Grameen Bank loan distribution has risk of default and sometimes the loans are used even dowry which is crime against women right. The rate of interest in Grameen Bank is very high and due to high interest rate the poor women can not use the loan in a high profitable business to bear this burden, so some of the borrowers lose lands and assets to pay the loan.
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The paper discusses both advantages and drawbacks of Grameen Bank with mathematical calculations in some details. Ahmed, M. Adams, D. Auwal, M.
- Disadvantages of Micro Credit:!
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Banerjee, M. Barua, D. Belli, P. Bennett, L. Kimeny, Robert C. Wieland, and J. Besley, T. Bhatt, N. Fernando, N. Hashemi, S.
Holcombe, S. Hossain, M. Hulme, D. Islam, N. Jain, P. Khandker, S. Larance, L. Louis, Working Paper No. Lawry, S. Mair, M. Matin, I. Meyerhoff, D. At a regional summit last month, he gave an opening address beside Mexican President Vicente Fox. Friends tout Mr. Yunus for a Nobel Peace Prize.
Yunus's autobiography, "Banker to the Poor," gave no hint of doubt in Grameen's future. Even then, however, Grameen's recovery rate was slipping. In , 4. And Tangail has now become Grameen's worst region, with One reason is that microlending has lost its novelty. In Tangail, signboards for rival microlenders dot a landscape of gravel roads, jute fields and ponds with simple fishing nets. Borrowers have also become more rebellious. To put pressure on "lazy" group members who were slow making payments, she says she used to start removing the tin roofs of their homes.
But one day, the whole group decided to stop making payments. The "group fund" was meant for emergencies, but many borrowers wanted to withdraw money from the group fund. After a protest movement, complete with placards and amplified speeches, Grameen finally agreed to give borrowers easier access to the fund. Borrower groups had become lobbying groups, and Mr. Yunus hadn't noticed the change, says Muhammad Yahiyeh, former director of Grameen Trust.
Yahiyeh, who now runs a small microlender. Yunus says he still thinks groups are good for loan discipline. Grameen just didn't explain the group fund properly, he says, and politicians stirred up the borrowers. The typical Grameen success story features a woman who turns a small loan into a successful shop or craft business. But Grameen also has customers such as Belatun Begum, a borrower in Khatuajugnie since the late s.
She says the original loan was to buy a cow, but she actually gave some money to her husband, a well-digger, and used the rest to improve her house. She confesses to borrowing a neighbor's cow to show Grameen at meetings. One recent study found one-fourth of microcredit loan money in Bangladesh is used for household consumption. Yunus says that doesn't bother him as long as borrowers repay.
Grameen tells women to think of a loan as a mango tree and to eat only the fruits, he says, not the tree itself. But Grameen introduced so many loan options in the early s -- housing loans, student loans, seasonal loans -- that borrowers were often paying off one with another, says Aminur Rahman, an anthropologist based in Ottawa, Canada, who studied Grameen borrowers in a Tangail village six years ago.
Returning earlier this year, he found only six of borrowers were getting income from Grameen-funded investments. Massive floods in hit Grameen's borrowers hard. The bank let borrowers skip several payments.
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Informally, it forgave the old loans. Grameen also bailed out borrowers whose problems had nothing to do with the flood. Begum, for instance, stopped paying when she had to provide dowries for two daughters. She skipped group meetings, but Grameen workers came to her door asking for her taka weekly payment, she says. Earlier this year, Grameen came up with a proposal: pay just 50 taka a week for six months, and then take a new Grameen loan for twice the amount she repaid.
Begum accepted. Grameen calls the program a "flexible loan," and treats the old, delinquent loans as back on schedule, as long as some regular payment is being made. At a Grameen branch near Khatuajugnie, manager Mohammed Imam Modem shows his computer-printed ledger, full of cross marks to indicate missed payments. The rescheduling program and Grameen's personal visits to husbands as well as wives are improving the picture: The branch had 1, defaulters before; now it has But Grameen may simply be delaying inevitable defaults and hiding problem loans. One paper produced by the Consultative Group to Assist the Poorest, or CGAP, a donor group that sets industry standards, warns that heavy use of refinancing "can cloud the ability to judge its loan-loss rate.
Principles of Microcredit:
Agency for International Development and several U. CGAP says refinanced loans should at least be listed separately. Grameen doesn't do so. It says refinanced loans are one-fifth of its portfolio. CGAP recommends that microlenders report as at risk the entire remaining balance of any loan with a payment more than 90 days overdue. Yunus helped set up in to distribute foreign funds to other Bangladesh microlenders, requires its microlenders to report as overdue any loan that is one week late. It's impossible to know Grameen's overdue rate by that standard, since it reports only loans that are one year and two years overdue.
In early , Grameen approached the International Finance Corp. The official requested anonymity because the IFC is reticent about discussing its negotiations with clients. Yunus denied the IFC official's claims.
Analysing The Grameen Bank Of Bangladesh Economics Essay
He said Grameen is "generously covered" against loan defaults. Other microlenders have become much more stringent.
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Accion International, a U. Asked about Grameen's two-years standard, Accion Chief Executive Maria Otero says, "I don't think any [bank] superintendency in a million years would agree to something like that. Grameen Bank isn't under any formal supervision. He means the board of directors, which is led by borrowers.
https://andotsacowge.gq Zaman says Grameen's deposits are "well-protected " and the bank is "doing fine. Harder-headed microlenders are stealing the spotlight, though. Dispensing with borrower groups, ASA leans on borrowers' husbands and relatives if payments are missed, says the managing director, Shafiqual Haque Choudhury. To him, Grameen's approach is an ingenious idea that didn't stand the test of time. Choudhury, "we'll never be able to cover our costs. Your Money. At Leisure.
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