Islami Bank RDS

M S Akanda: The Rural Development Scheme (RDS) of Islami Bank Bangladesh PLC (IBBPLC) is a microfinance initiative aimed at providing financial services to the rural poor, particularly women, to promote economic development and poverty alleviation. This scheme follows Islamic Shariah principles and focuses on financing income-generating activities, ensuring financial inclusion, and improving the living standards of rural communities.

Overview

Islami Bank Bangladesh PLC is a global pioneer and world’s largest operator of Islamic microfinance. Rural Development Scheme (RDS) microfinance by the Bank has been transforming million of rural poor’s to successful entrepreneurs since its establishment in 1995. Currently enrolling 1.71 million members across 33 thousand villages of Bangladesh under financial inclusion. The scheme operates with an integrated development approach with typical collateral free micro investment and compulsory savings supported by entrepreneur development activities plus ward stipends, sanitation aid, medical camps, profit-free loans, rehabilitations and plantations.

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❏ Islami Bank Bangladesh PLC at a glance

The graduated clients successfully utilizing the micro investment slabs can avail larger investments under micro enterprise scheme. A 99% plus rate of recovery in the project demonstrates remarkable impact in poverty alleviation. Another salient feature being 92% majority of the beneficiaries are women which gears up the women empowerment practice in the rural settings. The successful project by the bank has been replicated for the urban poor’s since 2012. Islami Bank Rural Development Scheme (RDS) is the largest Islamic microfinance program of the world & 4th largest microfinance organization in Bangladesh.

Operating Procedure

Field officers from the bank conducts field visits to potential areas and selects villages with the following criteria:

1. Within a radius of 10 km from bank premise,
2. availability of agriculture and non-agriculture activities and
3. high percentage of low-income people.

Upon availability of at least 400 target group people in the selected areas, the concerned branch proceeds for MF operation. Groups consisting of 5 members each (living in the same village) are formed. A centre is formed with 2-8 groups. The group leaders appoint the centre leader and deputy leader from among themselves to facilitate centre activities.

Members have to open a Mudaraba savings account and are required to deposit Tk. 100 per week. Besides, they deposit Tk.10 per week to Qard-e Hasan fund which extends non-profit loans.

A centre meeting on weekly basis is conducted by the bank’s field officers what all groups must attend. The meetings uphold moral values, social rights and responsibilities of investment repayment; collection of investment installments, personal savings and centre funds; and review and approve investment proposals.

Investment financing starts after 8 weeks of positive observation for a member. Investment is allowed without collateral and functions on group guarantee mechanism. Personal guarantee from every member of one’s group is required and the members are jointly and severally liable and responsible for repayment of the investment.

The initial investments start around Tk. 50,000 and based on good repayment, it increase by Tk. 30,000 or multiple in every succeeding term depending on the sector of investment. The rate of return (based on profit and loss method) is at 9.10 percent, however timely repayment is rewarded by a 2.5 percent rebate, thus a successful member will pay 6.6 percent profit to the bank. This rate of return is lower than any rate offered by conventional MFIs in Bangladesh.

RDS/UPDS Micro Investment

The Bank has introduced this Scheme for the RDS/ UPDS micro-investment clients

Eligibility for RDS clients:

• Farmers/share croppers/Involving off farm activities
• Financial deficit for self employment
• Permanent resident
• 18-50 years of age
• Literate/trying to be literate
• Hard working
• For UPDS clients
• Working in designating city areas
• Financial deficit for self employment
• 18-50 years of age

Investment Ceiling:

• First time: Around Tk. 10,000/-, no more than Tk. 50,000/-
• Later investments: May be increased each time by Tk. 30,000/-
• Highest ceiling (regular): up to Tk. 150,000/-
• Highest subject to deposit: up to Tk. 300,000/-

MEIS Investment

The Bank has introduced Micro Enterprise Investment Scheme in 2005 for the graduated micro-investment clients

Eligibility:

• Individual/ proprietorship
• Requiring small capital
• Trading /production /processing / service
• Self and family involved business
• Skilled/semi- skilled entrepreneurs

Investment Limit:

Tk.100,000/- to 7,00,000/-

Training Program

At the group and centre meetings, members are offered support services such as skill training, environment awareness and entrepreneurship development to ensure the success of the potential small and medium entrepreneurs.

Profit-Free Loan

Qard-e Hasan fund, an interest-free fund given to the extreme poors, for members who are not able to make their timely payments or toward the rural development of the community (building and installing latrines, tube wells etc). The receiver of the Qard-e Hasan is only liable for the repayment of the principal amount. This innovative approach encourages the act of giving and ensures that the extreme poors are included in the program in order for them to become self-reliant and productive in the community.

CSR Activities

Different non-financial welfare services Education, Health, Training, Rehabilitation & Environment have been extended under the program.

The Islami Bank Rural Development Scheme (RDS) aims to empower rural communities by providing them with the necessary financial tools to achieve economic self-sufficiency, following the ethical guidelines of Islamic finance. See Details from Islami Bank Website: Click Here

Courtesy: Mohammad Shamsuddin Akanda, Islami Bank Bangladesh PLC (IBBPLC)

Contact for details

Islami Bank Bangladesh PLC, Head Office: Islami Bank Tower, 40 Dilkusha C/A, Dhaka-1000, Bangladesh, or Contact any Branch/Sub-Branch/Agent Banking Outlet
✆ Call Center: 16259 (Local); (+8802) 8331090 (Overseas)
GPO Box No: 233
Telephone: (02) 9563040 (Auto Hunting), 9560099, 9567161, 9567162, 9569417
Mobile: 88-01711-435638-9
Telex: 642525 IBANK BJ, 632403 IBANK BJ, 671620 IBANK BJ
Fax: 880- 2- 9564532, 880 -2- 9568634
Swift: IBBLBDDH
Cable: ISLAMIBANK
Email: info@islamibankbd.com
Website: www.islamibankbd.com