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Floods jeopardise Bangladesh farm credit scheme

- 01 October 1998
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01 October 1998

Floods jeopardise Bangladesh farm credit scheme


THE catastrophic floods in Bangladesh have severely damaged a formerly successful method of providing loans for the very poor in developing countries.

Bangladeshi farmers have bought cows or poultry, planted small-scale crops and started businesses under the microcredit loan schemes. Some six million Bangladeshi families have taken out the loans.

Now now it looks like a considerable number of borrowers will default on repayments. The borrowers blame extensive flooding in the region.

Muhammed Yunus, who founded Grameen Bank, one the best known microcredit institutions, said half the borrowers in Bangladesh failed to make payments in the last two months.

Lenders such as Grameen Bank have more than $500 million in outstanding loans. But reserves are to small for them to freeze repayments and extend fresh bridging loans to help people.

Microcredit schemes based on those developed in Bangladesh have also been started in Latin America and Africa.

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