Advantages Of Grameen Bank

703 Words3 Pages
The lack of accessible housing finance has been identified by the Government of Bangladesh as one of the important hurdles in its accessibility for those marginalised. Therefore a number of financial institutions provide housing finance on a non-collateral basis. In other words, the financial institutions do not require documents of ownership as collateral in issuing a loan. Loans are made on the basis of established membership in lending programs and a sound track record of repayments on previous loans. They use group pressure and mutual support agreements as guarantees for loan repayment. This simply means there is also no recourse by the financial institution in the case of non-payment other than the persuasive and legal ways to recover…show more content…
Its charter prevents it from working in urban areas. It established the system of small group-based lending for groups of approximately 5 members, whereby the individual’s continued access to credit is related to the repayments made by the entire group. An integral part of the credit program is that members have to save in group-funds, savings accounts and emergency funds. These savings can, however, not simply be retrieved when the individual requires money; group and institutional requirements have to be adhered to. Another characteristic of the credit program is that extensive social development and technical assistance support is provided to the borrowers. These lending and savings systems have been effective in keeping down default rates and dropouts, and increased the savings rate among the rural…show more content…
Repayment is done in weekly instalments, beginning five weeks after the start of construction of the house. The repayment period is calculated on the basis of repaying Tk.1000 per year, which is the standard loan repayment for other loans by the Grameen Bank. There is a maximum repayment period of ten years, but faster repayment is encouraged (faster repayment is required to meet the ten year loan period for the average housing

More about Advantages Of Grameen Bank

Open Document