Lending Model: Grameen Model¹

The Grameen model emerged from the poor-focused grassroots institution, Grameen Bank, started by Professor Mohammed Yunus in Bangladesh. It essentially adopts the following methodology:

A bank unit is set up with a Field Manager and a number of bank workers, covering an area of about 15 to 22 villages. The manager and workers start by visiting villages to familiarize themselves with the local milieu in which they will be operating and identify prospective clientele, as well as explain the purpose, functions, and mode of operation of the bank to the local population. Groups of five prospective borrowers are formed; in the first stage, only two of them are eligible for, and receive, a loan. The group is observed for a month to see if the members are conforming to rules of the bank. Only if the first two borrowers repay the principal plus interest over a period of fifty weeks do other members of the group become eligible themselves for a loan. Because of these restrictions, there is substantial group pressure to keep individual records clear. In this sense, collective responsibility of the group serves as collateral on the loan.

Grameen Foundation Values²

1. Priority for the poorest and for women through effective targeting in recruitment and promotion of self-empowerment, and treating them with dignity and respect regardless of their socio-economic condition, race, disability, ethnicity, religion, age, health or marital status.
2. Commitment to microfinance realizing its potential to be a solution implemented on the scale of the problem of world poverty.
3. Producing measurable results that demonstrate financial and social performance; commitment to prudent and businesslike practices as a means to achieving the ultimate goal - the elimination of poverty in the shortest possible time frame.
4. Commitment to transparency and accountability on all levels, and adoption of international standards wherever possible.
5. Commitment to innovation and to financial, social and environmental sustainability on all levels, especially to the socio-economic sustainability of clients, their families and businesses.
6. Dedication to exploring how microfinance can be a platform for multiple socio-economic empowerment strategies.
7. Sound governance, local ownership and management by social entrepreneurs; where possible, participation of clients in ownership and governance.
8. Professionalism among and empowerment of staff, and also the promotion and leveraging of volunteerism where appropriate.

For more information:

Grameen Bank - www.Grameen-Info.org
Grameen Foundation - www.GrameenFoundation.org.
¹ http://www.gdrc.org/icm/model/grameen.html
² http://www.grameenfoundation.org/who_we_are/values/