Grameen Bank(2)

8/8/2019 Grameen Bank(2)

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Grameen Bank

Voluntary Social Systems in action


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Bangladesh

Population:

145 million

Capital:

Dhaka (11 million)

More than half the

population is

landless


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Dr. Mohammed Yunus

Ph. D. inEconomics

Vanderbilt Univ

Nashville, TN

Taught at TenesseState and in

Colorado

After the war,

returned to

Bangladesh

Tried working inthe Govt, resigned

in two months.

Chairman of Dept

of Economics,

ChittagongUniversity


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I felt extremely ashamed of myself being part of a society which

could not provide $26 to forty-two able, skilled human beings

who were trying to make a living.

Dr. Yunus, testifying before the U. S. Congress Select Committeeon Hunger, in a hearing devoted to microcredit

Motivation


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Target Customers

The Landless

No Collateral

No Guarantee

Customers are never taken tocourt for default


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Target Customers

The Landless

No Collateral

No Guarantee

Customers are never taken tocourt for default

Villagers whose

families were

functionallylandless, didnt own

enough land to live off

for most of the year.

0.4 acres upper limit.


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Ownership

Owned by Borrowers (94%)Govt (6%)


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Money Disbursed

$5.25 billion Disbursed

$4.64 billion Repaid$425.15 million in 2005

$585 million Projected in 2006


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Loan Recovery Rate

99.01%

In 1996, Grameens repayment rate of 97% wasconsidered comparable to Chase Manhattans rate.


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Borrowers

5.58 million

96% women


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Ranis husband: If the bank lent money to men,they wouldnt get it back so conscientously.Women have the discipline to manage such

things.

Thats why the Grameen Bank is made up of

women, Rani added

Why? I asked.

Because they profit by it.


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Source of Funds

100% from borrowers deposits

No Donor Money, No Loans (since 95)


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Profits

Made profit every year except 83, 91 and 92.

Audited by two internationally reputed auditfirms. Audit reports available online.


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Interest Rate

Govt cap at 11% flat rate for microcredit operations.

Amounts to 22% at declining basis.

Grameens rate is lower than Govt. rate. 4 types:1) 20% declining basis (income generating loans)

2) 8% for housing loans

3) 5% for student loans

4) 0% loans for struggling members (beggars)


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Death of Member

In case of death a borrower, all loans are paid off

under Loan Insurance Programme.

Loan Insurance ProgrammeInsurance fund created by the interest generated

in a savings account created by deposits of the

borrowers made for loan insurance purpose, at thetime of receiving loans. Each time, an amount

equal to 3% is deposited into this account.


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Death of Member

Life Insurance

Total of 81,750 Grameen Bank borrowers havedied so far. Their families collectively received

$3.55 million.

Borrowers are not required to pay any premium

for this life insurance. Borrowers come under thisinsurance coverage by being a shareholder of the

bank.


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Pension Fund

Popular program.

Borrowers are required to save $0.86 each monthfor a period of 10 years. The depositor gets

almost twice the amount she saved, at the end of

this period.

Dec 2005 balance in this account - $147.66million


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Telephone Ladies

Provided loans to 187,000 borrowers to buymobile phones and provide telecommunications

services in villages.

Telephone ladies generate revenue for Grameen

Phone, the countrys largest telephone company.


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Computerization

Accounting and information management ofnearly all branches computerized (1455 out of

1735). 15 zones out of 21 connected through a

corporate intranet.


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Crossing the

Poverty Line

55% of Grameen borrowerfamilies have crossed the poverty

line. Remaining are movingsteadily up.


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Mechanics

Based on Community

Upto 6 groups of 5 form a center. Each center elects a chief

and deputy.

All loans collected at weekly center meetings


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People Should Not Go to the

Bank

The Bank should go to the people. When a villager isasked to come to an office, it becomes a symbol of

terror. You are put in a line, you dont know therules. Somebody says, You go there. Somebodyelse says, You better go there. Somebody says,Where are your papers? and, No, you come

next time. The people at the bottom are terriblyscared of this kind of situation. They would rather

not deal with you.

Dr. Mohammed Yunus, in a 1991 speech


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MechanicsOther banks assume that you are a potential cheat. Thats

how they tie you up [with collateral]. We assume that you arethe best person ever. And there are margins of error in both

cases. But if their repayment is 98 percent and so is ours,

theyre wrongin 98 percent of the cases and were rightin 98percent of the cases.

Dr. Mohammed Yunus


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Workshops & Center Schools

In 1980, Grameen began organizing workshopsand center schools, and providing members with

items such as iodized salt, vegetable seeds,

saplings, water-purification crystals, andtextbooks. The bank always charged a small fee

for these items, even if it was just a token

amount, because Yunus was adamant thatGrameen not be perceived by members as another

giveaway program. Bangladesh had far too many.


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Social Subtext


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Bank meetings are held five days a week, two permorning. So, at each designated time, about 6,000centers are gathering, each containing thirty to

forty borrowers. An hour and a half before,200,000 villagers had assembled, and now another200,000 were preparing for a second round.

Imagine the range of problems that might arise inthese meetings. Bangladeshi villages are splitalong clan, class, religious, and in some cases,caste lines. The anxiety produced by extreme

poverty leads inevitably to hostile competitionamong different factions.


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Villagers fight over control of land andwater. It is not uncommon for a family to

split apart over a land feud, or for a strongbrother to steal the inheritance of a weakone. Centers are by no means insulated

from the tensions in their communities.Almost every one of the two dozen centers Ivisited had at least one major division thatran through it like a geological fault.


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Admirers of the Grameen Bank are fond ofretelling stories about centers that have united to

protest injustices. Indeed, the image of fortyvillage women confronting a wife beater isinspiring. But such moments are the exceptions.More compelling is how well Grameens systemoperates under normal conditions: how itcompensates for a lack of goodwill, and how itsrules act as a tight web around the center ensuring that villagers are brought togetherfrequently in a setting where they are forced toanswer for their actions before all eyes.


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Depsite the great potential for anarchy, most

of the time things do not fall apart. The

center holds and it holds by means of apowerful social pressure that was described

two centuries ago by Adam Smith.


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In the middling and inferior stations of life,wrote Smith in The Theory of Moral Sentiments,

personal success almost always depends upon thefavor and good opinion of.. neighbors and equals;and without a tolerably regular conduct these canvery seldom be obtained. .. in such situations,therefore, we may generally expect a considerabledegree of virtue; and, fortunately for the goodmorals of society, these are the situations of by farthe greater part of mankind.


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Questions?


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The Sixteen Decisions


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We shall follow and advance the four principles of Grameen

Bank --- Discipline, Unity, Courage and Hard work in all

walks of our lives.


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Prosperity we shall bring to our

families.

W h ll li i dil id d h W h ll i h d


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We shall not live in dilapidated houses. We shall repair our houses and

work towards constructing new houses at the

earliest.

We shall gro egetables all the ear


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We shall grow vegetables all the year

round. We shall eat plenty of them and

sell the surplus.


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During the plantation seasons, we

shall plant as many seedlings aspossible.


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We shall plan to keep our families small. We

shall minimize our expenditures. We shalllook after our health.

W h ll d t hild d


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We shall educate our children and ensure

that they can earn to pay for their

education.


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We shall always keep our

children and the environmentclean.


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We shall build and use pit-

latrines.


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We shall drink water from tubewells. If it is

not available, we shall boil water or use alum.

We shall not take any dowry at our sons' weddings neither


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We shall not take any dowry at our sons weddings, neither

shall we give any dowry at our daughters wedding. We shall

keep our centre free from the curse of dowry. We shall notpractice child marriage.

We shall not inflict any injustice


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We shall not inflict any injustice

on anyone, neither shall we allowanyone to do so.

We shall collectively undertake


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We shall collectively undertake

bigger investments for higherincomes.

W h ll l b d t h l h th If


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We shall always be ready to help each other. If anyone

is in difficulty, we shall all help him or her.


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If we come to know of any breach of discipline in any centre,

we shall all go there and help restore discipline.


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We shall take part in all social

activities collectively.

Documents

Grameen Bank(2)