Grameen Bank: Performance and Sustainability

This report examines the working of Grameen Bank, Bangladesh. It discusses whether its operations are sustainable. It also explores the potential for expanding Grameen Bank in Bangladesh and replicating it elsewhere.

The report states that Grameen Bank provides credit and organizational help to the rural poor, who are excluded from the formal credit system. It replaces physical collateral requirements with group responsibility. The Grameen Bank also promotes social development by making the poor individually and socially accountable. Findings include:

• Grameen Bank's success is only sustainable if it is institutionally, economically, and financially viable and helps to reduce borrowers' poverty;
• Subsidized funds and grants were instrumental for its outreach and institutional development;
• Over time, however, it has demonstrated its ability to operate with resources from the market, relying less on subsidized funds;
• Grameen Bank has recorded loan recovery rates above 90% consistently and has had a positive impact on rural wages and poverty reduction;
• Long-run sustainability would depend on its ability to expand its lending for more growth-oriented activities and achieve cost efficiency on a sustained basis;
• Successful replications would depend on initial subsidized resources, and committed and dynamic leadership.