The capitalist inside the philanthrope

The Under belly of Grameen

My Bangladeshi barber has another story to tell about 'Grameen'.The more i told him about my days in Churni the more he told me about the misery and prostratism Grameen Bank has brought on the masses in Bangladesh .

Maybe I am not focusing on the macroeconomic picture but the anecdotes brimming on the lips of the regular Bangaldeshi are quite vulgar. 'A literal Blood sucker' the other barber chimed in when he heard the name Mohammad Yunus.

So why so much angst .I thought Mohd Yunus would be a celebrated 'Bangla' bhai.More Like a war hero, a man who helped build a nation .Received the highest accolades a western man can bestow . At least that is what you gather about him from the media.So why would there be such a disparate opinion.Why would not one but all Bangaldeshi's present in the saloon vehemently disgrace Mr Yunus.

Quite simply because Grameen is a modern day feudal establishment.There is nothing new in microfinance that the Mughals have'nt employed over the ages.The concept of Zamindari ,Jahagirdari brew up with the Mughals.The village rich gave money to the poor s.Both sustainance money and money to do business.

All looks well on the giving end.The issue is how do they behave when it comes to collecting this money with interest.

So if a farmer cant pay up on time.They would take his land,his cow, his daughter.And not necessarily in that order.

Grameen probably does not go as far as the daughter bit.But yes, if you cant make up your weekly installment they do take away whatever they can .The tin roof covering your little house is a particularly appealling commodity .So is your cattle heads . Or your house in case you cease to exist before you pay your due.

The way micro finance in rural areas works is like this. When you take money from 'grameen' .They pool you in to a group of ten debtors.The ten of you pay back a pooled amount in weekly installments and weekly installments alone.If any one of the ten peers defaults , 'grameen' does not accept the payment .This creates incredible peer pressure to pay on time.If you do not succumb to that, they take your roof away.

That should also be acceptable if you are going to take a loan .You would say.You should bear the repercussions of defaulting.I would say why not.

The question to ask is that why should this loan be at a 30 percent interest rate.Is the operational costs for such banks so high that they have to ask for a 3o percent interest rate.Or is the bad debt so significant that it has to be pricey .Or is there hidden capitalist within the hide of philanthrope .

Well the model has been so successful that not only has Mr Yunus catapulted to glory but also to a rather decent personal fortune.

More to come ..as I learn more...maybe I am completely wrong.

This is the link to my previous post on Grameen and Alex Counts

http://mindmarinate.blogspot.com/2009/05/grameen-bank-alex-counts-president-and.html