Grameen Bank, Bangladesh
GETTING CONTROL OF A PROBLEM
In organizations already facing serious arrears and defaults, the project management need go back to the basics and focus on the following issues:
- Stop Irregular Repayments -- Field assistants should insist that the group
undermine credit discipline and will become defaults before long.
- Fight Battle with Atendence -- "if you fight the disciplinary battle on
attendance, you will not have to fight it on repayment." Poor attendance should
result in a delay of disbursement of the next loan. Irregular payments must be
rejected in smaller subsequent loans.
- Try Using a Penalty Fund -- A group penalty is automatically triggered
whenever an individual member misses an installment.
- Use the Ultimate Sanction--When members refuse to accept their collec-
tive responsibility for a missed payment, the staff must be prepared to stop all
disbursements to that center, including those to its paying members, until the
center faces its problems and comes up with a plan for settlement.
While maintaining tight center discipline, management should offer new loans
or saving services to members in good standing once repayments are again on
time. Steady step-by-step increases in loans and savings move group members
out of poverty at a pace that they can absorb.
- "Inovation and Transfer" March 1997, Vol. 6, No.1
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