Savings Mobilization through Cooperatives, Swanirvar and Grameen Bank

1. Introduction: Savings is a crucial part of an economy which plays a major role in the development
of a country directly and indirectly. Savings put by someone in the financial institutions channels through
the financial system and open up new investment opportunities. In the total process, different
stakeholders are associated managing the savings properly and creating new ways of investment offering
it to the needy people. Therefore, savings mobilization is capturing voluntary savings deposits, protecting
them, managing them, and using them to fund loan portfolios. The savings mobilization plays a crucial
role for economic development of a developing country for several reasons. Foremost among these
reasons is the fact that the rural sector constitutes about a large part of the country's population. In order
to develop a healthy and viable rural financial market, resources should be mobilized from the rural
sector itself. In other words, rural savings mobilization is an integral and essential component for
developing a sustainable rural financial market. Much of the rural sector's development could be financed
from the sector itself, if only the correct techniques, incentives and institutions are provided. Moreover,
the growth of an economy depends on capital accumulation, which in turn depends on investment and
an equivalent amount of savings to match it. Savings can therefore be used to finance investments which
boost production and subsequently an increase in household income and overall standard of living. But,
foremost it requires the financial intermediaries to become safe and sound institutions where savers can
place their deposits with the expectation that they will receive the full value of their funds, plus a real
return, upon withdrawal. Effective savings mobilization requires clear principles related to safety of the
members deposits (without risk of loss), interest on savings (interest should regularly be paid to the
members), and liquidity (the members should be able to withdraw their savings when needed). Savings
mobilization therefore requires the development of appropriate savings products to satisfy the local
demand for voluntary savings services and marketing those products to savers of varying income levels.
In Bangladesh, however, the financial system for saving mobilization is run by various important stakes
and cooperatives, Grameen Bank, and Swanirvar are the major contributors in this regard.

2. Cooperatives: Cooperatives in greater Bengal was pioneered through constructing ‘Bengal provincial
cooperative federation’ in 1912. Then after the dividation, in 1956 Dr. Akhtar Hamid Khan established
the Rural Development Academy at Kotbari, Comilla as an experimental research institute. On his
initiative, the 'two-tier cooperative system' was introduced in 1960 at Kotyali police station in Comilla.
In 1971, steps were taken to spread the two-tier cooperative system of Comilla across the province by
launching the 'Integrated Rural Development Program' (IRDP). From that point of time the cooperative
movement got pace and went through various remarkable changes. Later The National Cooperative
Policy-2012 was formulated to modernize the Cooperative Policy formulated in 1989 to encourage
cooperative initiatives and guide the people-oriented cooperative movement in building a poverty-free,
self-reliant Bangladesh. In 2013, the Cooperatives Act was further amended by the Amended
Cooperatives Act, 2013. Although cooperatives originated in this subcontinent centered on agriculture
but it has spread besides agriculture and agro-based activities into small businesses, transportation,
professionals, housing, fisheries, dairy, water management, production and processing, cooperative
activities in tourism etc. At present there are about 12 thousand savings and credit cooperative societies.
Its membership is around 15 lakhs.

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2.1 Types of cooperatives: The cooperative societies of the country are divided into 3 tires.

a. Primary Cooperative Society

b. Central Cooperative Society
c. National Cooperative Society

On the other hand cooperative societies can be divided into 2 categories from initiative, financing, and
service provision point of view

a. General Cooperative Society

b. BRDB supported Cooperative Society

The Directorate of Cooperatives is working mainly in three ways for socio-economic development:

a. Cooperative societies forming societies through activities;

b. Through training;
c. By undertaking projects.

2.2 Functions of department of cooperatives:

a. Registering and encouraging cooperative principles.

b. Establish good governance through cooperative audit, inspection and supervision.
c. To improve the professional quality of officers/employees of Cooperative Directorate by
providing training/higher training opportunities.
d. To improve skills through practical training of cooperative members and reduce poverty through
capital formation and self-employment.
e. Promotion of cooperative values, publications, organizing seminars and workshops to strengthen
cooperative networking.
f. Capital formation through capital formation and investment and development of cooperative
based business institutions.
g. Empowerment and socio-economic development of rural women through cooperative based
projects and programs.
h. Establishing cooperative product branding and market linkages.
i. To formulate and implement policies, development programs and development projects
necessary to achieve the objectives.

2.3 Progress in cooperatives: the cooperative sector in Bangladesh have passed more than 100 years
and gone through various challenges due to capitalistic economy but its effectiveness helped to sustain
and bring welfare in socio-economic context. According to a 2011 BIDS study, Cooperative sectors
contribution in Bangladesh's GDP is 1.89%. But in reality the cooperative sector is contributing several
times higher through agriculture, fisheries, animal husbandry, textiles, dairy manufacturing, housing,
microcredit and savings, cottage industries, leather industry, fisheries, human resource development,
employment agencies, women empowerment, etc.

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 Items 1972 2021 Annual growth
rate
No of cooperatives 42025 197065 3.09
Members 2865573 11742674 2.82
Deposit (TK) 330351287 94262.90 (lakh) 6.70
Working Capital (TK) 1190170059 1529488.02(lakh) 9.71
Table 1: Statistics of cooperative society in Bangladesh

2.3.1 Agriculture Cooperatives: Central and Primary Cooperative Societies affiliated to

Agricultural Cooperatives include: Agricultural/Farmer Cooperative Societies (52,326),
Central Cooperative Banks (75), Central Multipurpose Cooperative Societies (65), Union
Bahumukhi Sambuay Samiti (10,063), Upazila Central Cooperative Associations (488) and
Primary Land Mortgages Banks (68). At present the total number of such societies is 72,460.
All these agricultural cooperative societies are provided financial assistance by Bangladesh
Cooperative Bank.

3916.6
3409.4
4000

3000
Investment

2000 1171.6 1267.7 1386.3

1000

0
2017-18 2018-19 2019-20 2020-21 2021-22

Year
Figure 1: Investment by cooperative societies
2.3.2 Bangladesh Cooperative banks: It mainly provide microcredit to agricultural cooperative
societies, all types of deposits from members and non-members. In the financial year 2019-

15000
Working capital

10000
12975.3 14255.3
11281.5 11728 12348
5000

0
2017-18 2018-19 2019-20 2020-21 2021-22

Year

Figure 2: Working capital of cooperative societies

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 20, the cooperative bank disbursed loans of 5128.38 lakhs Tk and collected debts of Tk
7,077.14 lakhs.
2.3.3 Marketing Cooperatives: Central Multipurpose Cooperative Society, Central Agricultural
Cooperative Society, Central Sales and Supply Cooperative Society, Primary Commodities
Cooperative Societies etc. are incorporated in it. At present the total number of such
associations in the country is 639 and individual members is 27,974. The amount of share
capital is 781.79 lakh Tk, the amount of savings deposit is 1,595.56 lakh Tk, and the amount
of net profit is 167.28 lakh Tk.

7000
6000
5000
Loan collectoin

4000
6455
3000
4524.3 4387.1 4426
2000
1000 1841.8

0
2017-18 2018-19 2019-20 2020-21 2021-22

Year
Figure 3: Loan collection through cooperatives
2.3.4 Industrial Cooperatives: Currently the number of industrial cooperative societies is 3,210
and individual member 1,29,637 people. The amount of share capital is 1,366.50 Lakhs and
Savings Deposit amounting to 11,700.48 Lakhs.
2.3.5 Fisheries Cooperatives: At present national, central and primary fishery Societies in total is
10,030 (primary 9,955, central 74, national 1), individual membership is 3,90,527. The
amount of share capital, savings deposit, and net profit is respectively 2,497.89 lakhs,
5,641.17 lakhs, and 1,614.17 lakhs.
6726.18
7000
6000 4524.32 4710 4543.42
5000
Loan amount

4000
3000 1947.54
2000
1000
0
2017-18 2018-19 2019-20 2020-21 2021-22

Year
Figure 4: Loan disbursement through cooperatives

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 2.3.6 Women's Cooperative Society: For women's progress, development and protection of all
their interests Women's Cooperative Society was formed. At present there are 9,72,403
members registered in total 27,448 women’s cooperatives. The amount of share capital,
savings deposit, and net profit is respectively 19,949.56 lakhs, 22,916.40 lakhs, and 89.17
lakhs of this society.
2.3.7 Transportation Cooperative societies: Currently the total number of such cooperatives are
1346 where share capital and saving deposit are respectively 763.92 lakh and 6103.06 lakh.
2.3.8 Housing Cooperatives: This form of cooperatives is prevalent in urban areas and increasing
day by day. At present there are 228 cooperatives with total 53899 members. Its share capital
is 3,787.03 lakhs and the amount of savings deposit is 6,899.74 lakhs.
2.3.9 Milk Producers Cooperative Societies: this cooperatives are improving the quality of life
of small, marginal and poor farmers and making a remarkable contribution in poverty
eradication. Currently it has 2517 cooperatives, 117758 members, 654.06 lakh Tk share
capital, and 185.69 lakh Tk net profit.

3. Swanirvar Program: The roots of the Swanirvar movement could be traced to the local reactions
expressed explicitly by Mahbub Alam Chasi (a civil servant) against the country’s heavy dependence on
food aid from foreign country and his detaste of the increasingly bureaucratic approach of the Cumilla
model to solve the problem. In contrast to the Cumilla model two tier cooperative system it took bottom
up approach emphasizing formation of grass root level organization and mobilization of local resources
for achieving self-sufficiency in food production was envisaged originally in the Swanirvar movement.
The activities of the project was administered and financed by the local people themselves and first
introduced in “Gumai Beel”, Chittagong. Swanirvar Bangladesh was adopted as a national program for
total village development in the first national conference held at Bangladesh Rice Research institute
(BRRI) Joydevpur, in 1975. Six hundred thirty Swanirvar village came into being in 1976 and in 1977
the coverage was widened from one village to Union level. The major achievements of the Swanirvar
Movement include establishment of a substantial number of rural institutions and infrastructure
especially in the fields of communications, informal education and healthcare, hybrid agricultural crops,
voluntary labour, employment opportunities especially through infrastructure projects and micro credit,
collective action and group mobilization.

3.1 Swanirvar Micro-credit Program: Swanirvar Bangladesh started Micro Credit Program for
poverty alleviation in 1978. This program aims to reduce poverty and increase GDP, create job
opportunities for unemployed men & women, and empower women for sustainable socio-economic
development. Swanirvar credit program is operated through three state-owned Commercial Banks:
Sonali, Janata, Agrani and two other specialized Banks: Bangladesh Krishi Bank (BKB) and Rajshahi
Krishi Unnayan Bank (RAKUB). Initially "DHEKI LOAN" project was started in 1978 while the loan
ceiling was Tk. 400-500/-. The loan was disbursed for making Crushed Rice, Fried Rice, Puffed Rice
etc. Later on it was expanded as “Swanirvar Credit Program” and engaged in various income-generating
activities (213) in 159 Upazilas. Credits are being delivered to groups consisting of 5 members, and 5
groups form a centre composed of 25 members.

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Swanirvar Bangladesh selects members from rural poor and form groups & centers. Members of groups
are then imparted 7 days extensive training. Banks visit the centre and give their approval. On their
satisfaction of forming group/centre & training, the Bank disburses the loan to an individual member of
the group. After that, Swanirvar Bangladesh field workers recover the loan every week from the centre
member and deposit it to the respective bank branches. From the beginning up to June 2015, Taka
1698.24 crore was disbursed among 1155995 poor people through 773 bank branches and recovered
Taka 1534.59 crore. Total savings amount is Tk. 38.73 crore. Through this credit program, 561067
members of destitute and less earned family members have been benefited. Present outstanding loan is
Tk. 612.29 crore against total borrowers of about 5.61 lac. Swanirvar Credit Program has been playing
a significant role for empowering rural women. It may be mentioned here that more than 80%
beneficiaries are women. Besides this, reducing illiteracy, implementing family planning, taking child
health care, planting trees and making the environment friendly are integral parts of the program. This
program provides the opportunity for rural people to improve their living standards.

4. Grameen Bank: Grameen Bank is a microfinance organization and community development bank
founded in Bangladesh. It makes small loans (known as microcredit or "grameen credit") to the
impoverished without requiring collateral. Grameen Bank originated in 1976, and authorized by national
legislation to operate as an independent bank in October 1983. The bank grew significantly between
2003 and 2007 creating a huge impact on the rural backward people in Bangladesh.

Figure 5: General credit information about Grameen bank

4.1 Different loan types and loan limit: The Grameen bank extends various kinds of loans to its
members depending on the length of their membership. The maximum loan ceiling and their kinds are

a) General loan Tk 10000

b) Seasonal loan Tk 10000
c) Family loan Tk 50000
d) Tube well
Individual Tk 5000
Collective Tk 10000
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 e) Extended loan ( family member with at least 3 years membership)
f) Destitute loan ( for natural disaster)
Or capital recovery loan Tk 2500
g) Housing loan Tk 30000
h) Sanitary loan Tk 500

4.2 Obligatory Contributions:

4.2.1 Group fund: Each loanee is required to pay 5% of loan to group fund. The money is deposited
in group own account. The members who contribute this money do not have personal right or claim
over it. This fund belongs to the group, all members have equal right on it. Group members may
borrow group fund for any purpose with the approval of all the members.
4.2.2 Emergency fund: After payment of principal loan with interest, the members are required to
pay Tk.5 for Tk.1000 loan, starting from Tk.1001 which means a person who takes Tk.1000 loan
does not contributes to the fund. The family gets one time grant from this fund if any member dies.
The amount of grant varies depending on the membership length.

4.3 Disbursement of microfinance loans: Grameen bank provides loan on different activities among
the rural poor. There are seven broad categories where Grameen bank provided loan in 2020 are

SL Items No of loan Loan amount (Tk)

No
1 Processing and manufacturing 153743 5863253201
2 Agriculture and forestry 527364 16012099386
3 Livestock and fisheries 144308 4970050296
4 Services 16976 876153634
5 Trading 257565 9866665133
6 Peddling 14132 582881613
7 Shopkeeping 137935 4570636853
Total 1252023 42741740116
Table 2: microfinance sectors of Grameen bank

Safe and accessible savings facilities of GB are highly valued by group members. Therefore, GB has
been able to mobilize deposits of different types from members and non-members. Like commercial
banks in Bangladesh, GB offers both deposits and savings services. In addition, savings receive 8.5
percent interest. Currently savings have grown to a level significantly higher than the total outstanding
loans. The surplus of deposits over total advances that GB has lately assessed implies that GB is now
mobilizing rural funds for transmission to other economic sectors. At GB savings mobilization is a
natural response to a fundamental principle of financial intermediation. Intermediation in financial
markets occurs because not all firms and households want to borrow or to save at the same time. Some
of them want to borrow at exactly the same time others want to save. This heterogeneity provides the
opportunity for intermediaries to bring the interest of borrowers and savers together. The resulting
transaction allows both borrowers and savers of GB to attain higher income levels. While in most rural
development banks, opportunities for savings are ignored and importance is only given to lending, at GB
members use, and highly value, the saving facilities it offers.
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 SL No Particulars In million BDT
1 Cumulative amount disbursed since inception 2,328,445.99
2 Cumulative amount repaid since inception 2,186,427.53
3 Outstanding loans 142,018.46
4 Rate of recovery 94.66
5 Overdue loan 4,016.63
6 Deposit as percentage of outstanding loans 170
7 No of branches with more deposit than outstanding loan 2152
Table 3: Loan information of Grameen bank till 2020

Further, savings programs of GB provide the bank with valuable information about the savings patterns
and wealth of its debtors. Additionally, GB’s management is conscious that saving is a healthier financial
alternative for on-lending resources, as central bank rediscounting stimulates inflation and, on the other
side, the bank has no guarantee of sustainability of external inexpensive borrowing and foreign grants

5. Conclusion: Financial institutions that seek to mobilize savings must have the vision, commitment,
and disposition to attract voluntary savings. Each institution must adapt its own business strategy,
culture, policies, procedures, and product offerings to provide savings services that are competitive and
that meet the needs of the local market. For credit-only institutions that want to initiate savings programs,
this decision will require a reorientation of the service delivery mechanisms and of the culture of the
institution. This savings institutions suggests that, to expand their savings mobilization efforts it requires
to increase the funds available to them, improve service provision to clients, and increase their local
market share will have to examine their existing operations to see how they can better provide the key
features that savers seek: safety, convenience, and returns. Although savings mobilization presents
serious challenges, the institutions that choose this path will find themselves able to provide higher
quality services to clients of all income levels and greater access to financial services for their low-
income and poor clients.

6. References:

Annual_Report_2020-1_GB.pdf. (n.d.).
Bin Amin, M. F., & Jalal Uddin, S. (2018). Microfinance-Economic Growth Nexus: a Case Study on
Grameen Bank in Bangladesh. Indonesian Journal of Nursing Practices, 1(1).
https://doi.org/10.18196/ijief.112
Hassan, M. K., & Renteria-Guerrero, L. (1997). The experience of the Grameen Bank of Bangladesh in
community development. In International Journal of Social Economics (Vol. 24, Issue 12).
https://doi.org/10.1108/03068299710193949
Samabay Adhidaptar, samabay potrika 2020. (n.d.).
Samabay Adhidaptar, smaabay potrika 2022. (n.d.).
Shahidur R. Khandker. (1996). Grameen Bank: Impact, Costs, and Program Sustainability. Asian
Development Review, 14(1), 65–85.
Swanirvar-1988.pdf by BIDS. (n.d.).

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