Grameen Bank, Bangladesh


Project Dungganon delivers credit and savings services to the very poor households of the region through a network of branch offices in towns and municipalities throughout Negros Occidental. Each branch has a number of centers under its supervision, and each center includes several (six to eight) self-selected, five-member "groups" -- the basic GBR organizational unit. The branch office staff -- a manager, a bookkeeper, and field assistants -- provide services to the centers in their area, and monitor their progress and activities.

The basic GBR methodology as used by Project Dungganon for initial program implementation and operation includes the following features:

  • Targeting and site selection -- The project targets areas with a heavy concentration of the poorest of the poor. In keeping with its original objectives, it has chosen to have a 100% female membership.

  • Projection meeting -- The branch manager informs residents about the project and its objectives, as well as initial policies and procedures.

  • Means testing -- The project manager and loan officers visit the homes of the prospective participants for a personal interview and to assess their economic situation.

  • Compulsory Croup Training (CGT) -- Since many of the very poor members of Project Dungganon have had little education, basic training is required for all potential members to assure a thorough understanding of the principles, philosophy, rules and regulations, and procedures of the credit system. The CGT is taught by a field assistant for an hour a day for a minimum period of seven days. The training period itself is also a means for developing patterns for compulsory weekly center meetings and credit discipline.

  • Formation of groups by potential borrowers -- During the CGT, potential members form self-selected groups of five. Group members should be neighbors, but not relatives, and they should be of similar age group, educational background, and socioeconomic standing. Each group elects a chairperson and a secretary from among its members, hand the groups are then federated to form a Center.

  • Group guarantees -- The intimate group structure provides mutual supports for its members and encourages group discipline. The solidarity of the peer group creates the atmosphere and the social pressure 5or compliance with the rules and regulations of the project.

  • Group recognition test -- The members must pass an oral examination, administered by the branch manager, to ensure that all members know and understand the principles and procedures of the project.

  • Loan Proposal -- Each 'member must submit a simple loan proposal, within the limits of the available loan amount, that explains the intended productive use of the funds. The proposal must be approved initially by the group and the renter before going to the board manager for final approval.

  • Close Supervision -- To ensure that members use the credit for the stated purpose and that they maintain a good repayment record, close supervision by the field staff is an ongoing process.

  • Staggered Disbursement; the 2-2-1 System -- The two poorest members of the group receive their loans first. After four to six weeks of repayments, two other members are eligible to receive their loans. After an additional four to six weeks of regular payments, the chairperson may take the final turn to borrow.

  • Open Conduct of All Business -- Transparency is essential in all aspects of the project in order to share its objectives with the community and to allay suspicions. Transparency also helps group members deal with family objections; husbands can openly listen to meeting activities or watch the transaction of business.

  • Compulsory Savings in the Group Fund -- Each group:sets up a fund to which all members contribute, both on a voluntary savings basis and as a compulsory 5% "tax" on loans distributed. Loans from the group fund are available to members for personal and family emergency needs and must be repaid in one month.

  • Small Loans and Weekly Repayment -- The initial loan amount is modest, ranging from $12 to $40, but that amount can be gradually increased in subsequent loans. The borrower repays the loan in fifty equal installments at compulsory weekly center meetings. The system of small loans and small weekly payments instills credit discipline and promotes successful repayment.

"Innovation and Transfer" March 1997, Vol. 6, No.1

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