Rahfin in Bangladesh

Rahfin is a sophomore President’s Scholar and member of the University Honors Program who is majoring in economics, political science and public policy in Dedman College of Humanities and Sciences, with minors in religious studies and Arabic. He was named an SMU Maguire and Irby Family Public Service Intern for summer 2012. He is interning at Grameen Bank in Bangladesh, a Nobel Laureate organization that has pioneered microfinance for the poor. He plans to work on the administrative and financial side of microfinance and also visit rural banks in an effort to understand microfinance from a grassroots level.

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Not your everyday bank

Other interns from various nations at Grameen Bank. From left: a British graduate student, a Canadian senior, a Polish senior and a British senior.

How does microfinance work? How do women (the majority of Grameen Bank’s borrowers) maintain successful loans? What type of loans does Grameen provide? Is Grameen more than just a financial institution?

Grameen Bank has many rules and regulations when it comes to administering loans, and I encourage you all to read more about how Grameen Bank has been so successful, especially in terms of its payback rates. But, I would like to focus on Grameen Bank’s loan offerings for one purpose: I want to differentiate Grameen Bank from other microfinance institutions.

In recent years, microfinance has received a bad name. Microfinance banks have been portrayed as abusive, and said banks have been accused of usury. Grameen Bank, on the other hand, offers a singular basic loan to its first-time borrowers. If borrowers pay back their loans in a timely manner, interest does not exceed 10 percent. If borrowers are successful in paying back their initial loans, they are given an opportunity to apply for larger entrepreneurship loans.

A view of Dhaka from the 11th floor of Grameen Bank.

I was most excited by Grameen Bank’s other loans, however. The bank offers housing loans and higher education loans to its long-run borrowers who have more than three years of experience. In a nation that is routinely ravaged by floods, weather-resistant housing is important for both the protection of life and capital. By the same token, the cost of a university education is expensive in Bangladesh. Grameen Bank offers both to its borrowers (and at lower interest rates). Per example, Grameen Bank members can take out a higher education loan at zero-interest for the first five years; their children pay back the loans (at around 8 percent interest) after they have graduated and have acquired some form of employment (self- or otherwise).

The bank has other humanitarian elements, as well. It offers free life insurance to its members. It forgives the interest payments on loans in areas that are hit by natural disaster. It offers beggars loans at zero-interest to encourage the most disenfranchised to pursue small-scale commerce.

While Grameen Bank is not perfect, the bank is nothing like a traditional financial institution. One senior bank official told me, “We were never a bank for the rich. We are a bank to aid people to come out of poverty and help their children lead better lives than they did.”

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    2 Responses to Not your everyday bank

    1. Jason says:

      I am planning to do this internship next year. Looking forward to your next blog.

      • Rahfin says:

        Jason,

        I’m glad you’re reading my blog because of your interest in Grameen Bank and/or microfinance. If you’re an SMU student, feel free to contact me during the year, and we can discuss the internship further.

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