Research findings:
Research was carried out on six MFIs in Bangladesh. Effective interest rate is actual interest rate which is much higher than the Flat interest rate, MFIs charges. Main intention of my research is to find out the actual interest rate of MFIs and how Borrowers are getting effected by this.
Most important findings are given Bellow:
Flat interest:
Flat interest is a method following the interest on the whole amount once and amount will depreciated by each installment. MFIs in Bangladesh and some other countries are following the Flat rate method. In addition MFIs added compulsory savings, which is great benefits for the lenders. Bellow table showing the flat rate of some leading company and actual interest rate including saving and service charges:
Flat interest and Actual interest differences:
| MFIS | Flat Interest rate | Actual interest rate with service charge and savings |
| Asha | 15% | 85.77% |
| Brac bank | 15% | 69.70% |
| Buro Bangladesh | 15% | 85.74% |
| Deep | 15% | 54.58% |
| Grameen Bank | 10% | 43.44% |
| Tage | 15% | 96.70% |
Effective interest rate are showing in different stage ( including fees, savings)
Six MFIs effective interest rate in different stage:
| MFIs | Nominal rate interest | Fees | savings | Repayment plan | EIR without fees and savings | EIR with fees | EIR with fees and savings |
| Asha | 15% Flat | 1% | 11.50% | Weekly | 33.19% | 35.40% | 85.77% |
| Brac Bank | 15% Flat | 5% | 6.13% | Weekly | 33.19% | 44.25% | 69.70% |
| Buro Bangladesh | 15% Flat | 0.80% | 7.60% | Weekly | 33.19% | 34.85% | 85.74% |
| Deep | 15% Flat | 2% | 11.50% | Weekly | 33.19% | 37.61% | 54.58% |
| Grameen Bank | 10% Flat | 0% | 7.33% | Weekly | 23.11% | 23.11% | 43.44% |
| Tage | 15% Flat | 1.16% | 15.33% | Weekly | 33.19% | 35.77% | 96.70% |
Loan overlapping:
Loan overlapping means, taking loan from different MFIs even same institute by different member of a family. MFIs are also tensed on this meter. due to much debt borrowers are unable to pay any of the loan and ran way. As MFIs has strong policy to collect the installment, forcing them to sell their remaining property. This trend can not drive upward the Bangladesh. In the bellow table showing that 82% borrowers are in loan overlapping. 6% are extremely in danger point.
| Overlapping | No of Borrowers | Percentage of Borrower |
| one MFIs | 9 | 18% |
| Two MFIs | 11 | 22% |
| Three MFIs | 20 | 40% |
| Four MFIs | 7 | 14% |
| Five MFIs | 3 | 6% |
| Total | 50 | 100% |
From my research i came to know that MFIs can not help the poor by charging high interest interest rate. some people might say that they have seen in news paper or some other research paper , Micro finance help 10 Million people in Bangladesh and did a lot. But if you want to know ask the borrower how much they are benefited?
Its true that Micro finance is most applicable in south Asia and invented in Bangladesh in a bigger form. so its need modification to make it as a weapon to fight against poverty.
