Women outperform men in repaying loans: bankers
Women's loan default rate is much lower than their male counterparts in Bangladesh, prompting financial institutions to come up with more female-friendly products, departments and even branches, according to bankers.
While the overall banking sector's default rate stood at about 10 percent at the end of December 2016, women borrower's default rate is less than one percent.
“Every woman borrower is compliant and hardly gets defaulted in paying their loans back,” said Anis A Khan, managing director of Mutual Trust Bank and chairman of the Association of Bankers, Bangladesh.
He said women begin their business humbly and progress steadily because they use their loans efficiently.
The unbelievable recovery rate of loans given out to women has prompted many banks to launch special products dedicated to the group. Some banks have set up dedicated departments to land more clients.
However, the picture is not entirely rosy: women still face a lot of challenges in getting loans as they can't provide adequate collateral.
Banks disbursed Tk 141,935 crore to small and medium enterprises (SMEs) in 2016, of which only three percent went to women borrowers, Bangladesh Bank data shows.
Some 42,000 women entrepreneurs got loans of Tk 5,346 crore last year.
The central bank refinanced Tk 6,200 crore to 54,000 SMEs as of February this year, but only 17,500 were owned by women entrepreneurs. Various estimates show that 10 percent of Bangladesh's businesses are run by women.
According to bankers, women begin businesses in a very small way and usually take loans from Tk 5 lakh to Tk 30 lakh depending on the size of the initiative.
Nurul Amin, managing director of Meghna Bank, said no woman borrower has defaulted on their payment at his bank yet.
“The women have tendency to be successful through hard work. As a result, they are very serious about paying off their loans,” he said.
He said women entrepreneurs are hardly large borrowers, which is one of the main reasons for the low default rate among them.
Most women clients take loans a maximum Tk 25 lakh, the highest ceiling set by the central bank for the female borrowers to borrow without collateral.
Women borrowers are more law-abiding than men, said Ishtiaque Ahmed Chowdhury, managing director of Trust Bank.
He said hardly any fraud is found in case of women borrowers. “In some cases men take loans at their wife's name, and in that case, the loan gets defaulted,” he said.
A banker at Southeast Bank's Moghbazar branch, which is run by female staff only, said: “We have no loan recovery team. More than 90 percent of the clients are women and they pay installments regularly.”
Eastern Bank has opened a separate department last year to serve the female clientele after it found that women are very good borrowers.
“We have customised products, such as deposits and credit cards, for women,” said Nasrin Jahan Khan Kanak, head of the women and student banking at the bank.