Aminur Rahman Grameen Bank - Copy

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Pergamon Wor l d Devel o pm en t Vol. 27, No. 1, pp. 67-82, 19990 1998 Elsevier Science LtdAll rights reserved. Printed in Great Britain

0305750X/98/ - see front matterPII: s0305-750x 98)00105-3

Micro-credit Initiatives for Equitable and SustainableDevelopment: W ho Pays?

MINUR R HM NDepartment of Anthropology University of Manitoba Winnipeg Manitoba CanadaR3T 5V5

Summary. - There is a growing acknowledgement that micro-credit programs have potential forequitable and sustainable development. However, my anthropological research on the micro-credit program of the Grameen Bank shows that bank workers are expected to increasedisbursement of loans among their members and press for high recovery rates to earn profitnecessary for economic viability of the institution. To ensure timely repayment in the loancenters bank workers and borrowing peers inflict an intense pressure on women clients. In thestudy community many borrowers maintain their regular repayment schedules through a processof loan recycling that considerably increases the debt-liability on the individual households,increases tension and frustration among household members, produces new forms of dominanceover women and increases violence in society. 0 1998 Elsevier Science Ltd. All rights reserved.

K ey w o r d s - Micro-credit, Gramcen Bank, rural Bangladesh, women, violence

1. INTRODUCTIONThe concept of micro-credit -extension of

small amou nts of collateral-free institutionalloans to jointly liable poor group mem bers fortheir self-employment and income-generation-isa Grameen Bank innovation. Over the last twodecades the Grameen Bank has pioneered acredit de livery system in rura l Bangladeshbringing banking to poor villagers and focusingprimarily on women. This Bank is now thelargest micro-lending institution in Banglade sh,with 1046 rural branches covering 3491 3 villages,more than half of all the villages in the country.The cumulative investment of the GrameenBank in rural Bangladesh is more than one

attracted international interest and made themicro-credit approach a new paradigm forthinking about economic development(Morduch, 1997, p. 1). Now, there is almost aglobal consensus that micro-lending to the poorthat is focused on the achievement of equitable(women as equal partners) and sustainable gain(in regard to livelihoods for beneficiaries andfinancial viability for service-providing institu-tions) is the key element for the 21st centuryseconomic and social development (MCS, 1996).Currently, most bilateral and multilateraldevelopment agencies incorporate micro-credit*Material used in this paper was collected in 1994-95in a rural community of Bangladesh for my doctoral


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into their development projects and are keen topush other multi-sectoral social development-oriented non-government organizations (N GO s)and private voluntary organizations (PVO s) intothe function of credit delivery (Woo d and Sharif,1997).

2 . BACKGROUND OF RESEARCH

This pap er is based on my dissertationresearch on the Grameen Bank micro-creditprogram in a rural community in Bangladesh. Inthis paper I examine the lending structure ofsmall loans among poor wome n in one studyvillage and illustrate the implications of suchlending to achieve e quitable and sustainabledevelopment. Despite the success of theGrameen Bank in delivering loans to poorwome n and bringing socio-economic changes tomany of these womens households, my findingsshow that there are still many borrowers whobecome vulnerable and trapped by the system;they are unable to succeed. At the level of grass-root credit operation, bank workers and peergroup members inflict an intense pressure onborrowers for timely repayme nt, rather thanworking to raise collective responsibility andborrower empow erment as originally envisagedby the Bank (Yunus, 1997, p. 18). Manyborrowers maintain their regular repaymentschedules through a process of loan recycling(paying off previous loans by acquiring newones) which considerably increases borrowerdebt-liability. T he institutional debt-burden onindividual households in turn increases anxietyand tension among household members andproduces new forms of social and institutionaldominance over many wome n clients in theprogram . The qualitative analysis of this paperraises questions about conventional under-standing of small-scale lending by the Gram ecnBan k and about orthodox views of its success

the informants about credit operation in thevillage. The hidden transcript develops offstageand informants often express or discuss it in asafe context, i.e., within their ow n group or withpersons whom they trust (Scott, 199 0, pp. 4-7).The public transcript of the Bank and hiddentranscript of the informants together provide amore comprehensive picture of the process. Theanalysis of the paper also reveals that manypractices of both the program members and bankworker s are contrary to the public transcript(ideology) but are often rationalized by inform-ants in the context of practical needs of thesituation (Bourdieu, 1990).

3 . RESEARCH SITE AND DATACOLLECTION

This study was carried out in a village in theTangail region of Bangladesh in 1994-95 and inSummer 1997. The research site is one of theoldest program areas of the Grameen Bank. In1980, the Grameen Bank started its operation inthe study village. T he duration of the programwas important to examine and comprehend thelong-term socio-economic and cultura l implica-tions of micro-credit for the mem bers. The studypopulation-295 households, 1 54 Grameen Bankmembers (120 women and 34 men) and 12 (ninemale, three fem ale) bank workers in the localbranch-was manageable in terms of time andresources.

My approach to this study was based uponanthropologica l research techniques of partici-pant observation, unstructure d and in-depthinterviews and a collection of case studies. Inaddition, I conducted a comprehensive house-hold survey of my research site to providedemogra phic and socio-economic organization alinformation for the study area. Data collectionwas geared primar ily to docume nt the inform-ants experiences of their participation with the


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MICROCREDIT INITIATIVES 69

native language and my cultural knowledge tobuild a rapport with informants; my previousresearch experiences of working w ith ruralwomen in Bangladesh (Rahman, 1992) werehelpful for this study.

4 . TARGETING WOM EN(a) The p u b l i c t r m scr i p t

From the beginning of its operation in Bangla -desh the Grameen Bank has maintained amand ate of poverty alleviation. To alleviate ruralpoverty in the country the Bank ha s not justpreferred to lend to wome n borrowers, but sincethe mid-1 980s it has focused primar ily onwomen. Bank rationale for targeting women overmen in rural Bangladesh is based on the assump-tion of wome ns greater contribution to familywelfare. The hypothesis is that wom ens priorityis to invest their earnings in their children, to befollowed by their spending on other householdnecessities. Therefore, lending to wome n andincreasing their earnings bring more qualitativebenefits to family welfare than the earnings ofmen. In addition, lending to wome n is perceivedas an effective way to assist poor w omen inattaining their socio-economic empow erment inthe larger society (Yunus, 1994). The publictranscript of the Grameen Bank for targetingwomen in the micro-credit program is based onthe following objectives: (i) to give wome n accessto credit for increasing their earning capabilitiesand bringing faster improvements in the house-hold socio-economic conditions; (ii) to organizewomen into groups for raising their collectiveconsciousness, strengthening their groupsolidarity through weekly meetings and assistingthem to attain a greater socio-economic empow-erment in society.

for running the loan center) to uncover thereason for not replacing or forming new groupsin this loan center. The bank work ers responsewas:

Our superior officers have asked us not to recruitany new male members and eventually to eliminateall male groups from the loan operation. The loancenter previously had six groups and thirty malemembers, some of whom have either left the groupor have been expelled by their peers, but we havenot replaced them.The bank worker rationalized his statement

in the context of practical intelligibility(Bour dieu, 199 0) by explaining the realities ofthe field situation. He said:

In the field it is hard to work with male members.They do not come to meetings, they are arrogant,they argue with bank workers and sometimes theyeven threaten and scare the bank workers. It is goodthat our superior officers have decided not to recruitnew male members, although we do not have anywritten instruction about it.The statement of the bank worker-a hidden

transcript-implies that targeting women for theprogram is strategic for the Ban k, i.e., accom-plishment of the goal of investment and recoveryof loans. Helen Todd (1997, pp. 159-160 )explains that during the mid-198Os, mainly inresponse to increasing repaym ent problemswithin male centers, the Grameen Bank projectbegan a shift toward recruiting women membersinstead of men.

The Bank extends loans to women, but in thestudy comm unity men predom inantly use theseloans and supply instalments to wome n for theirweekly pa yment in the loan centers. This practicegoes against the public transcript of the lendinginstitution but all actors involved with the loanoperation (bank workers and borrowers) areaware of it. The borrowers and bank workershave their own views on why women are exclu-


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The experience of Bahar ( lOl) is an exampleof this.Bahar was brought up in a conservative familyand always observed p~udc~lzuntil she joined theGrameen Bank group. The household own morethan two acres of arable land and Bahar does notqualify for Gram een loans. But, within three tofour years of the Banks operation in the village,a couple of women from neighboring householdsowning arable land, who officially did not qualify,joined the Ban k and received loans.Since then Bah ars husband insisted that shejoin the Bank and get money for him. Baharresisted and refused. Then her husband exertedpressure on Bah ar thr-o ugh his verbal aggression,e.g., quarrelling. Bah ar tolerated such aggressionfor some time and refused to join the Ban k.Finally, her husband warne d her- that if she didnot join the Gramcen group then he would sendBahar back to her natal home and he wouldremarry. In 1989, Bahar joined the group andreceived her first loan. Until 199 3, when herhusband migrated to Libya as a manual labourer,the husband used her loans. He instructed Baharto continue with the Grameen Bank. Now Bahargives her loans to her brother in a distant villagewho invests the money in his business and gives ashare of the profit to Bah ar at the end of eachyear. Bahar pays regular w eekly instalments fromher husband s remittance.

The use of customa ry gender relations intargeting wome n for micro-credit extensionshows the importance of patriarchy in ruralsociety of Banglad esh. In the study village bothworkers of the Bank and men in the householduse patriarch al ideology-women s positionalvulnerability-in their own interests. The bankworkers manipulate it to recruit and extendloans, and men in the household rely on patri-archal gender relations to use wom ens loans andto pay their instalments. The USC of women sposition to attain institutional interests and intcr-ests of men reaffirms the hegemony in society

social solidarity. The wome ns loan centerintends to provide wome n with a space to meetwith each other, pay instalments, discuss varioussocial development issues, e.g., health, edu cation,environment and solidarity. The social dcvelop-ment program consists of Sixteen Decisions and each center tries to ensure that all its mem bersare guided by the Sixteen Decisions in their dailylives (Yunus, 1997, p. 19). During the earlyyears of Ban k operation in the village theworkers used a good p ortion of their time in thecenter to discuss the social program with groupmembers. However, in current practice theorganized group works primarily as the safeguardfor investing money and for recovering loaninstalments from the borrowers (Bernasek, 1992:Chandler, 1993; Goetz and Sen Gupta, 1996).

The Grameen Bank lends to individualborrowers in the village by forming loan groups.Five members form a group which must receive aformal recognition from the Grameen Bankbefore their loan transaction with the Ban k. Sixto eight such groups-30-40 members usuallyfrom the same village-create a loan center.Women who belong to a new loan center takethe responsibility of building a center-house orfinding a n available free space within theirvicinity for the weekly meetings and loan opera-tion. Fulfilment of these basic requiremen ts byborrowers in a center make s them eligible forloans. The Ban k grants credits to individualborrowers sequentially by establishing a uniquetime cycle. In the first sequence of the cycle onlytwo members from a loan group receive loans.The bank worker observes their loan repaymentbehaviors for at least two months and their satis-factory com pletion of the loan repayme ntsentitles the next two in the same gro up toreceive loans. In this micro-credit program theindividual is kept in line by a considerableamo unt of pressure from the other membe rs ofthe group. The group and the loan center in thissystem function as institutions to ensure mutu al


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72 WORLD DEVELOPMENT

wom en is widespread in the rural society (seeArnes and Van Beurden, 1977; White, 1992;Zaman, 1997). The patriarchal ideology, i.e.,wom ens absolute socio-economic dependency onmen, mak es them vulnerable to violence insociety. A study on the Grameen Bank states credit program s may reduce dom estic violenceby channeling resources to families throu ghwom en, and by organizing women into solidaritygroups that meet regularly and make thewom ens lives more visible, strategies that couldbe used in other types of programs (Schuler eta l . 1007 p. 33). Such study represents the publictranscript of the program , but the information ofmy research shows that social collateral -astrategy for ensuring high repaym ent rates-mayactually escalate violenceX toward womenborrowers. The violence in the loan center and inthe borrowe rs household is discussed here withthe evidence of the loan operation in the studycommunity and power hierarchy in the loancenter.

In the Crameen Bank micro-credit scheme theborrowers must maintain the credibility of theloan center by ensuring regular weekly repay-ments to the Ban k. Th e credibility of a center tothe Bank and the potential for new loans for itsborrowers is in jeopardy when even one mem berin the center fails to maintain her regular weeklypayment of the loan instalment. The GrameenBank has been w orking in the study village forthe last 15 years. There are four women and twomale loan centers in the village; often there areone or two mem bers in every loan center who,because they were unable to arrang e their instal-mcnts, did not come to center meetings. In sucha situation, other re gular memb ers in the centerare forced to sit on their bare feet on a mudfloor for several hours until all instalments arecollected. If the absent mem ber is available inthe village, her peers persuade her to come tothe center. The appeara nce of the absentee inthe center usually releases an outburst of anger

part of the instalment to the defaulting borrowerin order to adjust her account or the bankworke r may leave the center w ithout collectingthe default instalment (this rarely happened);(iv) in extreme situations peers in the loan centermay decide to take the defaulters saleablehousehold items or personal assets and sell ormortgage them o ut to collect the instalment.

One possible consequence of a defaultingmemb er is that all the other mem bers who paidtheir instalments in a timely man ner must wait inthe center and experience a delay before theycan return to their household. In the household,the male members give instalmcnts to wome nand expect them to pay the instalments to thebank worker and return home from the centerpromptly. Wom ens forced delay in the centerproduces disorder in household chores and maygenerate tension among household mem bers.Such rising tension may turn into violence inwhich wome n are victimized. An excerpt frommy field notes illustrates:

Once I missed a center meeting and in the afternoonI went to Romenas ( 65) house to collect informa-tion about the meeting. As I arrived there, 1 loundRomena sitting on her veranda (the front balcony ofthe house) pale and depressed. My initial inquil-yabout what happened went without respond forsome time when Romenas husbands cider brotherswife, who lives on the same homestead, informed mcthat Romena had a fight with Jinat (husband). Atthat point Romcna protested by saying that she didnot fight with her husband but it was the husbandwho had beaten her. Romena then explained thatthe previous night Jinat had borrowed the instalment(kisti) from one of his friends in the neighboringvillage and promised to sell his labor to the lender.In the morning Jinat gave the kisti to Romcna andasked her to pay it to the bank worker and returnhome to prepare his morning meal. Romcna wasdelayed in the center because one member whobelongs to her group comes from a distant villagedid not show up in the meeting. Jinat sent one oftheir daughters twice to the center to get Romena


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Aminur Rahman Grameen Bank - Copy