The Grameen Fund Summary

This is part of what I wrote for my Internship Report:

So, what does the Grameen Fund do? They provide, among other things, financing to small and medium enterprises (SME). This is very important because these businesses are often unserved by both the commercial banks and microfinance banks. They are not poor enough to be accepted by MFIs and they require more services than they can provide. Commercial banks generally do not consider SME financing important since it is much more profitable for them to focus on much larger clients. Thus there is the 'SME finance gap' between these two groups of banks.

This is where Grameen Fund and other SME financing institutions such as BRAC and Basic Bank come in. They provide their clients with loans and other services to help them grow and expand their businesses. This is very important for a country to continue its development. It is all great if everyone in the country has a cow and a rice paddy field, but some of these businesses must keep growing for substantial growth to occur.

The Grameen Fund used to operate through Grameen Bank branches, however just 9 months ago they left and started operating through their own branches or 'booths'. Now they find, appraise, disburse and collect their own loans. It is our job to make profiles of the two branches that we are visiting and asses the progress that they have made and make recommendations on how they can improve! We also want to do a couple case studies of some of their clients, and get to do some in depth interviews with them.

Our trip to Grameen Fund was very interesting and definitely worthwhile for many reasons. It was worth it just to get out of Dhaka and actually get to do something. But it was also very interesting to get to talk to the Fund. They are a very new business.

The Grameen Fund is the next step after the Grameen Bank on the development food chain. They deal with bigger clients and have fewer restrictions than the Bank does. The Fund deals with already established business owners who want to get bigger loans than they can get with Grameen Bank. Fund offers loans which are greater than tk 50,000, the average loan size that we saw was between tk 1-2 lakh (tk 100-200,000).

There are a number of other features that make Fund more appealing to larger businesses. They have monthly repayment instalments instead of the Grameen Bank’s weekly ones, and they have no requirement to be in a group or attend weekly meetings. Instead clients get a visit at least once a month from the Booth Manager where he comes and visits to see how the borrower is doing, encourage them and give advice if needed.

They have been around for a couple years but they only just split from the Grameen bank and started doing things themselves about 9 months ago. Now they have their own booth offices across the country, currently they only have 6, but that are plans to double that by the end of the year.

 We were asked to go to the field and visit one of the booths and make a report on the Grameen Fund with an assessment of the booth system and recommendations for the future.

We came up with a couple recommendations:

1. Organise better with the Grameen Bank on who is going to offer Micro Enterprise Loans, as well as making use of the Grameen Bank’s network.
• Currently both are but we feel that just Grameen Fund should be offering them.
• They should have a graduation system for Bank members to become Fund members. We are not sure if they do have one it was hard to get a clear answer because we would here different things depending on who we asked.
• Promote themselves more through the Grameen Bank so that people know more about it and the benefits of getting loans from them.
• Instead of setting up more booths, they could instead rent an office at Grameen Bank Branches, that way the Fund can make use of the existing infrastructure and
2. Keep expanding their booth network both in terms of the number of booths and number of employees at each booth. Currently the manager is able to visit all his borrowers but it requires a lot of travelling.
3. Further decentralization of the booths, such as giving them more autonomy over the loan approval process. Also technology like computers need to be used to their full potential to save time and allow for more rapid communication between head office and the booths. This may require training of booth managers or hiring of computer technicians. 

Cheers,

Mike