Grameen Bank, Bangladesh

PREVENTING A REPAYMENT CRISIS

If repayment problems are inevitable, how can management arrest their developing into crises? Crucial elements for close supervision include:

Targeting -- Group recognition must be done by a supervisor more senior than the branch manager and must include visiting the house of each prospective member to ensure that all are bottom-level poor. Non-poor group members are the first to refuse collective responsibility when the first repayment problems arise.
Center Discipline -- Surprise center visits should be routinely made by branch managers, program officers, and area managers to check on attendance, payments made, conduct of meetings, and loan utilization and explore any problems of members.
Quarterly Monitoring and Evaluation -- An effective system compares plan targets with actual performance and analyzes gaps between them.
Surprise Internal Audits -- Unannounced audit visits to branch offices and village centers examine both financial management and work performance and provide an independent check for monitoring reports.