4. Main Activities of Grameen Bank

Grameen Bank mainly acts with loan disbursement and its repayment. It has many kinds of loan projects. Basic loan is mostly popular and easy and it is entry pass to being a member of Grameen Bank. Main activities of Grameen Bank are

? Loan Projects
? Deposit Scheme
? Village Phone

4.1. Grameen Bank Credit Loan Projects

The Grameen Generalized System offers four types of loan products:
-The basic loan
-The housing loan
-The higher education loan, which runs parallel to the basic loan, and
-The struggling members (beggars) loan programme

4.1.1. Basic Loan
This is the main loan product of Grameen Bank. Any poor person can get this type of loan. All borrowers start with a basic loan ("easy” loan). Most of the borrowers will continue with this basic loan, cycle after cycle, without any difficulty, and meet all their credit needs in the most satisfactory manner. But life does not proceed smoothly for any human being, let alone the poor women. It is likely that some borrowers will run into serious problems, and face difficulties, somewhere along the cycles of loans, in repaying the basic loan according to its repayment schedule. For them GGS has a very convenient arrangement. In GGS, basic loan comes with an exit option. It offers an alternative route to any borrower who needs it, without making her feel guilty about failing to fulfill the requirement of the basic loan.

According to Grameen Bank definition poor means who possess less than one acre of land or equal to that. This loan started with 5000 taka per individual. The interest of basic loan is 20% on declining basis. Borrower has to pay this money with 10% more within one year in 44 installments. After repaying 23 installments barrower will get more money if she wants.

Conditions to get Basic loan:
There are some conditions to get basic loan from Grameen Bank such as
-Landless, who possesses less than one acre of land.
-Wealth less,
-Creation of a group comprised of 5 to 9 members from her neighbor.

Process of loan application:
Who want to get loan money from Grameen Bank, she has to make a group of 5 to 9 members. They should be neighbor and well known to one another. Grameen Bank usually gives loan to a group not an individual. This group will apply to center manager with recommendation of center leader. Justifying other conditions of Grameen Bank Branch manager will recommend to Area manager to allocate money against the application. Whole process is matter of one week.

Denial of loan Application:
Most of the loan applicant get basic loan from Grameen Bank. But in a few cases some application are denied due to some reasons such as misuse of previous loan money, frequently being absent from center meeting or for her bad natures idle husband.

4.1.1.1. Micro-enterprise Loans
Many borrowers have shown dynamisms to new opportunities to move ahead on the road to success in business ventures and have shown promises of success in bigger ventures due to many favorable reasons, such as, proximity to the market, presence of experienced male members in the family etc. Grameen Bank provides larger loans, called micro-enterprise loans, to these fast moving members. There is no restriction on the loan size. So far 2,179,300 members availed of the micro-enterprise loans. A total of BDT 56.07 billion (USD 839.26 million) has been disbursed under this category of loans. Average loan size is BDT 25,728 (USD 372 app). The maximum size of a single loan taken so far is BDT 1.60 million (USD 23,209) for purchase of truck. The other major categories of activities financed are grocery shops, pharmacy, dairy farms, auto-rickshaw for transportation and stone business for construction.

4.1.1.2. Flexible Loan
There is another type of loan called flexible loan. Flexible loan is simply a rescheduled basic loan, with its own set of separate rules. It is also called as "contract" or "Renegotiated" loan, because the bank, the group, and the borrower have to go through a process of renegotiation to arrive at a new contract with a fresh repayment schedule for a borrower entering into the flexible loan. In flexible loan borrower can get exemption from paying installment for a certain period of time until her good time come. Flexible loan reduces the installment size to a tolerable level. At the end of 2010, nearly 5 per cent of the borrowers were on flexible loans.

Flexible loan is not an independent loan. It is only a temporary detour from the basic loan. The borrower tries his or her best to go back to the basic loan. If a borrower fails to repay the basic loan and is unwilling to go into flexible loan, s/he is reckoned as a defaulter. In that event, 100 per cent provision is made against his/her outstanding dues. If a Flexible loan is not paid back in two years it is considered as overdue; after three years, it is entirely written off.

Under GGS loans are written off as a part of financial prudence, but the amount is neither forgotten nor forgiven. GGS treats all written-off loans as recoverable loans. I think, under GGS, nearly 90 per cent of written-off loans and interest will ultimately be recovered, because the borrowers will pay them back, in their own interest, as and when opportunity arises. Poor people always need money. Their interest is to keep the door to money open. If this door shuts down for any reason, they'll do their best to reopen it - if that option is available. GGS provides this option.

There are many exciting features in GGS, but I think removing tension from micro-credit and permanently establishing full dignity to the poor borrowers are the two most important features of them all. Tension-free micro-credit is a great gift of GGS. Now both sides in the micro-credit system, the lender and the borrowers, can enjoy micro-credit, rather than having occasional nightmares created by one for the other.