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Grameen Bank II Print

Custom-made Credit Service

GGS has created a methodology which can provide custom-made credit to a poor borrower. GCS is still a powerful methodology which demonstrated its ability to deliver microcredit in all types of countries, economies, and cultures. It has done its job in making microcredit a serious business. GGS takes off from where GCS left off. GCS is a "single-size-fits-all" kind of methodology. This feature gives GCS the simplicity which was most needed for the implementation of an idea which was totally unknown to the world. Now microcredit has matured. The world is ready to afford a methodology which can provide custom-made microcredit to the poor. GGS allows loans of any duration, such as, 3 months, 6 months, 9 months or any number of months and years. In its reduced form it can be as simple as GCS. GCS was designed to be operated mechanically. There is only limited scope in GCS for the exercise of judgment by the foot-soldiers of microcredit. GGS is different. It allows a staff to be creative. He can design his loan product to make it a best fit for his client in terms of duration, timing of the loan, scheduling the installment, etc. The more a staff becomes a creative artist, the better music he can produce. The institution can identify the levels of creativity among its staff. GGS allows space for the growth of the staff. An initial level user of GGS can use it almost as GCS by restricting it to one-year loans only. As the user gathers experience he can widen the number of options offered within GGS. Besides duration, size of weekly installments can be varied. A borrower can pay more each week during peak business season, and pay less during lean period. In an extreme case, each installment can be of different size. In the other extreme, all installments can be exactly equal, like in GCS. An agreed repayment schedule is signed by both the lender and the borrower, before the loan is disbursed. The borrower is obliged to follow the schedule during the loan period. If she fails, she is required to take the detour and move to flexible loan.

When a borrower moves to flexi-loan she gets a second chance to work out another repayment schedule, one that is more do-able than the previous one. Suppose a borrower starts with a basic loan for a duration of one year. During the loan period she develops some problem in paying the installments according the schedule she had committed to. No problem. She moves to flexi-loan and converts the one-year loan into, say, a three year loan, making the installments very small and affordable. Even if she has extended the loan period to three years, she does not have to wait three years to access fresh loans. In both basic and flexi-loans, a borrower can borrow after each segment of six months is completed as per schedule. She can borrow exactly the amount she has paid back during the six months - it is like having a cash credit limit with a bank. In case of flexi-loans, a borrower can borrow, after the first six months, as much as twice the amount that she has paid back, if she fulfils certain stringent conditions. She can borrow exactly same amount she has paid back in each subsequent six months.

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