Business & Economic Research Center | Jones College of Business | Middle Tennessee State University

by Steven Sibley (November 3, 2008)

I am startled awake from dreams of America by the distinct feeling of hands gently patting my head. Zaman says, "It is time to wake up. Let's move. You will wake Kathryn up? I will be at the Grameen branch office." Zaman is not comfortable with rousing Kathryn from her sleep. I, too, am certainly not comfortable using Zaman's wake-up technique on Kathryn.

I say through the window, "Kathryn. Wake up. Let's move." No response. Louder this time, "Kathryn, wake up." Louder still, "Hey Kathryn!"

"Yeah," she replies.

"It's time to wake up.

"What are we going to do?" Kathryn asks.

"We're going to go see the approval of a new Grameen group. I'll be waiting in the Grameen Bank office."

"Okay, I'll be there in a minute."

In the branch office, Mr. Ahmed and the second officer are waiting with Zaman. Ms. Barui is busy processing savings account deposits from both members and non-members. "You have good rest?" Mr. Ahmed asks.

"Yes, very good," I respond, as Kathryn walks in the door behind me.

Upon seeing Kathryn, Mr. Ahmed stands and says, "Okay. Let's move."

We mount up and ride through the crowded streets of the Prashadpur market. Today is market day, and people from all of the surrounding villages are gathered in the streets, buying and selling items as varied as mango saplings, live fish, potatoes, and jewelry. The sound of the motorcycle engines startles those in the market, and the crowds part to allow us to pass. Upon seeing Kathryn and me on the backs of the motorcycles, the villagers' expressions of irritation at being disrupted from their buying and selling shift to expressions of astonishment. I nod my head and smile at them. Some smile back, while others just stare.

Arriving in the village where the new group lives, we are greeted by throngs of naked and half-naked children who are playing in the village common area. We proceed to the place of the center meeting, where the new group and the center manager await us. We are seated, and the area manager begins the process.

Prior to today, the group has received six consecutive days of training and education. Those who were unable to write their own names have been taught how to do so. The center manager has detailed the advantages of Grameen membership, including general loans, micro-enterprise loans, higher education loans, housing loans, savings accounts, pension plans, and health care services. Furthermore, the members are taught about loan repayment, including the concepts of principal and interest. Additionally, the center manager has helped them complete the application forms.

Mr. Ahmed introduces himself to the potential members. He then delivers a lengthy speech that Zaman translates for us. "Do you know why Bangladeshi people are poor? Because they lack education. Children need to go beyond class 12 to get a good job. Grameen can help your children with higher education loans. Bangladeshi people are poor because women work hard at keeping the house, but their work does not make money. One thing that you can do with a Grameen loan while taking care of the house and children is raise livestock. If your payment is good, you can get a larger loan and raise your capacity to make and manage money. Child marriage and the practice of dowry make Bangladeshis poor. You can start a business by yourself. How can you repay the loans? With extra income sources like eggs and rice. Save a fistful of rice for times when business is slow."

Zaman continues, "The area manager tries to motivate the women to make money herself."

After concluding his speech, the center manager hands Mr. Barui the completed application forms. Mr. Ahmed proceeds to examine the information on the applications and checks each item for accuracy by questioning the members one by one. Information on the applications includes the woman's present address, her father's address, marriage status, husband's name, the member's education level and literacy, fixed assets like land and house, and non-fixed assets (including the number of cows, chickens, ducks, and goats). After reviewing this information with each member, Mr. Ahmed checks to make sure that the proper signatures are in place. The group chairperson (elected by the group), the center manager, the branch manager, and the member all must sign each member's application.

After ensuring that the paperwork is in order, Mr. Ahmed tests the member's understanding of the Grameen process by asking specific questions. Mr. Ahmed asks the group chairperson, "How much would you have after 10 years of making the required deposits to the Grameen Pension Scheme?"

The member responds, "44,854 taka (~$640)."

"When can a member take a big loan (micro-enterprise)?"

"After three years," the chairperson replies.

"Very good," says Mr. Ahmed, before turning to the second member and asking, "How much is loan insurance for the loan?" (Loan insurance is required. In the event of the death of the member or her husband, Grameen forgives the loan).

"60 taka per thousand," she replies.

"When do you have to pay the insurance on the loan?" asks Mr. Ahmed.

"Before you receive the loan."

"Very good." To the third member, he asks, "When can you take out an intermediate loan?"

"After six months if your repayment history is good."

"How much can you borrow with an intermediate loan?" Mr. Ahmed asks.

"The amount of the first loan and the interest that you've repaid."

"Very good."

Mr. Ahmed asks similarly specific questions of the last two members, and their responses are satisfactory. Before Mr. Ahmed gives his final approval to the group and grants them membership to Grameen, he must visit the members' houses to verify that the assets that they have are consistent with the assets listed on the members' applications. Before visiting their houses, Mr. Ahmed gives Kathryn and me the opportunity to ask questions of the group.

I begin. "How did you first hear about Grameen?"

One of the members responds, "I heard about it earlier because there is a center and a branch nearby."

Another member says, "My cousin is a member of another center, so I heard about it from her."

"Why did you decide to join Grameen?" I ask.

The group chairperson replies, "Because the interest rate on loans is low and the interest rate on savings is high." I think to myself that 20% is not exactly low, but as far as microcredit is concerned, it is the standard rate. I would, however, be thrilled to find a savings account that pays 8.5%.

Another member replies, "So that I can take an education loan for my son some day."

"After you decided to join Grameen, how did you decide whom you wanted to be in your group?"

The group members look at each other with smiling faces. One offers, "We are very close neighbors." Another says, "We have good relationships." A third chimes in, "They have good character, and their husbands are good."

I ask, "Who is going to get the first loan?" The group chairperson raises her hand. "What are you going to do with the loan?"

"With 7,000 taka (~$100), I am going to buy goats. With 3,000 (~$42) taka, I am going to buy chickens."

"Very nice," I say. Many of the newer members we interviewed earlier in the day were timid with their first loans, taking an average of about 5,500 taka (~$77). I am impressed that this woman has taken the maximum amount available to her. As she was elected as group chairperson and has borrowed as much as possible, I am optimistic that she has the ambition and determination to raise herself and her family out of poverty.

"Do you have any questions, Kathryn?" asks Zaman.

"No."

"Any more questions, Steve?"

"No."

Zaman talks to Mr. Ahmed briefly. Mr. Ahmed then addresses the group. Zaman says that he is telling them that they have worked hard over the course of the previous week's training. He tells them to go back to their houses and do their daily work, and we might come by to check their residences.

"Okay. Let's move."

We visit two of the residences. They are both only one room in a larger building that houses four families. The woman was certainly telling the truth when she said, "We are close neighbors." Ducks wander through the common area while four shirtless children are running around chasing each other. Duck droppings litter the ground around the wood stove that serves as the kitchen for all four families. I've lived with some messy housemates before, but none as bad as these ducks. The squalor is depressing.

Mr. Ahmed signs the applications and hands them to the center manager. The group has been approved. We exit the residence area and find our typical entourage waiting for us. One of the little boys points at me and says something. Children around him laugh. One of the men grabs his arm and smacks him on the head. In America, I would assume this is his father, but the expression "It takes a village to raise a child" is appropriate. It is impossible to tell whose child is whose. At the child's reprimanding, the children stop laughing.

I ask Zaman, "What did he say?"

Zaman says, "It is nothing."

Pressuring him further. "I'm not angry. I'm just curious. What did he say?"

Zaman answers me, "He talks about your hair. He says, 'You have made yourself into a girl.' In the villages, only women wear their hair in your style," indicating with his hands how I have my hair pulled back into a ponytail.

Kathryn and I laugh hysterically. A ponytail on a man is very rare in Dhaka and must be unheard of in the village. At seeing my laughter, the man who scolded the boy begins laughing. The rest of the villagers break out into laughter. "What a cheeky little kid," Kathryn says. The cheeky little kid clings to a woman (presumably his mother) for protection. I snap a photograph of him. We head back to the motorcycles, followed by about 30 children, and wave goodbye.

After parking the motorcycles, we head into the market to visit several of the shops that have been financed by Grameen. We visit a sweets shop, a cosmetics shop, and the "computer lady." Throughout our adventure in the market, the villagers stare at us, snap pictures with their mobile phones, and follow us. I smile at as many as I can. In the market, we are celebrities.

Upon returning to the branch office, Ms. Barui informs us that Mr. Wahab is en route from the zonal office to meet with us to discuss Grameen Bank and answer any questions we have. In the meantime, we sit down to wait, and Mr. Ahmed asks us if we have any questions.

"How does Grameen Bank decide to open a new branch, and what is the process for opening a new branch?" I ask.

Mr. Ahmed begins to detail this process. Before the branch opens, the program officer (second in command at the area level) travels across the country, assessing the demand for a Grameen Bank branch by determining the number of villages not within range of an existing branch. Additionally, a survey is conducted determining the size of the population in the area, the sources of income, and the access to markets and communication. The minimum number of potential members required for Grameen to open a branch is approximately 3,000.

Once the program officer determines that the conditions for a new branch exist in an area, he informs the zonal office. The zonal manager then confirms the information provided by the program officer with his own brief survey. If the zonal manager is satisfied that there is a need for a new branch, then he submits an overall report to the head office. This report includes the area's male and female populations, the schools and colleges in the area, the markets and marketplaces, and other detailed information. If the head office agrees that there is a need for the new branch, then the head office submits an application to the Bangladesh central bank, which then issues a permit to Grameen.

Having received the permit, Grameen Bank's General Manager appoints a branch manager to the new branch. On foot, the branch manager goes door-to-door, meeting with five to 10 households per day, discussing Grameen Bank's program and trying to identify the area's truly poor villages and households. In the afternoon, the branch manager conducts a mini-meeting with local villagers, trying to find potential centers, groups, and members. After several weeks of this laborious process of grassroots marketing and research, the bank holds a projection meeting, chaired by the local union chairman. The bank invites the entire area to this meeting but especially tries to get the local eminent people to attend. At the projection meeting, the zonal and area manager are the keynote speakers. They discuss the mission of Grameen Bank, the products offered to members, and the 8.5% savings accounts that are available to non-members, in hopes of attracting deposits from the local wealthy. In general, all of the funding for the new branch comes from the deposits from the local area. If the new branch receives insufficient funds from deposits, then nearby Grameen branches with surplus deposits transfer funds to the new branch. After the projection meeting, centers and groups are formed, trained, and approved. On the branch's integration day, the new branch is officially opened, and the zonal manager is on hand to disburse the first loans to the new Grameen members. While Mr. Ahmed is finishing his description of this process, Mr. Wahab's car pulls up outside, and he enters the branch office.

After greeting us, Mr. Wahab gets down to business, opening his briefcase and producing a number of publications that he has written regarding Grameen Bank, the establishment of a new branch, and maintaining discipline in a center and a branch. He speaks exclusively to me, ignoring Kathryn entirely. I feel sorry that Kathryn has been excluded from many of the conversations that we have had during our internships.

Once he has distributed his writings, Mr. Wahab fields questions. "What are some of the challenges facing Grameen, and what are some of the key success factors?"

"Loan repayment is the biggest issue," Mr. Wahab begins in fluent English with a thick Bengali accent, spittle flying from his mouth as he lisps the 'st' sound of 'biggest.' "These are poor people. How do we get them to repay? Overall discipline. Discipline in loan utilization, attendance at center meetings, and financial discipline. Weekly repayment is crucial to encourage discipline. If member does not pay, then it is a social obligation of remaining members of group to pressure the husband and the member, and say 'Why you do not pay?' If there is a lack of discipline in center or group, then loan disbursement is threatened. Social pressure by other members gets them to repay."

Mr. Wahab continues, in a very nonlinear fashion, describing discipline. "Discipline starts before the group is approved. The group has continuous seven-day training before. The group selects its members, so there is incentive for the group to select disciplined members. Selection of group members is essential."

With the last sentence, I am showered with both Mr. Wahab's spit and his insight. A lightbulb goes off in my head. Grameen's repayment rate is so high (over 98%) because the members know the character of their fellow villagers. They have lived with them for their entire lives. I am reminded of local banks in America, before the time of the huge, impersonal conglomerates. Local bank presidents had personal relationships with the people of the local community to whom they loaned money. The townspeople were more than a mere series of numbers on an application sheet. Bankers knew the personal and financial situations of loan applicants. They knew whether someone had the character and capacity to repay a loan. The same is true of the Grameen members. With intimate knowledge of the village women and their husbands, new members of Grameen choose the best possible members to be in their group. This is also why it is the group chairperson and then the center chairperson who must approve loan proposals before they are presented to Grameen Bank employees.

Distracted by my own personal epiphany, I miss some of Mr. Wahab's discussion of the various group and individual penalties administered under the old Grameen system (Grameen methodology was overhauled in 2000 and introduced in 2001). If attendance was unsatisfactory, then a member's loan ceiling was lowered. If a member failed to repay her loan, then the other members of the group would receive no new loan disbursements.

Mr. Wahab has reached the end of his discussion of discipline and asks if we have other questions.

"What are key success factors for Grameen?" I ask.

"Grameen requires hard work, sincerity, and honesty from its staff and its borrowers. The commitment of our staff to alleviate poverty is important. Loan projects are selected by the groups and center members. We must have top-to-bottom financial discipline. Loan proposals go through the group members, center members, the center manager, the branch manager, and the area manager before they are approved. Weekly payment ensures discipline. The government has mismanagement and corruption. It is immoral. There is no discipline. Banks in America lose money now because they lack financial discipline. Banks in America fail, but growth and development is high for Grameen because growth and development for Grameen members is high. We do not have financial crisis. We have financial discipline. All staff do work for their money; they don't snatch it."

"More questions?" asks Mr. Wahab.

"What are some of the problems and challenges that Grameen faces?"

"The problems that Grameen faces are natural calamity, like cyclone, flood, death of a member or husband from disease or accident. Manmade calamities like political strike and government corruption. Also, there are hidden problems. Fifteen hundred organizations are working with the poor. Some defame Grameen. They disseminate misinformation." While the spit flies with "disseminate," I am thoroughly impressed with Mr. Wahab's English vocabulary. Mr. Wahab continues, "The lack of financial discipline of other microcredit entities makes Grameen's task difficult. The rules and regulations are strict, but there is no enforcement. Grameen motivates its staff members to be disciplined."

"How does Grameen motivate the staff and ensure discipline?"

"I myself see how the people are changing their lives, and it is a great source of enjoyment and peace and happiness. We tell staff, 'To serve the poor is to serve God.' There is no application fee to apply for a job at Grameen. Other banks charge people to apply for job. This gives us more applicants. Before we hire, they take written and oral tests. If they pass, then we hire them to train. Potential Grameen officers train for two days at training institute and go for two months at old branch. Then they come back to head office where we administer a test. If they pass, they go to new branch for two months. They come back and take another test. If they pass, then they are hired. This way, they must be dedicated."

"We retain Grameen staff by giving them job security with government pay scale. Grameen gives on job training and many chances for promotion. Working for Grameen is a creative job working with the poor. Grameen provides staff loans and a staff health care insurance fund. Years ago, Grameen staff wanted to unionize. Dr. Yunus did not want unions because they are inefficient. With unions, there are two organizations with two layers of management. So Dr. Yunus created Staff Welfare Association. With 26,000 staff, there is no trade union. Every three months, there is a meeting of the zonal SWA. Then the zonal officers meet at head office for the head office SWA meeting. This way, the mitigation of staff concerns happens through dialogue, not through strikes."

Coming to the apparent conclusion of his train of thought, Mr. Wahab asks if there are any more questions.

"No. Thank you," I reply.

Zaman seeks to include Kathryn. "Do you have any questions, Kathryn?"

"No. That's enough."

Mr. Wahab offers a departing thought. "Dr. Yunus says, 'Charity rears the poor. Microfinance empowers them."

We again offer our thanks to Mr. Wahab for meeting with us and offering so much information. He tells us that he tried to cram a week's worth of education about Grameen into three days. Suffering a mild case of information overload, I am certainly exhausted from the experience. The day has been a long one, and I am ready for dinner and sleep. We bid farewell to Mr. Wahab. He tells us that he will return tomorrow for lunch and to take us to the Naogaon bus station.

Glancing at the clock on my mobile phone, I discover that it is already 9 p.m. I think to myself, "I am starving." I reconsider thinking the word "starving" in quantifying my hunger. "I am extremely hungry" is more appropriate. The young children of the beggars are starving. The abandoned street children are starving. I am merely hungry. Zaman rouses me from my thoughts. "Let's move to the rooms until dinner?"

In the room, I again change out of sweaty clothes. I take my hair down from my ponytail, making myself into a man. While in the bathroom washing my hair and hands, the branch's messenger, Alim, comes to get us for dinner. Noticing that my hair is down, Alim says, "Very nice," as he motions with his hands to indicate that my hair is down. "Like Robin Hood."

Ms. Barui and Mr. Ahmed welcome us into the town center. On the table, dinner has been served. Ms. Barui points to a bowl, smiling at me. "Fish," she says. Considering that the fish in the market this afternoon were alive in buckets of water, I realize that this is about as fresh as it gets. Zaman says that he does not eat fish, and Kathryn is again not very hungry.

While we eat, Mr. Ahmed is constantly on his cell phone, with the bank's books spread out in front of him. He is busy tallying the daily deposits and withdrawals for each of the branches in the area he manages. Zaman notes, "He starts his day at 9 a.m. and is still working after 9 p.m."

I say, "He works very hard. I hope he is paid very well."

Mr. Ahmed reveals that he makes only 30,000 taka (~$450) per month. He says that employees of commercial banks receive the same salary as a starting salary. Mr. Ahmed has been a Grameen Bank employee for 19 years. Clearly, there is much truth to Mr. Wahab's comments that Grameen Bank employees are dedicated to serving the poor. Mr. Ahmed says, "I am paid here," as he holds his hand over his heart. I consider how much better a place the world would be if more people worked to enlarge their hearts instead of their wallets. As I polish off the fish, I have certainly enlarged by belly. After dinner, we retire to our rooms, and I fall asleep peacefully.