Grameen Bank: The Grameen General Credit System

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Case Details:

Case Code : FINC045
Case Length : 14 Pages
Period : 1992-2006
Pub. Date : 2006
Teaching Note :Not Available
Organization : Grameen Bank
Industry : Banking
Countries : Bangladesh

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Savings Account

Since its inception, Grameen Bank had maintained a group fund system. However, under GGS, the group fund and the group joint account were done away with and the borrowers were required to open two accounts, a personal savings account and special savings account.

When the loan was taken, 2.5% of the amount was deposited into the personal savings account. The borrowers were also required to deposit a minimum amount every week depending on the value of the loan taken. For loans upto Tk 15,000 the weekly savings was Tk 5 and for loans of Tk 100,000, the weekly saving was Tk 50.

The borrowers could also deposit more money if they wished to. The minimum deposit amount could also be determined for a center in consultation with the Kendra Manager. Borrowers were free to withdraw money from the personal savings account at any point of time, provided they fulfilled the obligations related to the loan repayment schedule...

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Other Products

Insurance: Another new concept introduced in GGS was loan insurance. According to this scheme, on the last day of the financial year, borrowers were required to deposit a small amount in loan insurance savings account.

The amount to be deposited was equivalent to 3% of the total outstanding amount (loan and interest) on the last day of the year. If the outstanding amount was higher in the next year, 3% of the extra amount was to be deposited. In the event of the death of the borrower, the outstanding loan amount was paid by the insurance fund. The family of the deceased also received amount equal to the total savings in the borrower's insurance savings account.

Fixed Deposits: GGS also offered fixed deposit services to its members. Lump sum amounts deposited for one year were paid interest at 8.75% per annum in the year 2003. For a longer term, interest was paid at 9.5% for a period greater than one year...

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Looking Ahead

The introduction of Grameen II had a positive impact on the membership and portfolio size of the bank. The number of active clients grew to over four million by 2004 and to 6.2 million by 2006 from 2.3 million in 2002. Due to the introduction of new savings products, deposits grew from US$ 163 million in 2002 to US$ 450 million by the end of 2005. As of May 2006, total deposits were at US$ 506.67 million, with members' deposits at US$ 321.05 million and non-members' deposits at US$ 185.62 million...


Exhibit I: Key Statistics of Grameen Bank (April 2006)
Exhibit II: Grameen Bank's Organization Structure
Exhibit III: Sixteen Decisions of Grameen Bank
Exhibit IV: Features of Loans Extended under GCS
Exhibit V: Grameen Micro Credit Highway
Exhibit VI: Grameen Bank - Struggling Members' Program

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