By:-Amar Aditya (3)Haqiqat Ali (12)

Grameen Baking: - A Social Entrepreneurship model

Introduction

Grameen Bank of Bangladesh is known worldwide for its innovative credit

delivery to the rural poor. By incorporating group-based lending,

mandatory savings and insurance, repayment rescheduling in case of

disasters, and similar other schemes, it has been able to minimize both

behavioral and material risks of lending. By 1994, Grameen’s coverage

had increased to include 50 percent of villages of Bangladesh with more

than 2 million members (94 percent of whom are women), with a loan

recovery rate steadily above 90 percent. It also has noticeable positive

impacts on participants’ economic and social well- being, and on the

overall income growth and poverty reduction in the village level.

Grameen Bank (GB) has reversed conventional banking practice by

removing the need for collateral and created a banking system based on

mutual trust, accountability, participation and creativity. GB provides

credit to the poorest of the poor in rural Bangladesh, without any

collateral. At GB, credit is a cost effective weapon to fight poverty and it

serves as a catalyst in the overall development of socio-economic

conditions of the poor who have been kept outside the banking orbit on

the ground that they are poor and hence not bankable. Professor

Muhammad Yunus, the founder of "Grameen Bank" and its Managing

Director, reasoned that if financial resources can be made available to the

poor people on terms and conditions that are appropriate and reasonable,

"these millions of small people with their millions of small pursuits can add

up to create the biggest development wonder." 

  As of October, 2011, it has 8.349 million borrowers, 97 percent of whom

are women. With 2,565 branches, GB provides services in 81,379 villages,

covering more than 97 percent of the total villages in Bangladesh. 

How Grameen came to being

Now this is how the birth of Grameen came about (Yunus, 1998). A young

economist with a freshly minted PhD from the United States had returned

to Chittagong University in Bangladesh to help to build his newly created

country, but he grew frustrated with abstract theory as he watched people

starve during the famine of 1974. One day in his quest to find a way to

help, he met a bamboo weaver who, for want of less than $1, was

enthralled to a moneylender. From his own pocket, the professor lent

$0.64 to the weaver. By 1976, Grameen was born. When it became a bank

in 1983, Grameen had 36,000 members and a portfolio of $3.1 million. By

1997, it had 2.3 million members and a portfolio of $260 million.

Behind the miracle story lies the design of products and incentives that

allow Grameen to make small loans to poor people without physical

collateral. This section describes the design details behind the tale of

success.

Grameen Bank model

It is believed at the GB that the

main problem of the poor is a

lack of access to credit lines

despite their productive capacity.

While most conventional banks

grant credit based on collateral

assets, GB give loans without any

kind of collateral. GB has been

successful in overcoming the

problems of informational

asymmetry often found in rural

financial markets. This bank replaces

collateral by peer pressure and social

sanctions.

Figure 1:- Grameen Bank’s

The extremely poor can get

small loans at GB if they

form groups of five people.

Each member of the group

receives an individual loan;

however, they are mutually

responsible for all five

credits. The bulk of GB’s

borrowers are women who

constitute the weakest social

group among the rural poor.

Lending money to women has largely enhanced recoverability for GB’s

loans.

This bank originated in 1976 as an experiment in a research project of

Muhammad Yunus, Professor of Economics at Chittagong University in

Bangladesh. The GB was chartered to operate as a national bank in 1983,

with 75 branches spread in five districts of the country. Presently, GB has

extended its reach to 56 out of 64 districts in Bangladesh. In 1994, GB had

in operation 1,045 branches with 10,861 employees and it was spread

over 30,000 villages, equivalent to half of the villages in Bangladesh.

As shown in Figures 1 and 2, in

1994 GB had over two million

members, 94 per cent of which

were women. In 1994, GB lent

Taka 15,395.3 (US$385) million

and mobilized savings for Taka

12,231.80 (US$306) million

(Figures 1 and 2). Women held 90

per cent of the total cumulative

disbursement of Taka 46,135.40

(US$1.100) million and the

outstanding loan portfolio amounted to Taka 11,308.7 (US$281) million.

Figure 2:- Outstanding loans and

Figure 3:- Grameen Bank

Between 1985 and 1994, annual membership growth rates averaged 32

per cent, loan disbursement increased at an average rate of 54 per cent

per year, and savings grew at an average of 67 per cent per year (see

Figure 3).

As a result of a research project, GB is the final product of wide

experimentation. The Grameen programme enjoys great flexibility in its

implementation. Therefore, if something does not work in practice, it is

modified. The legal framework in rural Bangladesh has been adapted

according to new social requirements. The GB programme works based on

consensus. Everyone follows the rules because they collectively set them

up.

Some authors maintain that the extraordinary growth of GB is due to the

charismatic leadership of Dr Yunus and to the decentralized

administrative system that it applies for its purpose.

Administrative organization

GB is organized into four levels: the head office, zone offices, area offices

and field branches. GB is a highly decentralized organization. Such

autonomy has been a crucial factor in attaining its present success.

Branches are independent profit maximizing units, which borrow money

from the head office at an interest of 8 per cent and lend it at 20 per cent.

Typically, a branch encompasses about 60 centers in an area not greater

than 50km2. Zone offices and area offices are known as regional offices.

There is one area office for about ten to 15 branches. It is at the area level

that credit is approved based on branches recommendations. Zone offices

are set for supervision only and they control five to ten area offices.

Finally, the head office is located in Dhaka, capital of Bangladesh. It has a

total of 400 employees, and is in charge of obtaining loan able funds and

providing training to branch workers.

On the other hand, salaries of managers depend on general performance

of branches. Consequently, GB’s employees are highly motivated to

helping the poor. Additionally, employees are thoroughly trained in the

bank’s operating norms and they are compensated according to

productivity and general office performance. As a result, employees and

managers do not require supervision.

They have personal incentives to work. Through the training process they

have been injected with high doses of enthusiasm to help the poor

overcome their situation. Unlike conventional banks where customers visit

the bank’s branches, the GB approach is to take banking services to

centers and villages. In the centre, members receive the funds, pay the

due installments or fill in any bank requirement. As a result, information

asymmetries decline, as bank employees are usually well informed about

problems and achievements as they arise.

Grameen banking: - A social entrepreneurship model

Grameen Bank introduces social intermediation as an integral part of

financial intermediation to improve both social and financial discipline

among the poor. Grameen Bank realizes that besides income and

production risk, lack of financial and social discipline is an important

source of poverty. Savings is one means of promoting social and financial

discipline among the poor. In addition, Grameen Bank has developed a

comprehensive social development program, outlined by its “sixteen

decisions”. These decisions are behavioral guidelines that members are

expected to follow. For example, they are encouraged to plant trees, grow

kitchen gardens, raise small families, and build houses and sanitary

latrines. It mobilizes the poor into groups for training and disseminating

information about contraceptives, children’s education, health and

nutrition, and other socioeconomic indicators of development. For skill

development, it introduced different training activities according to the

needs of members and borrowers.

As part of its design for social and economic transformation, Grameen

Bank actively promotes female membership in a society where women are

virtually excluded from productive employment because of social

restrictions. Its objective has become to empower women by enabling

them to undertake independent income-earning activities. Grameen Bank

introduced a housing loan which is specifically designed to empower

women in household decision making by securing the land entitlement of

the homestead in their name.

Loan portfolio

As at the end of 1994 the loan

portfolio of GB included general

loans (70 percent), collective

loans (0.10 per cent), house

building loans (29.5 per cent)

and technology loans (73 per

cent). General loans are

provided for a one-year term at

an interest rate of 20 per cent.

General loans are the centre

piece of GB operations. The

general loans are granted for

maximum of $125 to group

members for investment in

income generating activities

Collective loans are given to

centers which have decided to

participate in any joint venture

such as public roads or

community facilities. This type of

loan has not been very

successful at GB due to a

relatively poor repayment

performance. GB introduced

housing loans in 1984 as a part of its social development programme.

Figure 4:- Cumulative disbursement of loans

These are longer-term loans requiring weekly repayments over ten years

at an interest rate of 8 per cent. GB house-building lending has been

increasing since 1984; it represented 29 per cent of the GB loan portfolio

in 1994.

Finally, technology loans provide funding for larger projects and involve

longer amounts of credit. Technology disbursement was increasing until

1991, when it observed a decreasing trend. In 1994, technology

comprised less than 1 per cent of the GB portfolio. The interest rate

charged on this type of loan is 9 per cent per year.

Various characteristics and salient features of Grameen

bank

1. Nobel Peace Prize, 2006

October 13, 2006 was the happiest day

for Bangladesh. It was a great moment

for the whole nation. Announcement

came on that day that Grameen Bank

and I received the Nobel Peace Prize,

2006. It was a sudden explosion of

pride and joy for every Bangladeshi. All

Bangladeshi's felt as if each of them

received the Nobel Peace Prize. We

were happy that the world has given

recognition through this prize, that

poverty is a threat to peace. Grameen Bank, and the concept and

methodology of micro-credit that it has elaborated through its 30 years of

work, have contributed to enhancing the chances of peace by reducing

poverty. Bangladesh is happy that it could contribute to the world a

concept and an institution which can help bring peace to the world.

2. No Collateral, No Legal Instrument, No Group-Guarantee or

Joint Liability

Grameen Bank does not require any collateral against its micro-loans.

Since the bank does not wish to take any borrower to the court of law in

case of non-repayment, it does not require the borrowers to sign any legal

instrument.

Although each borrower must belong to a five-member group, the group

is not required to give any guarantee for a loan to its member.

Repayment responsibility solely rests on the individual borrower, while

the group and the centre oversee that everyone behaves in a responsible

way and none gets into repayment problem. There is no form of joint

liability, i.e. group members are not responsible to pay on behalf of a

defaulting member.

3. 97 per cent Women

Total number of borrowers is 8.35 million, 96 per cent of them are women.

4. Over Tk 684 billion Disbursed

Total amount of loan disbursed by Grameen Bank, since inception, is Tk

684.13 billion (US $ 11.35 billion). Out of this, Tk 610.81 billion (US $

10.11 billion) has been repaid. Current amount of outstanding loans

stands at TK 73.32 billion ( US $ 968.31 million). During the past 12

months (from November’10 to October'11) Grameen Bank disbursed Tk.

107.30 billion (US $ 1480.53 million). Monthly average loan disbursement

over the past 12 month was Tk 8.94 billion (US $ 123.38 million).

Projected disbursement for year 2011 is Tk 110.00 billion (US$ 1557.63

million), i.e. monthly disbursement of Tk 9.17 billion (US $ 129.80 million).

End of the year outstanding loan is projected to be at Tk. 78.00 billion (US

$ 1105 million).

5. Recovery Rate Over 97 per cent

Loan recovery rate is 96.67 per cent.

6. 100 per cent Loans Financed From Bank’s Deposits

Grameen Bank finances 100 per cent of its outstanding loan from its

deposits. Over 56 per cent of its deposits come from bank’s own

borrowers. Deposits amount to 145 per cent of the outstanding loans. If

we combine both deposits and own resources it becomes 160 per cent of

loans outstanding.

7. No Donor Money, No Loans

In 1995, GB decided not to receive any more donor funds. Since then, it

has not requested any fresh funds from donors. Last installment of donor

fund, which was in the pipeline, was received in 1998. GB does not see

any need to take any donor money or even take loans from local or

external sources in future. GB's growing amount of deposits will be more

than enough to run and expand its credit programme and repay its

existing loans.

8. Earns Profit

Ever since Grameen Bank came into being, it has made profit every year

except in 1983, 1991, and 1992. It has published its audited balance-

sheet every year, audited by two internationally reputed audit firms of the

country. All these reports are available on CD, and some on our web-site :

www.grameen.com.

9. Low Interest Rates

Government of Bangladesh has fixed interest rate for government-run

microcredit programmes at 11 per cent at flat rate. It amounts to about 22

per cent at declining basis. Grameen Bank's interest rate is lower than

government rate.

Recently MRA has fixed the maximum interest rate for microcredit at 27%

on declining balance method and instructed the NGO-MFIs to implement

this capped interest rate within June 2011.MRA found in a recent survey

the effective interest rate of NGO-MFIs on General Loan ranges from 25%

to 33% and the modal value is 29%.On the contrary Grameen Bank's

highest interest rate is 20%.

Microfinance Transparency an internationally reputed pricing certification

agency also verified the pricing of Grameen Bank loan products and found

that GB actually charges the same interest as it publicly claims.

There are four interest rates for loans from Grameen Bank: 20% for

income generating loans, 8% for housing loans, 5% for student loans, and

0% (interest-free) loans for Struggling Members (beggars). All interests

are simple interest, calculated on declining balance method. This means,

if a borrower takes an income-generating loan of say, Tk 1,000, and pays

back the entire amount within a year in weekly installments, she'll pay a

total amount of Tk 1,100, i.e. Tk 1,000 as principal, plus Tk 100 as interest

for the year, equivalent to 10% flat rate.

10. Deposit Rates

Grameen Bank offers very attractive rates for deposits. Minimum interest

offered is 8.5 per cent. Maximum rate is 12 per cent.

11. Micro-enterprise Loans

Many borrowers are moving ahead in businesses faster than others for

many favourable reasons, such as, proximity to the market, presence of

experienced male members in the family, etc. Grameen Bank provides

larger loans, called micro-enterprise loans, for these fast moving

members. There is no restriction on the loan size. So far 3,590923

members took micro-enterprise loans. A total of Tk 105.96 billion(US$

1540.58 million) has been disbursed under this category of loans. Average

loan size is Tk 29,507 (US $ 389.69), maximum loan taken so far is Tk 1.6

million (US $ 23,209). This was used in purchasing a truck which is

operated by the husband of the borrower. Power-tiller, irrigation pump,

transport vehicle, and river-craft for transportation and fishing are popular

items for micro-enterprise loans.

12. Beggars as Members

Begging is the last resort for survival for a poor person, unless he/she

turns into crime or other forms of illegal activities. Among the beggars

there are disabled, blind, and retarded people, as well as old people with

ill health. Grameen Bank has taken up a special programme in 2002,

called Struggling Members Programme exclusively for the beggars. Over

111,296 beggars have joined the programme. Total amount disbursed

stands today at Tk. 162.60 million. Of this amount of Tk. 130.89 million

(80% of the amount disbursed) has already been paid off.

19,678 beggars have left begging and are making a living as door-to-door

sales persons. Among them 10,185 beggars have joined The Grameen

Bank groups as main-stream borrowers.

Beggars members have voluntarily opened their personal savings

accounts. Cumulative deposit in these savings accounts amounts to BDT

22.41 million; present balance stands at BDT 8.08 million.

Basic features of the programme are :

1) Existing rules of Grameen Bank do not apply to beggar members;

they make up their own rules.

2) All loans are interest-free. Loans can be for very long term, to make

repayment installments very small. For example, for a loan to buy a

quilt or a mosquito-net, or an umbrella, many borrowers are paying

Tk 2.00 (3.4 cents US) per week.

3) Beggar members are covered under life insurance and loan

insurance programmes without paying any cost.

4) Groups and centers are encouraged to become patrons of the

beggar members.

5) Each member receives an identity badge with Grameen Bank logo.

She can display this as she goes about her daily life, to let

everybody know that she is a Grameen Bank member and this

national institution stands behind her.

6) Members are not required to give up begging, but are encouraged

to take up an additional income-generating activity like selling

popular consumer items door to door, or at the place of begging.

13. Housing For the Poor

Grameen Bank introduced housing loan in 1984. It became a very

attractive programme for the borrowers. This programme was awarded

Aga Khan International Award for Architecture in 1989. Maximum amount

given for housing loan is Tk 25,000 (US $ 354) to be repaid over a period

of 5 years in weekly installments. Interest rate is 8 per cent. 690,737

houses have been constructed with the housing loans averaging Tk

13,059 (US $ 181.50). A total amount of Tk 9.02 billion (US $ 211.21

million) has been disbursed for housing loans. During the past 12 months

(from Nov.'10 to October’11) 4,482 houses have been built with housing

loans amounting to Tk 52.43 million (US $ 0.69 million).

14. Scholarships

Scholarships are given, every year, to the high performing children of

Grameen borrowers, with priority on girl children, to encourage them to

stay ahead to their classes. Up to October'11, scholarships amounting to

Tk 205.03 million (US$ 3.00 million) have been awarded to 133,031

children. During 2011, US$ 592,849 will be awarded to about 24,611

children, at various levels of school and college education.

15. Loans Paid Off At Death

Grameen offers an optional insurance programme called Loan Insurance

Programme. Those who sign up for this programme in case of their death ,

all outstanding loans are paid off. Under this programme, an insurance

fund is created by the interest generated in a savings account created by

deposits of the borrowers made for loan insurance purpose, at the time of

receiving loans. Each time an amount equal to 3 per cent of the loan

amount is deposited in this account. This amount is transferred from the

Special Savings account. If the current balance in the insurance savings

account is equal or more than the 3 per cent of the loan amount, the

borrower does not need to add any more money in this account. If it is

less than 3 per cent of the loan amount, she has to deposit enough money

to make it equal.

Coverage of the loan insurance programme has also been extended to the

husbands with additional deposits in the loan insurance deposit account. A

borrower can get the outstanding amount of loan paid off by insurance if

her husband dies. She can continue to borrow as if she has paid off the

loan.

Total deposits in the loan insurance savings account stood at Tk 7,000.17

million (US$ 93.77 million) as on October 31, 2011. Up to that date

217,907 insured borrowers and insured husbands died and a total

outstanding loans and interest of Tk 2022.00 million (US $ 29.53 million)

left behind was paid off by the bank under the programme. The families of

the deceased borrowers are not be required to pay off their debt burden

anymore, because the insured borrowers or their insured husbands do not

leave behind any debt burden to take care of.

16. Life Insurance

Each year families of deceased borrowers of Grameen Bank receive a total

of Tk 17 to 20 million (US $ 0.25 million to 0.29 million) in life insurance

benefits. Each family receives Tk 1,500. A total of 137,976 borrowers died

so far in Grameen Bank. Their families collectively received a total amount

of Tk 241.34 million (US$ 4.74 million). Borrowers are not required to pay

any premium for this life insurance. Borrowers come under this insurance

coverage by being a shareholder of the bank.

17. Computerized MIS and Accounting System

Accounting and information management of nearly all the branches

(2,565 out of 2,565) has computerized. This has freed the branch staff to

devote more time to the borrowers rather than spend it in paper-work.

Branch staffs are provided with pre-printed repayment figures for each

weekly meeting. If every borrower pays according to the repayment

schedule, the staff has nothing to write on the document except for

putting the signature. Only the deviations are recorded. Paper work that

remains to be done at the village level is to enter figures in the borrowers'

passbooks.

All zones (40) are connected with the head office, and with each other,

through intra-net. This has made data transfer and communications very

easy.

18. 'Stars' for Achievements

Grameen Bank provides color-coded stars to branches and staff for 100

percent achievement of a specific task. A branch (or a staff) having five-

stars indicate the highest level of performance. At the end of June'2011,

branches showed the following result.

929 branches, out of total 2,565 branches, received stars (green) for

maintaining 100 per cent repayment record.  19,93 branches received

stars (blue) for earning profit. (Grameen Bank as a whole earns profit

because the total profit of the profit-earning branches exceeds the total

loss of the loss-incurring branches.)

1,869 branches earned stars (violet) by meeting all their financing out of

their earned income and deposits. These branches not only carry out their

business with their own funds, but also contribute their surpluses to meet

the fund requirement of deficit branches.

324 branches have applied for stars (brown) for ensuring education for

100% of the children of Grameen families. After the completion of the

verification processes their stars will be confirmed. 65 branches have

applied for stars (red) indicating branches those have succeeded in taking

all its borrowers' families (usually 3,000 families per branch) over the

poverty line.

The star will be confirmed only after the verification procedure is

completed. Each month branches are coming closer to achieving new

stars. Grameen staff looks forward to transforming all the branches of

Grameen Bank into five star branches

Grameen’s cost-effectiveness and microfinance

worldwide

What does Grameen’s cost-effectiveness mean for the worldwide

microfinance movement that Grameen inspired? If Grameen, one of the

best micro lenders, were not cost-effective, then there would be little

hope for most of the thousands of other micro lenders. But Grameen

probably was cost-effective.

Unfortunately, this does not mean that other micro lenders are cost-

effective. Although Grameen’s failure would likely condemn them,

Grameen’s success does not necessarily save them. One happy ending

does not a microfinance movement make, and very few micro lenders

perform as well as Grameen. Still, microfinance as a whole may be

worthwhile, and even if it is not currently worthwhile, it is improving and

may in time become worthwhile. Grameen offers no answers, but it does

offer hope; it did well, and so might microfinance in general.

Of course, Grameen’s success cannot be simply exported. As Hulme

(1990) cautions, Grameen is not a blueprint but rather a source of broad

lessons which must be adapted to local contexts.

Market versus subsidy

Wide agreement about what microfinance should do—improve the poor’s

well-being—contrasts with wide disagreement about how to do it. Part of

microfinance’s mystique is that it might be able to survive without

subsidy. The central debate is whether micro lenders should be expected

to outgrow subsidies and enter the market. The subsidy approach targets

very poor clients who are costly to serve and who thus may require on-

going subsidies. The market approach targets less-poor clients who are

less costly to serve and who thus may represent a profitable niche. The

debate’s two poles can be simplistically characterized in terms of surplus,

depth, breadth, length, and scope. The subsidy approach assumes that

great depth and great per-user surplus can compensate for narrow

breadth, short length, and limited scope. The market approach assumes

that wide breadth, long length, and ample scope can compensate for

shallow depth and low per-client surplus.

How does Grameen inform this debate? Unlike the stereotypical (and

hypothetical) micro lenders in the subsidy and market camps, Grameen is

strong in all aspects. For example, the review above suggests that user

surplus is high. Likewise, depth is great, as most users are poor, rural

women. Grameen also has great length; subsidies probably will not be

removed, but even if they are, Grameen is close enough to true

profitability that it could make a few adjustments and continue. Breadth is

great as well, and Grameen’s loans and saving services provide ample

scope. Grameen reconciles the subsidy and market approaches because it

is subsidized yet permanent and because it is (almost) profitable yet

serves the very poor. How does it do this?

Grameen realized that efficiency was not incompatible with its social

mission; helping the poor is no excuse for waste. Because Grameen

wanted both to be efficient and to serve the poor, it worked to design (and

redesign) incentive structures that rewarded—sometimes in a precarious

balance—both these goals.

The result was that subsidies did not leak to employee perquisites but

rather financed expansion and kept costs to users low. Grameen’s unusual

ability to do this appears to derive from its founder and his recognition

that doing good is not easy.

Furthermore, Grameen used a low-cost lending method (joint-liability

groups) implemented by low-cost, loyal workers. Thus, Grameen could

charge prices low enough to reach the poor yet high enough to approach

profitability.

Most important, Grameen simply wanted to grow. Its employees could

have had a quiet life with its subsidies and 10,000 (or 100,000) members.

Instead, Grameen pushed to reach millions, even though this put more

pressure on its employees.

In short, Grameen avoided the typical tragedy of development projects;

the technical aspects are willing, but the implementing organization is

weak. Grameen also avoided the for-profit flaw of ignoring the poor. In

both cases, Grameen did this largely because it explicitly tried to.

Institution building has no formula, aside from making it a conscious and

continuous part of the strategic plan. The subsidy camp focuses on the

poor rather than on the organization, while the market camp focuses on

the organization rather than on the poor. Grameen’s lesson is that trying

to do both provides the best chance to achieve both.

Conclusion

GB has certainly established its credentials as an institution that aims at

providing credit to the landless and asset-less poor in rural areas of

Bangladesh. The GB makes more than 500,000 loans per month with an

average size of $70.00.

Credit gives the recipient the power of entitlement to society’s productive

goods and services with immediate effect, unlike most of the other

programmes for the poor that tend to create the unintended negative

effect of dependency on the service providers. The poor decide how to use

this entitlement in the type of income-generating activities that they know

best, thereby enhancing the chances of success. Although credit is a

highly potent instrument which enables the poor to be self-reliant in a

cost-effective way, the resource is systematically denied to the poor by

the conventional banking system. GB has demonstrated that the poor are

bankable, capable of making good business decisions in utilizing their

loans and repaying them on time. GB showed the possibility to develop a

viable and self-reliant credit programme for the poor.

The GB uses an unambiguous eligibility criterion which ensures that only

the poor or very poor can participate. Poverty is an exclusion factor for the

conventional banking system. In GB, on the contrary, to obtain a credit a

person must prove that he/she is poor. In any case, eligible individuals

must own less than half an acre of arable land or have less than the

commercial value of one acre of mid-quality land in assets. These clearly-

defined criteria leave no room for misinterpretation or abuse by the

bank’s workers. GB concentrates its lending to poor women as they make

better borrowers than men, utilizing their loans only for income-

generating activities and ensuring that their loans are promptly paid from

their profits. Additionally, women account for an extraordinary high share

among the poorest and most deprived in most societies. As a result, the

performance of GB in providing credit to the rural poor has been

impressive. For these reasons, most GB replications have adopted a

deliberate policy of concentrating their lending to women borrowers.

The most powerful incentive/penalty feature adopted by GB is the

assurance of a bigger subsequent loan on complete repayment of the

previous loan and the denial of this to any defaulting member and other in

her group. Because the borrowers highly value this access to a reliable

and sustained source or reasonably-priced credit, they go out of their way

to make sure that they make their loan repayments on time. This is

specifically true of the poor women borrowers who have no alternative

credit access at all, often not even from the moneylenders.

The whole structure of GB operates on a clear delineation of responsibility

and accountability. This contributes in a major way to the success of GB in

keeping its operations efficient and free of corruption. The staffs are also

encouraged to provide constructive critique of the Bank’s system so that

the methods can be continually improved. The investments for which GB

loans are utilized are characteristically labor-intensive, fast-turnover micro

businesses in sector such as trade, food processing, manufacturing and

services, with only a few in small-scale agriculture. GB encourages the

borrowers to utilize their loans in activities that they are already familiar

with.

Bibliography

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b. http://www.grameen-info.org/index.php?

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c. http://www.microfinance.com/English/Papers/Grameen_CEA.pdf

d. http://thecoolproject.us/?tag=grameen-bank

e. http://links.org.au/node/1955

f. http://timesofpakistan.pk/international-news/2012-08-09/us-

concerned-over-bangladeshs-grameen-bank-decision/61459/

g. http://www.holcimfoundation.org/portals/1/docs/

firstforum_yunus.pdf

h. http://www.microfinancegateway.org/gm/document-

1.9.28425/1835.pdf

i. http://www.mof.gov.bd/en/budget/gb/

Grameen_Bank_Interim_Report.pdf

j. http://www.grameen-info.org/index.php?

option=com_content&task=view&id=217&Itemid=172&limit=1&lim

itstart=0

k. http://socialentrepreneurshipasia.wordpress.com/tag/grameen-bank/

l. http://socialentrepreneurshipforeveryone.typepad.com/social-

entrepreneurship-f/2011/05/muhammad-yunus-ousted-from-

grameen-bank-1.html