Grameen Group Lending Model

The group lending model was developed by the Grameen Bank in Bangladesh in the 1970s. In this model, individuals form a group receiving several days of financial training before a loan is granted from the financial institution. The emphasis from the outset is to organizationally strengthen the clientele to manage their business well, making them aware of the features and obligations attached to the loan. Multiple groups form a center and meet weekly or bi-weekly to meet the staff of the credit institution and to repay their loan installments.

Grameen Lending process:

Punt 1

An individual living below the poverty line selects four people she knows and trusts to form a group.

Punt 2

The group participates in a five day financial training. Each member contributes $2 per day towards a savings account to be opened upon completion of the training.

Punt 3

Upon successful completion of the training each borrower gets a small loan that that allows them to start or expand a business to generate income.

Punt 4

Borrowers meet weekly with center managers to make loan and savings payments and to receive financial training.

Punt 5

The Grameen model offers a poverty fighting tool built on four key pillars:  Capital, savings, credit and financial education.