CDIP enters bond market to expand microfinance

Infographics: TBS

The Centre for Development Innovation and Practices (CDIP), an NGO dedicated to the socio-economic development of disadvantaged people, plans to extend its microfinance services by raising Tk171 crore through bonds to serve rural customers better.

The Bangladesh Securities and Exchange Commission (BSEC) recently approved this rural development plan.

According to the BSEC, the CDIP 1st Zero Coupon Bond will be non-convertible, fully redeemable, and unsecured with a face value of Tk171 crores, redeemable within three years.

The NGO intends to use these funds to support microcredit and small and medium enterprises.

BRAC Bank and its subsidiary BRAC EPL Investments are the joint arrangers of the bond, while DBH Finance PLC will serve as the trustee.

Mifta Naim Huda, executive director of the CDIP, told the Business Standard their organisation aims to diversify its funding sources.

He mentioned that the NGO has not taken any foreign loans since its inception, primarily relying on local loans, particularly from the Palli Karma-Sahayak Foundation and banks. However, it is currently in the process of securing a foreign loan.

Established in 1995 in a remote village in the Brahmanbaria district, the NGO works to improve the socio-economic conditions of disadvantaged people by providing financial and social services directly to them.

Currently, the CDIP supports 246,951 families with credit facilities and 57,661 disadvantaged children with home tutoring services across 30 districts in Bangladesh.

Over the past 28 years, CDIP has successfully become financially self-sustainable without receiving donations, serving the underprivileged community.

The organisation operates in three segments: microfinance, health, and education, covering 8,397 villages through 226 branches.

By the end of the 2022-23 fiscal year, it expanded its activities to 30 districts, 166 upazilas, and 1,748 unions, covering a total of 8,095 villages.

The membership increased from 2,88,574 in the previous fiscal year to 2,98,565 in the current year. During this fiscal year, loans totalling Tk2,363.80 crore were disbursed, a 20.53% increase from the previous year, with a timely loan recovery rate of 98.19%.

The education support programme operates in 138 branches, assisting nearly 58,000 children from disadvantaged families through 2,711 learning centres for 1st, 2nd, and pre-primary grades. CDIP focuses not only on school studies but also on the holistic development of these children.

In FY23, the healthcare programme provided primary healthcare services to 2,26,879 patients, including 4,806 children, through 119 branches in 19 districts.

Following the Covid-19 pandemic, there has been significant demand from rural customers. To meet this demand, NGOs have turned to the bond market, according to insiders.

Previously, NGOs often sought foreign loans, but this trend has decreased due to the devaluation of the taka. Additionally, the Bangladesh Bank has restricted the issuance of foreign loans due to the weakening taka, while bank loans have become more expensive due to high interest rates.

Organisations such as BRAC, Sajida Foundation, Thengamara Mohila Sabuj Sangha, and BURO Bangladesh have also entered the bond market by raising funds to facilitate microfinance across Bangladesh.