The positives about Grameen Bank

The operations of Grameen Bank (GB) have so far been hugely effective. It has helped millions of people move from one level of poverty to a far less oppressive level of poverty -- which means eating three meals a day instead of one or two meals a day. It means having a tin roof over their heads and over the kids' heads so the house is not wet all the time. It means being able to go to school and have access to medicine. It has transformed the lives of many people. One criticism of the bank is its high landing rate at over 20%. But interest of plus 20 per cent in micro credit terms is actually quite low. There are micro-credit organisations in other parts of the world that charge 50 per cent lending rates. The GB lending rate is somewhat higher than that of the commercial one in Bangladesh. The most important point is to provide ongoing credit to the poorest people in the world. The moot issue here is to have access to credit. If villagers in Bangladesh do not have access to GB's credit, they have to revert to money lenders who sometimes charge 50 per cent rate of interest a month, which puts the borrowers immediately into deep and irreversible debt very quickly and they have to mortgage their land. The borrowers usually end up by losing their land in perpetuity to the money lenders. If the GB could reduce its lending rate, it would have certainly done that. The bottom line is, the GB is an organisation that has to remain operational which means hand-delivering loans to millions of villagers in the remote parts of the country. There are large administrative costs and charging lending rate at a level higher than that of the commercial banks is the cost of providing ongoing credit to the poor villagers in Bangladesh. A Ahmed Chowdhury Gulshan, Dhaka