ASA Bangladesh Research
Brief History of ASA
ASA stands for Association for Social Advancement, which is a non-governmental organization aiming at helping poor people to get out of poverty. Bangladesh earned its independence in 1971, but because of the war, the whole country needed to be reconstructed. The unstable and bureaucratic political system slowed down the speed of economic development. In the meantime, some small non-governmental organizations stepped into Bangladesh to help the local people restore their life in different respects.
The official ASA website shows that the organization was founded in 1978 with its goal of empowering the poor. In the beginning phase, ASA started some programs such as “training program, communication support service program and legal aid and awareness build-up program”. The results of the programs, however, were below expectations. There were several limitations in developing ASA. For example, the employers had difficulty to get paid; the design of the programs was not consistent with the local situation; the natural disaster happened at that time. All these factors forced the managers to formulate a practical solution. ASA began to favor women as clients and addressed social concerns, such as education, sanitation and health. Since 1992, ASA has launched special programs in savings, credit and security fund areas (emergency loans or insurance), which are still the main financial businesses at ASA.
Main Services of ASA
The annual report of the year 2011 states that the main services of ASA include loans, savings, insurance, a Technical Assistance (TA) program and ASA’s sister concern Hope for the Poorest (HP). The new program introduced is the Primary Education Strengthening Program. The following product descriptions are based on the ASA official website. 1. Loans
ASA provides two kinds of loans—primary loans and special loans. Primary loans aim at providing financial support for poor people, who can get a maximum first loan from $105 to $265 based on their specific situations. Special loans are designed for enterprises or entrepreneurs with the initial maximum amount from $662 to $6500. Both kinds of loans carry a maximum of 27% interest and weekly or monthly payment. For primary loans, the payback period is normally up to one year (4, 6 or 12 months); for special loans, the duration is from 1 to 2.5 years (12, 18, 24 or 30 months). 2. Savings
With respect to a savings account, people have three choices: mandatory savings, voluntary savings and long-term savings. Mandatory savings are especially for clients who have loans at ASA with a deposit rate of at least BDT 10. As an additional choice, the mandatory savings’ clients are able to choose voluntary savings with any deposit rate greater than BDT 10. Both savings accounts earn interest monthly with 6% annual rate of return. The savers are allowed to withdraw the money anytime but they have to keep the balances no lower than 5% of the loan amount.
Long-term savings are suitable for everybody. The savers do not need to have loans or any other relationship with ASA. The deposit rate for this account can be Tk. 50 to Tk. 500 per month (specifically Tk. 50, Tk. 100, Tk. 200, Tk. 300, Tk. 400 or Tk. 500). For a 5-year account, the interest rate is 9% annually; for a 10-year account, the interest rate is 12% annually. If clients need to withdraw prior to maturity, they will receive the money at a lower rate of return. 3. Insurance
The insurance products include loan insurance and life insurance. All loan borrowers are mandatorily enrolled in these two insurance programs. The premium of loan insurance is “BDT 5 for a loanee or BDT 10 for a loanee and his/her spouse per thousand loan disbursement”. Clients have to pay the premium before disbursement. The life insurance program requires BDT 10 as premium for eight years. The premium is included in the loan installment. 4. ASA University Bangladesh
References: Ahmed, S., Luo, J., Rahman, M. W. & Wang, X. (2012). The Synthesis of Grameen Bank, , BRAC and ASA Microfinance Approaches in Bangladesh, World Applied Sciences Journal, 20(7), 1055-1062, doi: 10.5829/idosi.wasj.2012.20.07.1558
Kono, H. & Takahashi, K. (2010). Microfinance Revolution: Its Effects, Innovations, and Challenges. The Developing Economics, 48, 15-73.
Zaman, H. (2004 May). Microfinance in Bangladesh: Growth, Achievements, and Lessons, Center for World bank website: http://info.worldbank.org/etools/docs/reducingpoverty/case/108/
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