SUMMER GRANT REPORT SUMMER 2012

Name: Rahul Roy Expected Graduation Year: 2013 Concentration: Economics Organization: Grameen Bank Title: International Program Intern Location: Dhaka, Bangladesh

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Before this summer, I had travelled to Bangladesh twice with my family, my last visit

being about six years ago. As a Bangladeshi-American, I have always had a complicated relationship with my mother country: I love and admire its hard-working people, the lush tropical landscape of its countryside, and the delicious home-cooked meals prepared by family and friends; but at the same time, I mourn for it, and sometimes hate it, because the country is being torn apart by political corruption and is still plagued with all kinds of basic infrastructural problems, such as load shedding, contaminated water, and constant traffic jams (the latter being most prevalent in the chaotic urban jungle of its capital city, Dhaka). Most heartrending and tragic of all of Bangladesh’s issues, however, is the rampant poverty and crippling underemployment that has damaged the economic ambitions of most of its very capable populace. This is the problem that Professor Muhammad Yunus has been working to remedy for almost thirty years now through Grameen Bank, the self-sustaining, Nobel Prize-winning microfinance institution credited with pioneering the concept of lending to poor rural women who lack collateral, but possess the skill needed to lift themselves out of poverty.

Indeed, like every other student flocking from all over the globe to Mirpur-2, the neighborhood in Dhaka where the venerable microfinance institution (or MFI) is headquartered, I became an intern at Grameen Bank because I wanted to learn more about the logic, institution, efficacy, and humanity of microcredit, from both a theoretical, macroscopic bird’s-eye view as well as a practical “worm’s-eye view” (a term often used by Yunus). In my case, I was also driven by a deeply entrenched desire to somehow help my mother country, even if only indirectly, by critically grappling with this issue of poverty and learning about a system with a proven track record, a system that serves over eight million rural women and values long-term empowerment over mere charity. To this end, much of my time at the central office in Dhaka was spent attending lectures conducted by International Program directors on the bank’s organizational hierarchy, micro-lending mechanism, and multitude of financial features, as well as open-forum meetings with the bank’s commanding heights (including its current General Manager, Jannat-E-Quanine) and representatives from the MFI’s social business-minded sister companies (such as Grameen Dannon, which is dedicated to producing and selling cheap, nutritional yogurt in rural areas). In addition, I also provided administrative assistance to the bank’s various internal departments.

Ultimately, this edification process was crucial to my engagement with the heart of this two-month internship program, which constituted the other half of my time with the bank – the week-long excursions to Grameen Bank branch centers located in villages around the country, where the actual nuts-and-bolts paperwork and bank-borrower transactions of lending and repayment occur. Fatigued by daily morning commutes to the Grameen complex (and later back to my hotel), I welcomed any opportunity to escape the chaos and congestion of Dhaka, even if it meant losing some of its luxuries (i.e. toilets that flush). Using rented micro-buses, my intern group and I, aided by Grameen-appointed translators, travelled to several “grams” (the Bangla term for “villages” and the root word in “Grameen”) around the country, never straying more than six hours away from Dhaka, which included villages in the districts of Rangpur, Dinajpur, Madaripur, and Faridpur.

During my time at the villages, I would meet with branch managers and their associates to learn the facts and figures of their respective branch operations. I was also afforded the rare opportunity to observe their transactional activities and basically see what Grameen Bank actually does on a day-to-day basis at the village level. Even more special was the opportunity to attend center meetings, where groups of borrowers in a village (all female) gather every week to repay their loans according to a feasible, weekly-installment schedule, and to share with each other how their enterprises (often devoted to textiles, sweets, and livestock) are doing. I was also able to interview the borrowers about their loans, inquiring about how they invest their loans and whether or not they’ve had any troubles repaying them in a timely manner. Perhaps unsurprisingly, I received similar answers across the board, in nearly every village: basic microenterprise loans were used to expand business; students benefitting from higher education loans wanted to become doctors; and nobody really had any difficulties adhering to their repayment schedule. I did witness a few anomalies, however, such as two struggling members who had downgraded to a “flexible loan scheme,” and the rare phenomenon of a borrower withdrawing all of her savings and leaving Grameen Bank. Due to her shyness, however, I was unable to probe deeper into her case – perhaps she was dissatisfied with the bank and has found a more manageable loan scheme elsewhere; or maybe she is a resounding success story, since the ultimate goal of microcredit, at least in theory, is to lift poor borrowers out of poverty by loaning money that can be invested in capital, which can in turn generate profit for the borrower, until she has achieved a level of self-sufficiency through her enterprise.

This ethnographic experience in the villages was undoubtedly the most rewarding and enlightening aspect of my entire internship program. Indeed, the real pleasure was simply just being in that isolated rural setting, with its vast rain-soaked acres of farmland and narrow dirt roads adorned with tropical flora; of course, I would frequently snap out of this romantic delusion thanks to the signature village aroma of smoke and cow dung (but even that grew on me). My basic knowledge of conversational Bangla also enabled me to engage with the local community on a more informal level, which culminated in epic games of carrom, a popular tabletop game, and cricket.

One of my goals during these village excursions was to debunk the myths that appear to be circulating around the urban areas of Bangladesh regarding Grameen Bank, perhaps as a result of Bangladeshi PM Sheik Hasina’s cynical attitude towards Yunus and the alleged efficacy and altruism of his microcredit machine. Two opposing narratives consistently arise from the discussions I’ve had with Bangladeshis in Dhaka: a mostly misinformed one that is critical of Grameen’s “high” interest rates, harsh discipline, and “blood-sucking” of the poor; and another that exudes national pride and exalts Grameen as a beacon of hope in the mission to alleviate

poverty in rural Bangladesh. Indeed, many cynics, while naturally in favor of the basic concept of microcredit, are skeptical of its implementation and constantly cite horror stories of struggling borrowers with overwhelming debt committing suicide, and of branch officers stripping borrowers of their homes and livestock as punishment for defaulting. They also doubt the degree of social impact that the bank has actually had, and basically end up damning the entire institution for failing to design a system that yields a perfect repayment record. Most of these critics, however, don’t realize that Grameen’s 20% interest rate for basic income-generating loans is the lowest of all MFIs in Bangladesh. They also condemn the group dynamics that factor into the loan disbursement and repayment processes, falsely believing that every member in a group is punished for the failure of one member to repay loans on time, a punishment doled out in the form of lowered loan ceilings for the group members who are performing well. This reaction completely overlooks the flexible loan option made available to the struggling borrower, and how the adjusted loan scheme is determined based on the borrower’s financial capacity. As far as I can tell, this is a fair banking system that transcends mere charity by enforcing discipline and working within a capitalist framework, in that success stories are told by borrowers with exceptional skill.

Regardless of what side you take in this dialogue, one thing I’m sure of is that the Nobel Peace Prize shared by Prof. Yunus and Grameen Bank for their efforts in empowering a huge population of marginalized rural women has made Bangladesh and microcredit the topic of conversation in other parts of the world. The larger ambition of this internship program seems to be to teach foreign students firsthand about the institutional and operational intricacies of Grameen Bank, so that they can return to their respective countries to spread the gospel of microcredit, and perhaps even replicate Grameen’s model through their own social business initiatives.