In Bangladesh, poor people have traditionally been denied access to the formal banking system, as they are unable to provide collateral for loans and typically deal in small amount of money.

BRAC, the largest Non-Governmental Organization (NGO) in Bangladesh, launched micro finance program in 1974 to encourage the increase of income for the poor through setting up and expansion of income generating activities.

While taking a site visit on Tuesday to Manikganj, 63km southwest of capital Dhaka, BRAC Senior Communication Officer Fariduzzaman Rana told Xinhua BRAC provides collateral-free loan to the poor, especially women in a simple and affordable manner.

"Our micro finance program has three scales, the first scale is only for the medium poor women who are requested to be between 18 to 60 years old and must have a house. They can take loan between 5,000 taka and 30,000 taka (US$70-US$430) in one year and return in installments with a yearly interest rate at 15 percent," Rana said.

"When the borrowers' situation become better, they can enter the second scale and then the third scale which means they can take more loans," Rana added.

Shamima, a 35-year-old woman who lives in West Dashora village of Manikganj district, told Xinhua her life has changed a lot after she took small loan from BRAC 10 years ago.

"I buy cloth and make bed covers. With the money I make from selling bed covers, I not only can support the whole family but also can send my two sons to school as well as afford facilities like TV and other electronic appliances at home," she said.

Sukina, an old woman of around 55, said she took a loan of 50,000 taka from BRAC this year and is running a grocery.

"I can get 500 taka profit per day after returning the loan and interest. Life is becoming much better for me and my family," she said.

"I plan to expand my grocery in the future and make more money," she added.

Shamima and Sukina belong to one of the six loan groups in the village. One group consists of 25 to 45 women borrowers.

If some borrowers from the group can't return the loan, the group will take responsibility and manage to sort it out, Rana said.

"Ninety-nine percent of the borrowers have returned the loan," he added.

Rana said if someone dies before returning the loan, BRAC will write off his or her debt and also give the family 5,000 taka.

He said the borrowers use the loan to start new enterprises or expand existing ones ranging from agricultural activities such as growing rice, maize or vegetables and livestock rearing to non-farm activities such as running a restaurant or grocery store.

According to BRAC statistics, up to December 2007, the micro finance program was serving 7.37 million poor people, mostly women.

BRAC, founded in 1972, has become one of the biggest NGOs in the world. It employs 120,000 staff. They have offices in countries like Afghanistan, Tanzania and Uganda.