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GRAMEEN'S SOCIOPOLITICAL CONTEXT

When the Grameen Bank started in the early 1970s, Bangladesh was in disarray(confusion)and anarchy(disorder). The War of Independence of 1971 had shattered previously existingsocial, political, and economic systems. In such an environment, Professor Yunus, Grameen

Bank founder and head, understood the need for firm institutional structures andorganizational discipline, and created the Grameen model based on a framework of disciplineand trust.

From the start, Grameen was an experiment that existed outside therealm of traditional banking. The bank began as a research project,and even when its expansion required institutional relationshipswith the Bangladesh government's financial institutions, Grameenmaintained a high level of autonomy. This insulation fromgovernment interference (stipulated in a 1983 ordinance) had a

significant impact on Grameens approach to rural credit delivery.It ensured that the rural elite, who dominate state policy, did notretain control in the case of the Grameen Bank. This insulationfrom elite interference also allowed Grameen to provide credit atmarket rates, a condition which preserves its financialsustainability.

LOCAL GOVERNMENT IN BANGLADESH

Bangladesh's basic unit of political administration is the unionparishad. A representative body of roughly 100,000 people, itsfunctions include a range of duties from socioeconomicdevelopment to general administration.

In recent elections, Grameenborrowers and family memberscaptured 6.5 per cent of the totalunion parishad seats in the country.

Considering that one tenth ofBangladesh's families are involvedwith Grameen this percentage reflects a growing politicalrepresentation among Grameen members, who constitute the

bottom 10 per cent of the countrys economy. Where poor

Bangladeshi women previously hesitated to vote due to a longhistory of political exclusion, Grameen women are nowcampaigning for and winning local elections. This is partly due tothe concerted efforts of the government to promote womens

participation and partly due to the empowerment of poor womenthrough the Grameen process.

Anjumanara Begum, a Grameen borrower who had recently been elected to her union

The Grameen Bank

of Bangladesh is

one of the worlds

most famous

microfinance

institutions,

serving more than

four million

borrowers

annually and

helping 10,000

families escape

poverty every

month.

Successful

Grameen

replications must

modify Grameens

systems and

practices to suittheir own socio-

political

environments and

not seek merely to

transplant the

exact institutional

structure and

policies of

Grameen Bank.

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parishad at Dhamrai offered this, Through centre meetings I became aware of the problemsof my village. I felt that I should help to solve these problems. She added, After taking

loans from Grameen, I had to talk to men in the market when buying or selling poultry andmilk cows. I had to deal with men at the bank itself. Now I've learned how to deal with

people, both men and women, and I've become known to my centre and village. I'm no longer

afraid of speaking out.

Grameens incorporation in local political life has ensured that the social, economic andpolitical priorities of its members are heard. This political representation has helped to sustainthe institution and is an extremely importantfactor to consider in any future replication.

CULTURE and POWER in the VILLAGE

Grameen has approached rural credit deliveryas more than a business and it is instead

doing what many Grameen branch managers

call a job plus. For instance, Mahsud

Hossain, the branch manager in Dhamrai said

that part of his job is female empowerment. Grameen has formulated a platform known as

the Sixteen Decisions, which includes family planning, sanitation, and basic decorum as a

general framework for borrower conduct. The Sixteen Decisions are custom tailored to suit

Bangladesh's rural culture.

Grameen's position against the tradition of marriage dowries is unequivocal (clear). It is that

Grameen members will neither give nor receive dowry. In the banks early days there was

concern that Grameen borrowers would take loans to pay directly for their daughters'

dowries, which can cost as much as 1500 Taka (equivalent to US $ 23). Peer monitoring

through group lending has proved an effective means of screening out such loans. While

dowry is still prevalent in most Bangladeshi villages, Grameen's no-tolerance policy is

gradually changing villagers perceptions.

These examples show that Grameen is acutely aware of its cultural surroundings. The

relationship between social development and bank sustainability is mutually reinforcing. Forinstance, as Grameen expands its borrower base, its social development agenda becomes

increasingly powerful. And, as its development agenda takes hold, increased adult literacy,

family planning, and diminishing reliance on the dowry system work to strengthen borrowers'

ability to pay back loans.