Achievements of the Microfinance Program (HEM) of TMSS in Bangladesh

Achievements of the Microfinance Program    

    (HEM) of TMSS in Bangladesh

“ Poverty is the absence of all human rights. The frustrations, hostility and anger generated by abject poverty can not sustain peace in any society. For building stable peace we must find ways to provide opportunities for people to live decent lives. To avail that, only Microcredit is not enough, we need integrated approach. HEM is the ultimate solution to live in a decent way and to ensure peace in the society.” —— Prof. Dr. Hosne-Ara Begum

36 years back from now in 1980, TMSS was established by a group of distinguished social activists of Bangladesh, as a non-govt. voluntary organization with a target of supporting national development efforts in rural, semi-urban and urban areas and creating the condition of democratic social order based on equal rights for upholding economic solvency and human services for disadvantaged and underprivileged people of Bangladesh. Since the very beginning, TMSS steps towards the comprehensive development of the community people by undertaking the way of integrated development approach and accordingly TMSS has been practicing Micro Finance program in the name of HEM (Health, Education and Microfinance) as a part of integrated approach with disadvantaged and underprivileged poor and deserving people since 1986. The main objective of TMSS Micro Finance program is to raise the economic status of the poor people by engaging them in income generating activities and consequently make them self-reliant. TMSS believes that without a positive change of the economic status of the poor people, all development activities will prove to be futile and from this realization TMSS has started Micro Finance program at different parts of Bangladesh.

From the time of initiating Micro Finance program, TMSS is extending the geographical areas including remote and isolated areas and covering beneficiaries gradually with a view to outreaching coverage and the sustainability of the organization as well. Besides extending the working areas and people coverage, TMSS is creating multidimensional loan service delivery process and applying it in an innovative and time need based way. TMSS always designs loan, savings and loan insurance products keeping absolute conformity with investment nature and livelihood pattern of the program clients.  Simultaneously, TMSS is providing skill development & capacity building training in respective trades of the borrowers prior to loan disbursement. On the other hand, TMSS is continuously providing human resource development training through its own training department and sending staff to external sectors for receiving training with a view to raising the capacity of handling demand driven different loan, savings and insurance products.

Efficient management system and tools, efficient human resources, application of innovative ideas in the field level, user friendly operational strategies and policies etc. are the main causes of maintaining a satisfactory recovery rate and borrower level satisfaction of TMSS’s Micro Finance program. At present our Recovery rate is 99.59 %, Operational Self-sufficiency rate is 161%, Financial Self-sufficiency rate is 151% which indicates the success of the program. From almost its inception, TMSS has been receiving Micro Finance fund from PKSF (in 1991) and other financial institutions including banks and Non-bank Financial Institutions (NBFC) and foreign fund to cater the growing demand of the members considering our continuous performance records.

The achievements of HEM model of TMSS are appended below:

Impact of HEM (Health, Education and Microfinance) Model in the Community level :


In the modern world Micro Finance has emerged as a very effective tool for socio-economic development, especially for the TMSS, one of the largest and renowned national NGOs in Bangladesh, having a dazzling 35 years of experience, has been practicing Micro finance program with a view to improving the livelihood status of underprivileged. Through from the applied experience, TMSS has observed that micro-credit is not adequate enough to improve the livelihood status of the poor as the situation demands micro-credit plus approach. Realizing the situation and the demand, TMSS has designed health services and education, financial literacy and management along with literacy and to some extent basic education and financial services as a package. Based on the multidimensional experience in working with community level, TMSS has introduced a new model well known as HEM (Health, Education and Micro Finance) for the comprehensive development of the targeted people of the country. TMSS has been implementing this model (HEM) in a cost-effective way to overcome the impediments of management in maintaining improved livelihood of the poor.

The experience of TMSS reveals that Micro Finance plus model should be the strategy of development interventions towards attacking poverty and bring the poor people out of poverty and also for the comprehensive development of the disadvantaged and underprivileged people of the society. Besides, economic poverty, people need to get rid of human poverty like education, health etc. The long practicing experience suggests that sustainable livelihood security will face obstacles if the development interventions are not integrated one. Our experience suggests that Micro `Finance and other social development supports jointly can attack poverty most successfully and also in a worthy manner.

For materializing health, education and micro-credit program; TMSS has established required number of branches all over the country with HEM approaches for successful accomplishment. TMSS branch offices are considered as Centre of development activitiesfrom where all the said efforts are provided for the targeted people which yields visible socio-economic development of the lives of the program clients and their families as well.  

 Potent Driver of Financial Inclusion for the Poor :

In Bangladesh Microfinance sector, TMSS is one of the most powerful drivers of financial inclusion that leads to greater asset accumulation by the poor in all working areas, their ability to smooth consumption and cope with external shocks. The amount of microfinance disbursed by TMSS is increasing rapidly and in a very significant way keeping in consistent with the market demand with high recovery rate (at present 99.59%) in Bangladesh. In this context, the amount of gradually increasing annual microcredit disbursement of TMSS (for example, around BDT 40,000 million in the fiscal year 2015-16) focusing on agriculture and ME/MSME, as the boosting agent and device, is impacting already the financial inclusion of the poor people and missing middle along with ensuring the conducive environment of self and wage employment in a meaningful manner which is remarkably helping changing the face of poverty scenario of Bangladesh. Thus TMSS has been emerged as the strongest part of rural financing platform creating momentum towards broadening and deepening of rural financial markets.

Appropriate Micro credit Product Delivery for Poverty Alleviation via Promotion of Self-Employment:

TMSS has proved that micro borrowers are creditworthy who pay regularly with a recovery rate more than 99 percent. In fact, the key success of microfinance of TMSS lies in addressing lack of finance faced by the poor in generation of self-employment for poverty alleviation.  Microfinance (HEM of TMSS) provides real need based funds along with friendly policies for income generating activities and thus it creates self-employment, promotes income and helps the poor to get rid of the poverty trap. HEM of TMSS also makes consumption smooth for the poor and helps them cope with the vulnerability stemming either from temporary lack of work or natural disasters. At present Microfinance programs of TMSS has been able to generate self-employment for near 1(one) million poor households in different economic activities, both farm and off-farm activities. Some research and studies of TMSS revels that the generation of self-employment is the main mechanism through which demand driven and investment friendly micro financing model of TMSS has been very much effective in accelerating the growth of income/expenditure and alleviating poverty. This scenario is reflected in the higher labor force participation ratio among participants in microfinance programs of TMSS as compared to non-participants in almost all working areas of Bangladesh.

Promotion of Savings and Investment:

TMSS has been able to defy the perception that the poor do not save at all of its working areas in Bangladesh. Here TMSS initially mobilized compulsory savings, but now TMSS collects different types of savings viz-a-viz obligatory savings. The outstanding of savings of TMSS stood at about BDT 4,430 million as on October 2015. TMSS always influences the rural informal credit market through its impact on poor household’s savings and investment. By adopting different strategies, TMSS always helps to reduce the dependency of poor on the informal money market directly through the provision of its investment friendly microfinance products and also indirectly through the scope for increased savings by poor households. Appropriate loans from TMSS supplement their own investment and bridge the consumption need in slack seasons. Among the Microfinance clients of TMSS it has been revealed that, in addition to cash savings, poor household’s savings take various forms of direct investment and the value of such investment is being substantial and it is being higher than cash savings in many cases. TMSS is contributing to accumulation of both working and fixed capital of the poor which is found to enhance the probability of moving up the asset ladder and to reduce the probability of falling. While this is true for both poor and non-poor households, the effect is much stronger for the poor. Most of the poor borrowers of TMSS started their journey in life with fewer assets compared to poor non-borrowers. But over time they have been able to accumulate assets at a faster pace in comparison with poor non-borrowers, thereby narrowing the original gap in endowments, and access to the Microfinance program of TMSS is found to have made a positive contribution in this regard. Furthermore, faster pace of asset accumulation has not remained confined only to those borrowers who have utilized the loan productively; it has also extended to those who have used the loans mainly for consumption purposes. For the latter group, access to TMSS’s Microfinance program has greatly helped by reducing the need for asset depletion at times of crises. It is clearly noticed that the contribution of TMSS’s innovative Microfinance approaches to asset accumulation has translated itself into significant contribution to poverty reduction of Bangladesh.

Empowerment of Women :

In the Microfinance program of TMSS in Bangladesh, Majority recipients of Microfinance are women (Above 90%) who have been able to raise their empowerment through involvement in income generating activities. Empowerment of women includes both material and non-material benefits achieved through participation in the Microfinance program of TMSS. Material benefits means increase in income, nutrition, food security, health care facilities etc. Non- material benefits includes increase in power of decision-making, active participation in different social issue, self-sense of honor, respect and recognition from family members and others of the society and higher mobility. Emphasizing women as the manager in the family, encouraging women to participate actively in the income generating activities of the family, different right based development orientation and tips to the women with a view to raising their awareness, incorporation of women in different trade related training etc. are the main causes of visible women empowerment of Microfinance program (HEM) of TMSS.

Impacts on Human Capital Formation.

Besides Microfinance program, TMSS conducts non-formal education, health and other social programs which contribute to increase in school enrollment and education of children of poor households. TMSS always emphasizes and requires that the members must learn to sign their names, will be able to read and write, will have some basic knowledge on financial literacy, inventory management of their business and customer dealing, will have sound knowledge and information on value addition, market linkages, market information and promotion of the products etc. Thus TMSS has been effective in generating relevant skills and social awareness which leads to human capital formation badly needed for socio economic upliftment of the poor clients involved in the program.

Employment of Significant Numbers of Graduates:

TMSS does not only create self-employment directly and indirectly for millions of the poor, it also generates jobs for more than ten thousand young graduates at present. The continued tired less service and dedication because of organizational staff friendly initiatives rendered by committed and devoted graduates across the whole of Bangladesh has contributed a lot to help the microfinance industry a successful one in Bangladesh and the most viable model HEM performed by TMSS for financial inclusion and livelihood security of the poor in Bangladesh plays very active and vital role.

Export of HEM Model Outside of the Country :

The success of HEM model among the poor society in Bangladesh initiated by the living legend of development Prof. Dr. Hosne-Ara Begum has not confined only in the territory of Bangladesh. The wave of success and its achievement has also reached in other developing as well as developed countries of the world creating a hope of relief from poverty and social exclusion among millions of the poor. Such success of HEM model has generated markets in abroad already and many representatives of different financial institutions and MFIs, Non-bank financial institutions (NBFIs), different research institutions, networking bodies, govt. representatives of different ministries, students of different universities of both in country and abroad are now rushing to TMSS to learn about the device of HEM and afterwards trying to replicate TMSS HEM model into their own areas.   

At a Glance Visible Impact of TMSS HEM Model in Bangladesh 

  • Per capita expenditure has been increasing among the micro-credit borrowers from all levels of the program. A household’s net worth and asset are being increased side by side. It clearly indicates that micro-credit reduces both moderate and extreme poverty and raise the people’s purchase capacity through the enhancement of scope of self and wage employment.
  • Micro Financing has been found to strengthen crisis-coping mechanisms, diversify income-earning sources, build assets of the family, female control over family asset and knowledge of social issues and thus overall visible socio-economic improvement of the status of women and ultimately the family as well.
  • A small amount of money works as a miracle in a cash-hungry society and significantly raises the woman’s power in the family.
  • Access to the income generating activities by the poorest of the poor segment of people is being ensured by gradually increased/enhanced investment sectors.
  • The mobility of the women outside their home and some control over their own income have been increased. In many cases, women participate in decisions that have to do with household issues particularly dowry dowry(dou`rē), the property that a woman brings to her husband at the time of the marriage. The dowry apparently originated in the giving of a marriage gift by the family of the bridegroom to the bride and the bestowal of money upon the bride by , family and inheritance laws, family planning, and education of their children sectors.
  • After taking micro finance, the income of the borrower, their resources and marginal propensity to save have been increased.
  • Abject poverty / severity of the poverty particularly at the rural and semi-urban areas where TMSS is working is almost absent because of diversified and clients’ investment friendly financial approaches in Bangladesh and this credit goes to HEM model of TMSS in majority.
  • Self and wage employment rate is increasing in a satisfactory way every year along with the graduation of the clients in terms of the enhancement of their income generating activities.