Tarango: Microloans

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One of the pillars of Tarango is providing micro loans to women in Dhaka and surrounding districts. Today I joined one of the field managers when he went for a visit to a nearby slum. They have been offering micro loans to women in this area for over 10 years. Each area has a community president elected by the local women. The community president is the primary person to decide if a woman can receive a loan and for how much. Because these are all non collateral loans she is relying on her knowledge of the local business market and if she thinks the woman can/will pay the loan back.

In addition to loans, Tarango offers a safe and trusted savings program. Women can bring as little or as much money as they can save to their field manager. This money is accessible to the women at any time, but as long as it is with Tarango they will receive 6% interest on their savings.

In order to qualify for a loan the woman has to have at least 10% of the loan amount in savings. This money is not applied to the loan, but is to show the woman’s ability to manage money and make responsible financial decisions. The typical first loan is approximetly $100 USD, but once that loan is paid back they have the ability to increase their loan amounts. Payments can be paid on a weekly or monthly basis depending on the woman’s business. The interest rate is 12%, which may seem high, but compared to many NGOs here is quite low. Receiving a loan from the bank is ~8% so this is only a bit higher so they can cover the administration costs related to servicing the loans.

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