UNDERSTANDING AND PROMOTING GRAMEEN BANK EXPERIENCE IN PAKISTAN

By Prof. Dr. Khawaja Amjad Saeed*
Email: kamjadsaeed@yahoo.com, puhcbf@brain.net.pk

July 26 - Aug 01, 2004

The success story of Grameen Bank of Banlgadesh in emancipation of the role of women in social-economic aspects and poverty alleviation has raised the image of Bangladesh where the said Bank, under the inspirational, bold and innovative leadership of Prof. Dr. Mohammad Younus, has played a positive and productive role. This piece briefly reviews the experience of the above Bank and urges upon the Government and people of Pakistan to replicate it. Over sixty (60) countries by now have already replicated it to their advantages. Some of these countries include USA (Uburbs of Chicago), Canada, Norway, Netherlands, etc. Started in 1974 with a modest amount of $ 27 to 42 persons, at present there are over 1200 branches and the covers are in 40,000 plus villages. Nearly 2.5 million persons (including 94% women) are the beneficiaries. Eight percent has been contributed by the Government of Bangladesh and ninety two percentage has been contributed by the rural power of Bangladesh. The scope of activities cover education, environment and help each other besides extending micro credit.

APPROACH

The following table captures the difference between our traditional banking (excluding marginal effort of micro credit) and that of Grameen Bank promoted and developed by Prof. Dr. Mohammad Younus.

Table No. 1
TRADITION VS GRAMEEN BANK APPROACH

1.

Focus on men

1.

Focus on women

2.

Collateral pre-requisite

2.

No Collateral

3.

Loans to literates

3.

Loans to illiterates

4.

Emphasis on Projects with interest of Banks

4.

Selection of Projects by borrowers

5.

Recovery Low

5.

Recovery High

6.

Luxuriant Offices

6.

Austerity practiced

7.

Orientation sit in offices

7.

Orientation field visits

8.

Home focused experience

8.

Replication in over 60 Countries

9.

Selective Credit

9.

Credit bane right of borrowers

10.

Size of Loan Large

10.

Size of Loan Small

11.

Monitoring Less

11.

Monitoring Effective

Emphasis has been on proper targeting of poor persons. Over 500 new and innovative projects were identified. Even shelter was provided to down-trodden and underprivileged class. Through an appropriate technology, shelter has been finance at a very low amount. This facility has been provided to wives. Accordingly divorce rate has also declined substantially.

BBC has prepared an "Assignment". Cases studies have demonstrated genuine poverty alleviation through institutionalizing income generating capacity of poverty stricken persons.

Except for higher rate of interest on loans, there has been no criticism of Grameen Bank experience. The recovery rate is nearly 99%. Prosperity at gross root has ushered in. Besides economic growth benefiting the lower strata of society, social stability has grown.

LESSON

Some of the NGOs in Pakistan has been focusing on learning from Grameen Bank experience. The scale of operations is small. There is a need to expand the above experience on a grand scale.

A few months ago, the Senate of Pakistan had identified "Mind Set" as the basic problem of our country. There is a need to comprehend entrepreneurial experience of Grameen Bank and the banks of Pakistan should adopt a new approach and provide a transformational change to enable productive role of banks to ensure socio-economic stability in our country and help crystallize the dream of everyone. The glass lobby of the World Bank has a message:

"Our Dream is World Free of Poverty"

The World Bank Report 2004 carries a focused title: "Making Services for Poor People". Driven by foregoing thoughts, it is high time that the Parliament of Pakistan may hold a special session and address the poverty issues and its alleviation in the short run and its elimination in the long run concentrating on articles of the 1973 Constitution of Pakistan captures in Table No. 2.

Table No. 2
ARTICLES FOR DISCUSSION IN THE PARLIAMENT OF PAKISTAN FOR ALLEVIATING POVERTY

ARTICLE

FOCUS

3

Elimination of Exploitation

18

Freedom of trade, Business or profession

37

Social Justice and Reduction of Social evils

38

Social & Economic well being of the people

An action plan with time schedule be developed to address the above issues and ensure enforcement in the interest of 45 million (1/3rd of total population) of Pakistan who live below poverty line and deserve special attention by all of us.

*Principal, Hailey College of Banking and Finance, Constituent College of the University of the Punjab, Lahore