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, Grameens 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
problems

in
of

overcoming

the

informational

asymmetry often found in rural

financial markets. This bank replaces Figure 1:- Grameen Banks
collateral by peer pressure and social
sanctions.

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 GBs

borrowers are women who

Figure 2:- Outstanding loans and

constitute the weakest social

group among the rural poor. Lending money to women has largely
enhanced recoverability for GBs 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

Figure 3:- Grameen Bank

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

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, GBs employees are highly motivated to
helping the poor. Additionally, employees are thoroughly trained in the
banks 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 banks 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, childrens

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

members

for

income

$125

to

group

investment

generating

in

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

successful

not
at

relatively
performance.

GB

poor
GB

been
due

very
to

repayment
introduced

Figure 4:- Cumulative disbursement

of loans
housing loans in 1984 as a part of its social development
programme.
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 November10 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 Banks Deposits
Grameen Bank finances 100 per cent of its outstanding loan from its
deposits. Over 56 per cent of its deposits come from banks 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 balancesheet 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 October11) 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 fivestars 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

Grameens

cost-effectiveness

and

microfinance

worldwide
What

does

Grameens

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 costeffective. Although Grameens failure would likely condemn them,
Grameens 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, Grameens 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 doimprove the poors
well-beingcontrasts with wide disagreement about how to do it. Part of
microfinances 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 ongoing subsidies. The market approach targets less-poor clients who are
less costly to serve and who thus may represent a profitable niche. The
debates 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 Grameens 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 rewardedsometimes in a precarious
balanceboth these goals.
The result was that subsidies did not leak to employee perquisites but
rather financed expansion and kept costs to users low. Grameens 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. Grameens 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 societys 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 clearlydefined criteria leave no room for misinterpretation or abuse by the banks
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 Banks 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
a. http://www.grameen-info.org/index.php?
option=com_content&task=view&id=16&Itemid=112
b. http://www.grameen-info.org/index.php?
c.
d.
e.
f.

option=com_content&task=view&id=26&Itemid=175
http://www.microfinance.com/English/Papers/Grameen_CEA.pdf
http://thecoolproject.us/?tag=grameen-bank
http://links.org.au/node/1955
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/document1.9.28425/1835.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/socialentrepreneurship-f/2011/05/muhammad-yunus-ousted-fromgrameen-bank-1.html