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|Grameen Bank in Bangladesh|
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The most extensive and best documented program for providing credit'to the very poor is run by Grameen Bank in Bangladesh. As of August 1988, its 453 branches operated in about 9,000 villages, about 10 percent of all villages in Bangladesh. It had lent to some 413,000 borrowers or "members," mostly women. In 1982, about 39 percent of members were women. By 1988, about 84 percent were women, and they received about 70 percent of total loans. In 1988 and 1989, 97 percent of new members have been women, who received 79 percent of loans disbursed in that period. Despite concern that husbands or others would seize control of the loans, about two-thirds of the women used 90 to 100 percent of the credit themselves (with higher proportions among the poorer women).

To borrow from Grameen Bank, members form "solidarity" groups of five. Several groups join to form a center, which meets regularly and receives training in several aspects of development. Groups also help build self-esteem among members, who agree to such objectives as educating children, improving family nutrition and hygiene, and practicing family planning. Loans are given to members of the group in seritim: the first to borrow must establish sound repayment records before the others can, and among poor people with few other options for advancement, preserving the group's reputation becomes crucial. Grameen Bank personnel visit prospective and current Bank members at home, since poverty and culture discourage travel (especially for women).

Loans are made to individuals, with no collateral: one member of a household may borrow, provided that she or he owns less than half an acre of cultivable land or assets not exceeding the value of one acre of medium quality land. In fact, fewer than 5 percent of borrowers come from households with more than half an acre of cultivable land. The loan bears an interest rate of 16 percent annually. The borrower may use the loan for any productive activity but must use it immediately, begin repayments in weekly installments right away, and complete repayment within one year.

About half of all loans to women through 1986, were for livestock and poultry raising, 31 percent for processing and manufacturing, and only 13 percent for trading and shopkeeping. By contrast, about half of the loans to male borrowers were for trading and shopkeeping, 19 percent for livestock and poultry raising, and 14 percent for processing and manufacturing. Less than 3 percent of loans were used for crop production by men or women. Loans averaged Tk 1686 for women and Tk 2798 for men. There are no data on previous access to credit, but very few Grameen bank members could borrow from ordinary banks in Bangladesh.

Repayment has been excellent. Bank records indicate arrears of only 1 percent after one year but do not disaggregate by gender. A small but random survey in five "Bank villages" and two control villages in 1984-85 reported only about 0.5 percent of loans overdue beyond one year after the date of disbursement -- 0.6 percent for female borrowers and 0.3 percent for male borrowers. Of the female borrowers, 81 percent had no overdue installments compared to 74 percent for male borrowers. According to Hossain and Afsar,