grameen bank

When i heard about Professor Muhammad Yunus and Grameen Bank winning the Nobel prize for peace, the first thing i did was obviously reading up about the grameen bank. The part which was interesting to me was that most of the loan goes to women and the bank found women to be better at repayments than men:). I thought , ok, women are better at repayment, ya, they can be better at following the rules of society. I searched for women bloggers who took pride in this whole women better thing. My searches resulted in nothing :), looked like no woman blogger was interested in this huge statement about women. Then i came accross some other blogs, which gave another view point explaining women being better at repayments. The loan mechanism in grameen bank works on a peer mechanism where the loan is provided to a group and if one member defaults there will be immense peer pressure(some accuses that peers could humiliate the defaulter and even cases of locking the defaulter up in the panchayat hall were heard of) on the defaulter to pay up since otherwise the whole group loses the access to the next loan. The new view point said that women are more susceptible to such pressure tactics than men and this would explain the phenomenon of women being better at repay. Holy, such unromantic people, they chucked the whole concept of women being better social players :). The grameen bank website gives this explanation -"Women are the best poverty fighters. Experience and studies have shown that they use the profits from their businesses to send their children to school, improve their families’ living conditions and nutrition, and expand their businesses. They also are more likely to fully repay their loans on time."

Then i read up these article of scathing criticism against grameen bank written by an austrian school of economics advocate Jeffrey Tucker in 1995 and 2006. Some of his points suggest that the collectivism in the grameen bank loan groups and their strict practices like joining up for weekly physical-training exercises and parades where they chant the the "Sixteen Decisions," a narrative summing up the bank's worldview and education provided in the banks style in its 18000 schools make the bank more of a cult than a financial institution. I understand his concerns about such a rigid collectivist society. But when he is worried that the collectivism advocates against dowry(and according to Jeffrey this will lead to the members not geting married or get their children married in the dowry based society), and that the collective is forcing the members to make and use pit latrines i am more than a bit amused. This fellow Jeffrey Tucker, from his words, i think is a big romantic. He sitting in a nice dowry less society sees this thing called dowry as a pretty substance and more prettier is open latrines. And i would like to imagine that if such a large group of people thinks against dowry what big change can it make.

If you read the articles you can see one thing which these people see as the more important concern, "the dominant issue right now is how best to build institutions that are genuinely market viable as verses subsidy dependent", and not the welfare of these people. And at many points he wonders if micro finance is such a profitable industry why dont the private players get into this market. And he tries to prove that micro finance stays up because of huge subsidies and grants from in and out the country. Who cares as long as it goes into improving the life of a huge number of people. And if this statement from Grameen Bank is true,
"No Donor Money, No Loans

In 1995, GB decided not to receive any more donor funds. Since then, it has not requested any fresh funds from donors. Last installment of donor fund, which was in the pipeline, was received in 1998. GB does not see any need to take any donor money or even take loans from local or external sources in future. GB's growing amount of deposits will be more than enough to run and expand its credit programme and repay its existing loans.
" those allegations are also false.

The only negative part of micro-credit seems to be the sometimes subtle and sometimes not so subtle peer pressure to repay the loan. That is the same thing which makes it a success also. And compared to very not subtle threats of legal action or physical violence by money lenders(as normal banks never reach any of these people) this seems to be much better. I have heard about Self Help Groups in India which are similar to GB's peer groups and have always heard only good about them. And i think a similar bank in India with as much reach could change a whole lot of rural peoples life for the good and protect them from lack of the so called capitalist banks and presence of money lenders who would rather prefer that the debtors remain debtors for ever.