Grameen Bank At a Glance

Grameen Bank Project was born in the village of Jobra, Bangladesh, in 1976. In 1983 it was transformed into a formal bank under a special law passed for its creation. It is owned by the poor borrowers of the bank who are mostly women. It works exclusively for them. Borrowers of Grameen Bank at present own 94 per cent of the total equity of the bank. Remaining 6 percent is owned by the government.

Grameen Bank does not require any collateral against its micro-loans. Since the bank does not wish to take any borrower to the court of law in case of non-repayment, it does not require the borrowers to sign any legal instrument.

Although each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility solely rests on the individual borrower, while the group and the centre oversee that everyone behaves in a responsible way and none gets into repayment problem. There is no form of joint liability, i.e. group members are not responsible to pay on behalf of a defaulting member.

Total number of borrowers is 7.06 million, 97 per cent of them are women.

Total amount of loan disbursed by Grameen Bank, since inception, is Tk 326.96 billion (US$ 6.25 billion). Out of this, Tk 293.26 billion (US$ 5.58 billion) has been repaid. Current amount of outstanding loans stands at TK 33.70 billion (US$ 488.90 million). During the past 12 months (from June’06 to May’07) Grameen Bank disbursed Tk. 50.42 billion (US $ 729.44 million). Monthly average loan disbursement over the past 12 month was Tk 4.20 billion (US $ 60.79 million).

Projected disbursement for 2007 is Tk 65.00 billion (US $ 930 million), i.e. monthly disbursement of Tk 5.42 billion (US $ 77.50 million). End of the year outstanding loan is projected to be at Tk. 40.00 billion (US $ 572 million).

Loan recovery rate is 98.28 per cent.

Grameen Bank finances 100 per cent of its outstanding loan from its deposits. Over 59 per cent of its deposits come from bank’s own borrowers. Deposits amount to 137 per cent of the outstanding loans. If we combine both deposits and own resources it becomes 155 per cent of loans outstanding.

In 1995, GB decided not to receive any more donor funds. Since then, it has not requested any fresh funds from donors. Last installment of donor fund, which was in the pipeline, was received in 1998. GB does not see any need to take any donor money or even take loans from local or external sources in future. GB’s growing amount of deposits will be more than enough to run and expand its credit programme and repay its existing loans.

Ever since Grameen Bank came into being, it has made profit every year except in 1983, 1991, and 1992. It has published its audited balance-sheet every year, audited by two internationally reputed audit firms of the country. All these reports are available on CD, and some on our web-site : www.grameen.com.

Total revenue generated by Grameen Bank in 2006 was Tk 9.43 billion (US $ 134.90 million). Total expenditure was Tk 8.03 billion (US $ 114.90 million). Interest payment on deposits of Tk 3.47 billion (US $ 35.35 million) was the largest component of expenditure (43 per cent). Expenditure on salary, allowances, pension benefits amounted to Tk 2.03 billion (US $ 28.97 million), which was the second largest component of the total expenditure (25 per cent). Grameen Bank made a profit of Tk 1398 million (US $ 20.00 million) in 2006. Entire profit is transferred to a Rehabilitation Fund created to cope with disaster situations. This is done in fulfillment of a condition imposed by the government for exempting Grameen Bank from paying corporate income tax.

Government of Bangladesh has fixed interest rate for government-run microcredit programmes at 11 per cent at flat rate. It amounts to about 22 per cent at declining basis. Grameen Bank’s interest rate is lower than government rate.

There are four interest rates for loans from Grameen Bank : 20% (declining basis) for income generating loans, 8% for housing loans, 5% for student loans, and 0% (interest-free) loans for Struggling Members (beggars). All interests are simple interest, calculated on declining balance method. This means, if a borrower takes an income-generating loan of say, Tk 1,000, and pays back the entire amount within a year in weekly instalments, she’ll pay a total amount of Tk 1,100, i.e. Tk 1,000 as principal, plus Tk 100 as interest for the year, equivalent to 10% flat rate.

Begging is the last resort for survival for a poor person, unless he/she turns into crime or other forms of illegal activities. Among the beggars there are disabled, blind, and retarded people, as well as old people with ill health. Grameen Bank has taken up a special programme, called Struggling Members Programme, to reach out to the beggars. About 94,000 beggars have already joined the programme. Total amount disbursed stands at Tk. 92.62 million. Of that amount of Tk. 60.21 million has already been paid off.
Basic features of the programme are :

Grameen Bank introduced housing loan in 1984. It became a very attractive programme for the borrowers. This programme was awarded Aga Khan International Award for Architecture in 1989. Maximum amount given for housing loan is Tk 15,000 (US $ 218) to be repaid over a period of 5 years in weekly instalments. Interest rate is 8 per cent. 6,47,130 houses have been constructed with the housing loans averaging Tk 13,182 (US $ 191). A total amount of Tk 8.53 billion (US $ 204.27 million) has been disbursed for housing loans. During the past 12 months (from June’06 to May’07) 12,545 houses have been built with housing loans amounting to Tk 133.47 million (US $ 2.21 million).

Students who succeed in reaching the tertiary level of education are given higher education loans, covering tuition, maintenance, and other school expenses. By May’07, 16,608 students received higher education loans, of them 15,531 students are studying at various universities; 191 are studying in medical schools, 347 are studying to become engineers, 539 are studying in other professional institutions.

Grameen Bank does not own any share of the following companies in the Grameen network. Nor has it given any loan or received any loan from any of these companies. They are all independent companies, registered under Companies Act of Bangladesh, with obligation to pay all taxes and duties, just like any other company in the country.

1) Grameen Phone Ltd.
2) Grameen Telecom
3) Grameen Communications
4) Grameen Cybernet Ltd.
5) Grameen Software Ltd.
6) Grameen IT Park
7) Grameen Information Highways Ltd.
8) Grameen Star Education Ltd.
9) Grameen Bitek Ltd.
10) Grameen Uddog (Enterprise)
11) Grameen Shamogree (Products)
12) Grameen Knitwear Ltd.
13) Gonoshasthaya Grameen Textile Mills Ltd.
14) Grameen Shikkha (Education)
15) Grameen Capital Management Ltd.
16) Grameen Byabosa Bikash (Business Promotion )
17) Grameen Trust

Each year families of deceased borrowers of Grameen Bank receive a total of Tk 8 to 10 million (US $ 0.12 million to 0.15 million) in life insurance benefits. Each family receives Tk 1,500. A total of 93,444 borrowers died so far in Grameen Bank. Their families collectively received a total amount of Tk 174.05 million (US$ 3.77 million). Borrowers are not required to pay any premium for this life insurance. Borrowers come under this insurance coverage by being a shareholder of the bank.

By the end of May, 2007 total deposit in Grameen Bank stood at Tk. 46.21 billion (US$ 670.27 million). Member deposit constituted 59 per cent of the total deposits. Balance of member deposits has increased at a monthly average rate of 1.84 per cent during the last 12 months.

Accounting and information management of nearly all the branches (2,287, out of 2,422) has been computerised. This has freed the branch staff to devote more time to the borrowers rather than spend it in paper-work. Branch staff are provided with pre-printed repayment figures for each weekly meeting. If every borrower pays according to the repayment schedule, the staff has nothing to write on the document except for putting the signature. Only the deviations are recorded. Paper work that remains to be done at the village level is to enter figures in the borrowers’ passbooks.

Thirty six zones, out of 39, are connected with the head office, and with each other, through intra-net. This has made data transfer and communications very easy.

New branches are required to fund themselves entirely with the deposits they moblise. No fund from head office or any other office is lent to them. A new branch is expected to break-even within the first year of its operation.

According to a recent internal survey, 64 per cent of Grameen borrowers’ families of Grameen borrowers have crossed the poverty line. The remaining families are moving steadily towards the poverty line from below.

Grameen Bank provides colour-coded stars to branches and staff for 100 percent achievement of a specific task. A branch (or a staff) having five-stars indicate the highest level of performance. At the end of December 2006 branches showed the following result.

1553 branches, out of the total of 2,319 branches, received stars (green) for maintaining 100 per cent repayment record.

1627 branches received stars (blue) for earning profit. (Grameen Bank as a whole earns profit because the total profit of the profit-earning branches exceeds the total loss of the loss-incurring branches.)

1375 branches earned stars (violet) by meeting all their financing out of their earned income and deposits. These branches not only carry out their business with their own funds, but also contribute their surpluses to meet the fund requirement of deficit branches.

337 branches have applied for stars (brown) for ensuring education for 100% of the children of Grameen families. After the completion of the verification processes their stars will be confirmed. 54 branches have applied for stars (red) indicating branches those have succeeded in taking all its borrowers’ families (usually 3,000 families per branch) over the poverty line.

The star will be confirmed only after the verification procedure is completed. Each month branches are coming closer to achieving new stars. Grameen staff look forward to transforming all the branches of Grameen Bank into five star branches.