Grameen II At the end of 2003 - A 'Grounded View' of How Grameen's New Initiative is Progressing in the Villages

The paper defines Grameen II, formally known as "the Grameen Generalized System", as the methodology used by Grameen Bank to deliver its financial services.The paper describes the changes incorporated in Grameen II including:

• Removal of joint liability of the group for loans taken out by only one member;
• Branches being allowed to begin work with non-member depositor;
• Computerization of all branches served by area office by end of 2003.

The paper then describes what Grameen II how:

• Staff respond:
  • Enthusiastic about some elements like new basic loan, loan-life insurance, GPS and special project loans;
  • Cautious towards loan rescheduling and variable terms and schedules.
• Members respond:
  • Members have multiple complex portfolios of which Grameen forms only a part.

Finally the paper discusses the impact of Grameen II on microfinance industry:

• Grameen II does not have much impact on the competition, but GPS has the potential to fundamentally change the demand side of market;
• Loan rescheduling will not lead to collapse in credit discipline in Bangladesh;
• Grameen II is closer to satisfying the "universal" demand among poor people for reliable, flexible, financial services.