Overall trends in lending behavior of MFIs The scenario of the sector is also possible to see through important program

data, such as, amount of members savings or group savings, total (or cumulative) number of borrowers provided loans (inclusive of repeat loans) ever, current number of borrowers, amount of cumulative loans disbursed, amount of loans outstanding with the borrowers, and amount of revolving loan funds.
Growth rate of key Microfinance indicators (As of December 31) Variables Borrower-Member Ratio (%) Net Savings Cumulative Borrowers Current Borrowers Cumulative Loan disbursement Loan Outstanding Revolving Loan Fund Average loan Size Recovery Rate of Loan (%) Overdue in Loans Outstanding (%) 2006 77.28 22,303.76 25,925,021.00 14,817,531 2007 78.8 27391.43 31017930 17510662 2008 2009 74.2 70.42 33,656.74 39,657.63 35,355,27 9 39,536,838 18,432,75 2 16,863,874 816,051.0 0 1,051,222.39 107,135.7 6 109,971.67 122,288.8 7 135,175.83 26,588 26,588 97.99 97.47 1.96 2.65 2010 67.8 45,482.06 43,120,856 16,250,435 1,264,086.54 123,884.08 149,359.21 29,315 97.52 3.22

520,362.79 667688.12 67,094.24 61,010.77 26,588 98.75 1.51 86150.62 83,481.39 26,588 98.37 1.26

Borrower-Member Ratio: All the members at a given point of time may not be borrowers, and even everyone may not borrow. This is reflected in borrower-member ratio. As the panel data (Table 2.3.1) showed that in 2010, MFIs could provide loans to 67.80 percent of the members compared to 70.42 percent in 2009 and 74.20 percent in 2008 followed by 78.80 percent in 2007. This declining trend throws a big question to the microfinance industry about its progression with the given mandate of reaching the poor with financial services for poverty alleviation.

Intensity in Number of Loans: It is reflected in the ratio of cumulative borrowers and current borrowers. Cumulative borrowers are essentially the number of loans taken. As such, the ratio of cumulative borrowers and current borrowers will give us a trend in the intensity of number of loans per borrower. The cumulative number of borrowers of 126 MFI-NGOs till 2010 was 43,120,856 higher by around 9 percent than the 2009 level, and around 39 percent higher than the 2007 level. Loans Disbursement: Increasing number of borrowers will have impact on loans disbursement. In 2010, loans amounting to Tk. 212.864 billion were disbursed compared to Tk. 235.171 billion in 2009 and Tk. 148.363 billion in 2008 (Table 2.3.2). The growth rate was around 20 percent in 2010 compared to growth rate of more than 29 percent in 2009 and around 22 percent in 2008. Though the growth rate in 2010 was around 9 percentage point lower compared to that of 2009, but still it results a significant increase in the amount of loan disbursement. By the end of 2010, 126 MFI-NGOs disbursed a total of Tk. 1,264.086 billion to some 43.12 million borrowers. Over the period, 2007-2010, the growth of cumulative loans disbursement was about 89 percent. An amount of Tk. 596.398 billion more was disbursed in 2010 from that of 2007.

Average Size of Loans Disbursed: A monotonically increasing trend was observed in the overall size of loan per borrower from the year 2007 to 2010. Average loan size per borrower was around Tk. 29,315 compared to Tk. 26,588 in 2009. The growth in average loan size per borrower was around 7 percent in the year 2008 while it increased to around 15 percent in 2009 and around 10 percent in 2010. Over the period, 2007 to 2010, the growth of the average loan size was around 36 percent.

Recovery Rate: Loan recovery rate of the 126 MFI-NGOs have been consistently ranging from around 96 to 99 percent (Table 2.3.4.1). There was not much difference observed in the trend of

loan recovery rate by gender. It was marginally lower for the male borrowers. There was hardly any difference between recovery rates in the urban and rural areas. The differences in the rates of recovery between rural and urban areas in 2007 and in 2008 were around 1 percent whereas it reduced to exactly 0.33 percent in both 2009 and 2010.

Overdue Rate in Loans Outstanding: As a percentage of loans outstanding, the overall as well as considered categories loans overdue has been increasing since 2007 except for male categories in 2010 over 2009. It was 1.26 percent of loans outstanding in 2007 which grew up to 3.22 percent in 2010 with a significant growth rate of around 156 percent. However, the rate of default was higher for male borrowers in 2007 and 2008 whereas an opposite scenario observed in 2009 and 2010. The percentage of female defaulters among the female borrowers was slightly higher than their male counterparts in 2009 and it was close to double in 2010. The rate of change in overdue for female was significantly higher than that of the male borrowers for all the years under review. As a result, the overdue rate for female borrowers was higher both in 2009 and 2010. The disparity of overdue rate for female and male are very much consistent with female and male membership (Table 2.2). By geographic divides, overdue rate has been increasing both in urban and rural areas and it happens persistently every year (Table 2.3.4.2). The MFI-NGOs should think about the overdue rate in loans outstanding as, among others, it erodes or tends to erode their capital as well as income.

Loans Outstanding: The amount of loan outstanding in 2010 was around Tk. 123.884 billion. An increasing trend was observed in the loans outstanding over the period 2007 to 2010. The rate of increase has declined from around 24 percent in 2008 to only around 3 percent in 2009, and finally reached to around 13 percent in 2010. There is a consistency between the growth of current borrowers and the growth of loans outstanding (Table 2.3.2). Over the period, 2007 to 2010, the growth was around 44 percent. This growth in loans outstanding of the MFI-NGOs was not so high compared to growth in the loans disbursement of around 89 percent. It should be mentioned again that the greater the amount of regular loans outstanding (without delinquency) the greater is the income or financial sustainability of the MFI-NGOs.

Net Savings per Member: The growth of the program and development in its different aspects may be seen through savings mobilized by the MFI-NGOs or commitment of the members towards MFI-NGOs they deposit savings with. In this context, net

savings per member and the rate of savings withdrawal are important indicators, mutually exclusive though. The amount of net savings per member in 2010 was Tk. 1,796 (Table 2.4.2). The net savings per member increased in every considered year compared to their previous year. The per member net savings increased by Tk. 194 at an increasing rate of around 12 percent in 2010 while the amount of increase were Tk. 197 at an increase rate of around 14 percent in 2009 and Tk. 137 showing increase rate of around 11 percent in 2008. The growth rate in the net savings was around 42 percent in 2010 over 2007.