Grameen Bank, Bangladesh


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 andthecenteracceptcollectiveresponsibilityforamissedpayment.Arrears 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

Return to the Grameen Bank Page Return to the Grameen Bank Page

Hari Srinivas -
Return to the Virtual Library on Microcredit