Overcoming Poverty Through Credit: the Asian Experience in Replicating the Grameen Bank Approach - 3

The Grameen Bank Approach(GBA)of credit delivery for the poor in Bangladesh is one of the world’s largest banking institutions for the poor. The Grameen Bank(GB)has disbursed in a period of 16 years (from inception in 1976 to 1992)a total of US$489 million in loans to one million borrowers.The GBA concentrates on lending to poor women who make up 98% of the borrowers. The GBA has experienced women to be better borrowers than men as they use their loans solely for income generating activities as required by the GB and make regular repayments from the profits.

The GBA also considers poor women to be the most deprived group in the society who are left out of many social and economic activities. In employment, the number of women employed is only 1/2 or even 1/3 of the number of men employed. Also women receive lower wages than men. Further, household heads are mainly men who own all assets.

Poor women have much less access to alternative credit sources than males due to the patriachal conventions followed by formal institutions. Thus the women value more, the rare opportunity they have received of obtaining credit from the GBA, which they regard as a means to earn an income for themselves and their families.

Also it is the women who realise, understand and meet household needs directly and are aware of the absences of essentials in their lives. They therefore have a stronger commitment to the wellbeing and betterment of the family. Giving reasons for joining the GB, women have spoken of a child dying of starvation amd being at wits end not having any money or means to earn money to buy basic requirements.

The women, more importantly, have no other place to turn to and will lose nothing by joining a credit scheme they may not have heard of before. Thus women group together and join the credit scheme under the GBA without hesitation.

Women are therefore more appreciative of the credit scheme and the high rate of repayment(98%)has been maintained throughout the loan period despite changing interest rates.