but with presence in Africa and South America. [7] ASA offers financial services to including micro-credit, small business credit, regular weekly savings, voluntary savings and life insurance – and aims to follow a simple, standardised, low-cost system of organisation, management, savings and credit operations. [5]

It was initially funded by donors, then some small commercial bank loans, then low-cost loans from a subsidised wholesaler, and finally from client deposits and retained earnings. The core service has remained the low-value year-long weekly-repayment loan. ASA has not had to undergo large-scale internal reorganisation or training because the basic product and its delivery have remained largely unchanged. [8] Also, savings from clients are used to provide security against default by protecting the small loan portfolio, instead of being used in more risky ventures like raising capital.

Microfinancing model

ASA offers an alternative microfinancing model to that of the Grameen Bank. In December 2007, it placed Number 1 in Forbes Magazine's list of the world's top 50 microfinance institutions. [9] Grameen Bank placed Number 16, despite having won the Nobel Peace Prize 2006. [10]

Its flat interest rate was 15% (approximately 32% annual percentage rate) until July 1995, when it dropped to 12.5% at a time when micro-finance institution (MFIs) were coming under increasing criticism in the press for their prices. [11]

Internal organisation

ADB describes ASA as the "Ford motor model of microfinance" because of its standardisation of low-cost microfinance. [4] Its flat organisational structure consists of three tiers: a relatively small central office in Dhaka, [12] district offices, and branch offices. The branch offices are the main channel through which their core loan products are disbursed. These branches report to the district offices, who in turn report to the head office. [13]

Each of its 2,933 [14] branches in Bangladesh is a self-sufficient unit, run by six people: a branch manager, an assistant branch manager, and four loan officers. The branch manager is allowed to approve all transactions within the branch, provided they meet the guidelines of an operating manual. Each branch is run as a profit centre, and is expected to fully recover costs between 9 and 12 months. [4]

Operating information

Up to June 2014, ASA's cumulative loan disbursement has been TK. 851.42 billion (US$10.95 billion) while loan outstanding (principal) was TK. 59.29 billion (US$760 million) among 4 million borrowers. As of June 2014, ASA's Operational Self Sufficiency (OSS) was 202.72%, Financial Self-sufficiency (FSS) 127.03% and rate of loan recovery 99.63%. [15] It has 20,259 staff serving more than 4.85 million clients. [14]

Impacts on Bangladesh

A 2008 study conducted by ASA's Research and Documentation Cell showed that ASA's Credit and Savings Program increased, among other outcomes, business capital, education, employment and sanitation. [16] In 2011, ASA, together with Grameen Bank and BRAC, accounted for 62 per cent of Bangladesh's 18.5 million micro-borrowers and 69 per cent of the sector's gross loan portfolio. [17]

At the industry level, overall average borrower numbers and portfolios have been rising steadily, ASA's active borrower accounts in 2008 and 2009 fell by 32 percent. [18] [ failed verification ] This was data was analysed as a need for ASA to diversify their products and increase their quality of service. [17]

Women are the main demographic to which ASA provide their services. In 2007, 71% of services were to women. [19] Women who belong to ASA are reported to be among the least active within community and political life. [6]

Related Research Articles

<span class="mw-page-title-main">Microcredit</span> Small loans to impoverished borrowers

Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, and a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans. As of 2009 an estimated 74 million people held microloans that totaled nearly US$40 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent. The first economist who had invented the idea of micro loans was The Very Reverend Jonathan Swift in the 1720’s. Microcredit is part of microfinance, which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983 by their current Chief Adviser Muhammad Yunus. Many traditional banks subsequently introduced microcredit despite initial misgivings. The United Nations declared 2005 the International Year of Microcredit. As of 2012, microcredit is widely used in developing countries and is presented as having "enormous potential as a tool for poverty alleviation." Microcredit is a tool that can possibly be helpful to reduce feminization of poverty in developing countries.

<span class="mw-page-title-main">Microfinance</span> Provision of microloans to poor entrepreneurs and small businesses

Microfinance consists of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. ID Ghana is an example of a microfinance institution.

Grameen Bank is a microfinance specialized community development bank founded in Bangladesh. It provides small loans to the impoverished without requiring collateral.

<span class="mw-page-title-main">Muhammad Yunus</span> Bangladeshi economist and politician (born 1940)

Muhammad Yunus is a Bangladeshi economist, entreprenur, politician, and civil society leader who has been serving as the 5th Chief Adviser of the interim government of Bangladesh since 8 August 2024. Yunus was awarded the Nobel Peace Prize in 2006 for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance. Yunus has received several other national and international honors, including the United States Presidential Medal of Freedom in 2009 and the Congressional Gold Medal in 2010.

<span class="mw-page-title-main">Cooperative banking</span> Type of retail or commercial bank organized cooperatively

Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.

<i>Banker to the Poor</i> 1999 autobiography by Muhammad Yunus and Alan Jolis

Banker to the Poor: Micro-Lending and the Battle Against World Poverty is an autobiography of 2006 Nobel Peace Prize Winner and Grameen Bank founder Muhammad Yunus. The book describes Yunus' early life, moving into his college years, and into his years as a professor at Chittagong University. While a professor at Chittagong University, Yunus began to take notice of the extreme poverty of the villagers around him. In 1976, Yunus incorporated the help of Maimuna Begum to collect data of people in Jobra who were living in poverty. Most of these impoverished people would take a loan from moneylenders to buy some raw material, using that raw material to create some product, and then selling back the good to the moneylender to repay the loan, earning a very meager profit. One woman interviewed made no more than two cents per day creating bamboo stools using this system. The list Begum brought back to Yunus named 42 women who were living on credit of 856 taka.

<span class="mw-page-title-main">Village banking</span> Method of implementing microcredits

Village banking is a microcredit and saving methodology whereby financial services are administered locally in a community bank rather than in a centralized commercial bank. Village banking has its roots in ancient cultures and was most recently adopted for use by micro-finance institutions (MFIs) as a way to control costs. Early village banking methods were innovated by Grameen Bank and then later developed by groups such as FINCA International founder John Hatch. Among US-based non-profit agencies there are at least 31 microfinance institutions (MFIs) that have collectively created over 800 village banking programs in at least 90 countries. And in many of these countries there are host-country MFIs—sometimes dozens—that are village banking practitioners as well. The latest developments globally can be seen in South East Asia, where digitization is pacing fast to reach rural areas with hybrid on- and offline solutions.

<span class="mw-page-title-main">Solidarity lending</span> Lending practice

Solidarity lending is a lending practice where small groups borrow collectively and group members encourage one another to repay. It is an important building block of microfinance.

<span class="mw-page-title-main">Grameen family of organizations</span>

The Grameen family of organizations has grown beyond Grameen Bank into a multi-faceted group of both commercial and non-profit ventures. It was first established by Muhammad Yunus, the Nobel Peace Prize-winning founder of Grameen Bank. Most of the organizations in the Grameen group have central offices at the Grameen Bank Complex in Mirpur, Dhaka, Bangladesh. The Grameen Bank started to diversify in the late 1980s when it began attending to unutilized or underutilized fishing ponds, as well as irrigation pumps like deep tubewells. In 1989, these diversified interests started growing into separate organizations, as the fisheries project became Grameen Fisheries Foundation and the irrigation project became Grameen Krishi Foundation.

Bangladesh is a developing country with an impoverished banking system, particularly in terms of the services and customer care provided by the government run banks. In recent times, private banks are trying to imitate the banking structure of the more developed countries, but this attempt is often foiled by inexpert or politically motivated government policies executed by the central bank of Bangladesh, Bangladesh Bank. The outcome is a banking system fostering corruption and illegal monetary activities/laundering etc. by the politically powerful and criminals, while at the same time making the attainment of services or the performance of international transactions difficult for the ordinary citizens, students studying abroad or through distance learning, general customers etc.

<span class="mw-page-title-main">Microcredit Summit Campaign</span>

The Microcredit Summit Campaign, an American non-profit organization, started as an effort to bring together microcredit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with microcredit around the goal of alleviating world poverty through microfinance.

Grameen America is a 501(c)(3) nonprofit microfinance organization based in New York City. It was founded by Nobel Peace Prize recipient Muhammad Yunus in 2008. Grameen America is run by former Avon Chairman and CEO Andrea Jung. The organization provides loans, savings programs, financial education, and credit establishment to women who live in poverty in the United States. All loans must be used to build small businesses.

<span class="mw-page-title-main">Microcredit Regulatory Authority</span>

Microcredit Regulatory Authority (MRA) is the central body to monitor and supervise microfinance operations of non-governmental organizations of the Republic of Bangladesh. It was created by the Government of People's Republic of Bangladesh under the Microcredit Regulatory Authority Act. License from the Authority is mandatory to operate microfinance operation in Bangladesh as an NGO.

<span class="mw-page-title-main">Microcredit for water supply and sanitation</span>

Microcredit for water supply and sanitation is the application of microcredit to provide loans to small enterprises and households in order to increase access to an improved water source and sanitation in developing countries. While most investments in water supply and sanitation infrastructure are financed by the public sector, investment levels have been insufficient to achieve universal access. Commercial credit to public utilities was limited by low tariffs and insufficient cost-recovery. Microcredits are a complementary or alternative approach to allow the poor to gain access to water supply and sanitation in the aforementioned regions.

Hattha Bank (HKL) is a Cambodian bank and microfinance institution in Cambodia.

Angkor Mikroheranhvatho (Kampuchea) Co., also known as AMK, is a registered microfinance institution (MFI) headquartered in Phnom Penh, Cambodia with over 280,000 active borrowers.

The impact of microcredit is the study of microcredit and its impact on poverty reduction which is a subject of much controversy. Proponents state that it reduces poverty through higher employment and higher incomes. This is expected to lead to improved nutrition and improved education of the borrowers' children. Some argue that microcredit empowers women. In the US and Canada, it is argued that microcredit helps recipients to graduate from welfare programs. Critics say that microcredit has not increased incomes, but has driven poor households into a debt trap, in some cases even leading to suicide. They add that the money from loans is often used for durable consumer goods or consumption instead of being used for productive investments, that it fails to empower women, and that it has not improved health or education.

An interest rate ceiling is a regulatory measure that prevents banks or other financial institutions from charging more than a certain level of interest.

<span class="mw-page-title-main">Kashf Foundation</span> Non-profit organization

Kashf Foundation is a non-profit organization, founded by Roshaneh Zafar in 1996. Kashf is regarded as the first microfinance institution (MFI) of Pakistan that uses village banking methodology in microcredit to alleviate poverty by providing affordable financial and non-financial services to low income households - particularly for women, to build their capacity and enhance their economic role. With headquarters in Lahore, Punjab, Kashf have regional offices in five major cities and over 200 branches across Pakistan.

<span class="mw-page-title-main">LifeBank (Philippines)</span> Bank in the Philippines

LifeBank is a rural bank based in Iloilo, Philippines. It started operations on March 21, 1970 in Maasin, Iloilo as Rural Bank of Maasin. It is divided into two corporate arms each with its own designated finance and banking services functions: the LifeBank RB and LifeBank MFI. As of 2021, it has a total of 4 branches and 44 branch-lite units (BLU) under LifeBank - a Rural Bank in Western Visayas and 536 branches all over the Philippines under LifeBank MFI, an NGO microfinance arm of LifeBank.

References

  1. ↑ "Welcome". ASA Bangladesh. Archived from the original on 26 December 2016. Retrieved 26 December 2016.
  2. ↑ Stiles, K. (2002) International Support for NGOs in Bangladesh: Some Unintended Consequences. World Development. Vol. 30, No. 5, pp. 835–846.
  3. 1 2 Rutherford, S. (2009) The Pledge: ASA, Peasant Politics and Microfinance in the Development . New York: Oxford University Press.
  4. 1 2 3 Meyer, R.; Fernando, N. (June 2002). "ASA – The Ford Motor Model of Microfinance" (PDF). Asian Development Bank. Archived from the original (PDF) on 22 October 2004. Retrieved 11 September 2011.
  5. 1 2 Barrès, Isabelle (July 2003). "Focus on Savings" (PDF). The Microbanking Bulletin (9). Archived from the original (PDF) on 10 September 2014. Retrieved 14 February 2012.
  6. 1 2 Kabeer, N., Mahmud, S. & Castro, J.G.I. (June 2010) NGO's Strategies and the Challenge of Development and Democracy in Bangladesh. (Working Paper 2010/343). Brighton: Institute of Development Studies.
  7. ↑ "ASA Foundation Country Focus". ASA Foundation. 2008. Archived from the original on 2 April 2012. Retrieved 11 September 2011.
  8. ↑ Rutherford, Stuart (February 2008). "Managing Growth of MFIs: ASA Bangladesh – single-minded growth" (PDF). Retrieved 14 February 2012.
  9. ↑ Forbes (2007) (20 December 2007). "The Top 50 Microfinance Institutions" . Retrieved 11 September 2011.{{cite news}}: CS1 maint: numeric names: authors list (link)
  10. ↑ The Nobel Prize Official Website (2011). "The Nobel Peace Prize 2006" . Retrieved 11 September 2011.{{cite web}}: CS1 maint: numeric names: authors list (link)
  11. ↑ Reinforcing provision of sustainable Energy services in Bangladesh and Indonesia for Poverty alleviation and sustainable Development (RENDEV) (30 April 2009). "Identification of Microfinance Institutions – - Bangladesh" (PDF). European Commission. Retrieved 14 February 2012.
  12. ↑ Wood, G.D. & Sharif I.A. (1997) Who Needs Credit? Poverty and Finance in Bangladesh. New York: St Martin's Press.
  13. ↑ "Ornonogram". ASA. Archived from the original on 7 May 2015. Retrieved 11 September 2011.
  14. 1 2 "ASA Overview". ASA. 2013. Archived from the original on 21 November 2015. Retrieved 28 November 2015.
  15. ↑ "Welcome to ASA". ASA. June 2014. Archived from the original on 8 December 2015. Retrieved 28 November 2015.
  16. ↑ "Impact Assessment". ASA. Archived from the original on 5 April 2015. Retrieved 11 September 2011.
  17. 1 2 "MF Sector Operates Efficiently But Needs Product Diversity, States Bangladesh Microfinance Review August 2011". BRAC Blog. 26 August 2011. Archived from the original on 8 December 2015. Retrieved 11 September 2011.
  18. ↑ Nahar, K. (26 August 2011). "Three microlenders control two-thirds of MF industry". The Financial Express, Bangladesh. Retrieved 11 September 2011.{{cite web}}: CS1 maint: numeric names: authors list (link)
  19. ↑ Shafiqual Haque Choudhury (2008). "Goodwill Message of ASA's president" (PDF). ASA – 30th Anniversary Newsletter. Archived from the original (PDF) on 4 September 2011. Retrieved 11 September 2011.{{cite web}}: CS1 maint: numeric names: authors list (link)
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