Best Practices in Microcredit Governance: Lessons from Bangladesh

Author:Tahmina Akhter, Shanzida Hassan

Abstract:
The performance of two prominent microcredit providers—Grameen Bank and BRAC NGO—is examined in this paper, with particular attention paid to their different organizational structures and governance frameworks. As a borrower-owned cooperative, Grameen Bank promotes member involvement in decision-making, which, through group lending, encourages ownership and peer support but may also lead to social pressure. BRAC NGO, on the other hand, employs a centralized governance model and offers a thorough approach to micro credit that is in line with its larger social development initiatives. Although this strategy provides comprehensive assistance, it may not be as flexible to meet the needs of each borrower. Although borrower choices and economic conditions have an impact on their effectiveness, both groups aim to increase loan attachment and reduce poverty. While BRAC depends on a combination of donor money and revenue-generating operations, Grameen Bank places a higher priority on self-sufficiency. The impact and sustainability of microcredit systems might be improved by fusing the advantages of both models—BRAC's integrated approach and Grameen Bank's borrower ownership.

Keywords:Microcredit, Governance Models, Grameen Bank, BRAC NGO, Poverty Alleviation, Borrower Ownership, Social Development.

DOI:10.46333/ijtc/14/1/2

International Journal of Trade & Commerce (Vol: 14 Issue:1)