Putting farmers first: Introducing seasonal loans from BRAC Microfinance

More than 15% of Bangladesh’s gross domestic product (2015-16) is generated from the agricultural sector. While agro-business is a prominent source of income for 45% of the working population, their revenue is not generated until their produce is sold.

Nurunnahar and her husband Ali Akbar found it extremely difficult to sustain their household with two young children and a debt with hefty monthly instalments.

They worked as labourers on other people’s farmlands, but the income generated from it was not enough to meet the family’s basic needs. They wanted to invest in their own ventures, but they had limited access to small loans.

Watch: What is financial inclusion?

A swift access to finance

“Can we pay later?” – What came as a request from BRAC’s microfinance clients residing in wetland areas of Bangladesh, turned out to be quite the reform in the repayment scheme.

BRAC Microfinance in Bangladesh launched seasonal loans for people who expect bulk income a few months after their investment. This loan is for people who do not have a steady income stream to pay regular loan instalments, or are caught in a financial shock.

Seasonal loans provide farmers with a convenient repayment scheme, allowing them the flexibility to invest and start paying their instalments at the end of their loan term with the provision of a two-month grace period. Nurunnahar learned about BRAC’s seasonal loans from her neighbours, who are existing clients of BRAC Microfinance in Bangladesh.

Nurunnahar availed a loan of BDT 50,000 (USD 589) first, and she cultivated corn on leased land. After five months she made a profit of BDT 40,000 (USD 471). Since then, she has taken seasonal loans multiple times, bought her own land and leased an arable land worth BDT 180,000 (USD 2,122).

Photo credit:Sumon Yusuf©BRAC

The convenient repayment system allows borrowers to opt for one-time bullet payments at the end of the six month maturity period instead of weekly or monthly instalments like other loans. This simplified process has helped Foyjunessa, a mother of six, to support her family after her husband’s death.

“I have taken seasonal loans from BRAC up to eight times, because of its convenient repayment schemes”, says Foyjunessa.

Foyjunessa received training on cow-fattening methods from BRAC. She then took a loan of BDT 50,000 (USD 589) and bought two calves. She made a profit of approximately BDT 30,000 (USD 335) and availed seasonal loans eight times.

Foyjunessa’s dedication to becoming self-sufficient helped her educate her children, buy land and construct a new house, improving her and her family’s lives and those of others around her.

Diversification for alternative livelihoods

Clients living in northern Bangladesh are using seasonal loans to diversify their livelihoods by venturing into aquaculture. They are investing in high-quality inputs and scaling up their production sustainably, which also strengthens their financial security. Access to fish for personal consumption alongside business helps to meet their nutritional needs.

BRAC’s seasonal loans can be availed from BDT 10,000 to BDT 400,000 (USD 117 to USD 4,718). It is currently available in 74 branch offices covering 24 regions in Bangladesh, with plans to scale across more regions in the coming months.

BRAC Microfinance has achieved various milestones by providing necessary financial tools and services to people who are often left out of the formal banking system. These loans are already supporting people to improve their livelihoods, and will contribute to achieving the goal of financial inclusion.

Kamran Ibne Abdul Qader is a Communications Specialist at BRAC Communications and Tanishaa Arman Akangkha is a Senior Communications Officer, BRAC Microfinance