Soft Microfinance offers a human-centred alternative to conventional lending

A discussion titled “Current Challenges of Microfinance and the Potential of Soft Microfinance” was held in Rupganj, Narayanganj, bringing together local leaders, community representatives, microfinance stakeholders, social workers and others to explore fairer and more sustainable financial services for low-income communities.

ATM Ridwanul Haque, founder and CEO of Agroho Society, who coined the term “Soft Microfinance”, highlighted challenges associated with conventional microfinance, including borrowing costs and limited flexibility during financial hardship. He stressed the need for a system that helps borrowers improve their economic conditions without increasing their financial vulnerability, says a press release. 

Explaining the Soft Microfinance model, he said it combines financial assistance with borrower care, offering loans without compound interest and charging a variable, one-time service fee of up to 8%. Late-payment charges, where applicable, are capped at 1% per year on overdue amounts only. The model prohibits forced savings and compulsory purchases while allowing fee waivers for borrowers facing genuine hardship. Any operational surplus remaining after costs are covered is reinvested in the programme or returned in line with its principles.

“Soft Microfinance is not about profiting from poverty; it is about helping people overcome it,” he said.

Participants discussed the model’s potential to promote financial inclusion, support small entrepreneurs and encourage economic self-reliance while safeguarding borrowers’ dignity. The discussion underscored the importance of a more compassionate and accountable microfinance system that prioritises borrowers’ long-term well-being.