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“Money, says the proverb, makes money. When you have got a little, it
is often easy to get more. The great difficulty is to get that little.”
Adam Smith

• Grameen bank, means the rural or The village bank
• A microfinance organization
• Began as a research project by Muhammad Yunus and the
Rural Economics Project at Bangladesh in 1974.
• It provides credit and financial services :
1. Exclusively to the rural poor in Bangladesh
2. without any collateral for creating self employment
opportunities to quickly increase their income and
empower the poor.
• As of August, 2009, it has 7.94 million borrowers, 97 percent of whom are
women. With 2,559 branches, GB provides services in 84,652 villages,
covering more than 100 percent of the total villages in Bangladesh.
Process of giving loans
Interest Rates of Grameen Bank

Loan Savings
 Income Generating Loans :  Savings : 8.5%
Flat rate -10%.  Fixed Deposit : 8.75 - 9.50%
 Housing Loans : 8%  Double in Seven Years : 10.40%
 Higher Education Loan :
 Fixed Deposit (5 years) with
monthly income : 10.04%
On study - 0%  Fixed Deposit (10 years) with
After study - 5% monthly income : 10.67%
 For Struggling Members  Grameen Pension Savings (Five
(Beggars) : 0% Years) : 10%
 Center House Construction :  Grameen Pension Savings (Ten
0% Years) : 12%
Essentials Features of Grameen Credit
Delivery System
1 Exclusive focus on bottom poor
2 Borrowers organized into small homogeneous groups
3 Loan conditional ties specially suitable for the poor
4 Capable organization and management system
5 Loan Portfolio to meet diverse development needs
6 Social development program
• Sixteen Decisions
Reasons behind the success of
gramEEn bank
• Banking as a new approach" class to mass” and thus
reaching the poor
• Programmed participation to enable members to enhance
their net worth and enhance their assets
• Customers as an internal stake holders via equity
ownership thus provide protection against loan default
• Credit directly reaches to most poor segment by high
woman involvement
• Credits based on self-employment in familiar rural non-farm
activities and individuals access to credit via group
repayment activities
• Thus has lead to increase in rural wages
• Creative and effective leadership
The concept of “low margins-high
consumer base”
• Relationship based banking
• Association of savings with credit not perquisite
• Group based credit approach decreases default rate

• Huge investment in human resource
• Relaying heavily on systems financial balance
• Development based on the aspirations and commitment of
the economic operators
• Must be able to expand lending in more growth-oriented
activities for its survival in long run
Above strategy as applied to other
• Rural insurance can be based on the above strategy of high
volume and low margins
• Pooling the two end customer base (low and high) to create a
synergy of risk as applied to insurance sector
• Conversion of Customers to internal stake holders via equity
ownership thus provide a new domain to define relationship
based marketing as relates to services sector and increase
• Emerging sectors such as insurance can break the traditional
approaches of customer identification and conversion and thus
can break the jinx of pre-established techniques
• As we see in case of grameen bank Great human resource team
can open new sectors for a company's growth via creativity,
rigors, understanding and respect for the environment specially in
rural markets.
Solutions on the negative aspects of
gramin bank
• Moving up the ladder i.e. from rural banking to generalized
banking to pool in sub prime lenders and prime lenders
and thus reduce risk of loan defaults.
• As the bank expands focus from traditional non-farm
activities may need to be changed to other domains too.
• Increase or decrease in interest rate via credit rating can
also lead to less default in loans and will have to be applied
in long run.
• To break the vicious cycle of debt a continued check on
the borrowers must be done.
• Technology must be relied upon to identify any such
situations if they come up.
• Thus, relaying heavily on systems financial balance
Prepared by:

Ravi Singh (XI09035)
Priyanka Kumari (XI09030)

PGPMI 2009-10
DATE 12-11-2009