72 Chars (river islan) of Kurigram and Gaibandha District, Bangladesh

The imbalance between credit repayments and income seasonality creates a major challenge for the (MFIs) working in the developing countries like Bangladesh. Because, the credit institutions are being afraid of getting the money back after the sufferings of people during a certain period of time, (September 20-December 20) when food deprivation phenomenon monga prevails in northern rural part of Bangladesh. There has been a wide range of studies on this microcredit repayment system around the world. In connection with these Dr. Abu S. Shonchoy and Dr. Kurosaki Takashi from Institute of Developing Economies (IDE-JETRO) has jointly initiated a research work in 2011 in the northern part of Bangladesh based on Randomized Control Trial (RTC) design. The project was funded by IDE-JETRO and implemented by MOMODa FOUNDATION, in co-operation with Gana Unnayan Kendra (GUK).
Of the primarily selected 90 villages, the randomization defines 12 villages for control, 24 for the flexible-1, 12 villages for the flexible-1+IGA and the remaining 24 for the flexible-2. The research incorporates 1440 households from above 72 different villages (each village has a group of 20 members) of Gaibandha district; a poverty and seasonal food scarcity prone area of northern Bangladesh. The baseline survey (panel-1) was executed during (July-September) 2011 with a long questionnaire which incorporates the detailed information of different economic factors like households composition, health, education of the children, occupation, assets, migration experiences if any etc. The design holds two arms; one is treatment arm and another is control; which differs from the traditional and flexible loan repayment system during the lean period. The control arms will start repayment after two weeks of receiving the loan and repay the total amount within 45 regular installments at BDT 75 per week (excluding the last one which is BDT 60). Each weekly repayment is to be repaid by the borrower at the weekly group meeting. The first loan issued in first week of September 2011 among one third of the subjects.
Under the first treatment “Flexible-1”, the borrowers shouldn’t give any repayment during the lean period, but after the period is over, his/her repayment will stands for BDT 100 per week, making their total repayment amount and period identical to those of the control group. As an alternative of the first treatment, one third of the “flexible-1” also receives Income Generating Activities (IGA) support. This group identifies as “flexible-1+IGA” in which productive assets has been distributed among the borrowers depending on their choices instead of cash money along with best utilization advice with no further subsidy. Under the last flexibility treatment group “flexible-2”, the repayment schedule has been changed to three monthly installments for BDT 300 during the lean monga period. After the period is over, then the borrowers will resume to their previous repayment system for BDT 75 per week, ensuring that their total repayment amount and period will remain same as that of control group.
This research projects has been phased out in last December 2013 after successfully completing its implementation period from September 2011-December 2013. Within this long time there has been conducted several rigorous and fruitful additional surveys after baseline survey in July 2011; which are first monga survey (panel-2) in November 2011, the follow-up survey (panel-3) in July-August 2012, the second monga survey (panel-4) and the last follow-up survey (end-line survey) in December 2013 respectively. Yet, the ultimate findings of the project has not been analyzed, but there found several interesting findings like statistically no viable difference between the treatment arms in terms of default or overdue amounts. In case of food consumption, char people have less opportunity of access to food than the mainland people results their lower average in different estimations, but surprisingly in some cases, the char people are also in a better position than the mainland people.
The findings of this study of seasonality adjusted loan repayment system will help the MFIs to implement such microfinance programs in the rural areas where there is a limited access of borrowing money from the formal financial institutions like banks and other govt. support organizations.