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Group Fund Replaced
One most visible change everybody notices in GGS is the disappearance of Group Fund. Grameen Bank had to keep on defending Group Fund ever since it was created twenty five years back. Now we let it go. There are no more joint accounts. Each borrower will have three obligatory savings accounts - a) Personal savings account, b) Special savings account, and c) Pension deposit account (obligatory only for borrowers borrowing above Tk 8,000).
GGS continues with five percent obligatory savings, deducted from the loan amount, at the time of disbursement. But it is no longer called a "group tax". New name is "obligatory savings". Half of this five percent obligatory savings goes to a personal savings accounts, the remaining half goes to a "special savings accounts". A borrower can withdraw any amount from her personal savings account any time she desires. There is no restriction on her withdrawal. Weekly saving still continues. This goes to personal savings account. Special savings account is non-withdrawable for the first three years. Then withdrawal is allowed generally once in three years keeping a minimum balance of Tk 2,000 or half the amount in the account, whichever is larger. Under special circumstances the entire amount in the special savings account can be withdrawn. Some money from this account will be used to buy shares of Grameen Bank.
Pension Fund: Leading to Financial Self-Reliance
GGS requires all borrowers with loans above Tk 8,000 (US $ 138) to contribute a minimum of Tk 50 (US $ 0.86) each month in a pension deposit account. After ten years a borrower will receive a guaranteed amount which is almost double the amount she has put in during 120 months. This has become an amazingly attractive feature of GGS for the borrowers. Many are coming forward to save more than Tk 50 each month. There are borrowers who are saving Tk 500 per month. While it has become popular with the borrowers, it is generating a huge cash in-flow for the bank. Each month it is now bringing in over Tk 100 million (US $ 1.75 million) as deposits on account of pension savings. Grameen Bank can now rest assured that it will have enough of its own money to expand its lending operation in future. By the same token, branches will now have enough money to carry out their lending programs with their own deposits. All GB branches can look forward to becoming self-financed. While the institution moves towards financial self-reliance, the borrowers also move to financial self-reliance as old age approaches. They can have monthly income at retirement out of the accumulated savings in the Pension Fund. For a poor woman, it is a very comforting news.
The new pension fund has become an important savings instrument. GGS emphasizes on receiving deposits from both borrowers and non-borrowers. A variety of savings products has been incorporated in the system. Total amount of deposits account for 67 per cent of the total outstanding loans of Grameen Bank in July, 2002, after paying back Tk 3.3 billion (US $ 60 million) of its loans to the central bank, local commercial banks and the foreign lenders, which fell due during the past 18 months.