Interest Rate

In December 2010, Grameen Bank invited MicroFinance Transparency to certify their prices. MFTransparency followed its detailed procedures for certifying their prices and the report has just been published on their website .

The report shows prices for Grameen Bank’s four loan products. Their main loan product, the general loan, has an APR of 20.0%. The other three loan products are priced at 8% and below.

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.