Banker to the Poor by Muhammad Yunus, Alan Jolis

showing amounts paid per installment and the date:
     
     
Name of Borrower
Installment
Amount Date
     
     
    I made the sheet simple so that the pan seller needed only to make a check mark each time a borrower paid him. But after a few days even this system broke down. The borrowers claimed that the pan seller had forgotten to check them off. Something had to be done about my accounting system. But what? As an experiment, I abandoned the daily repayment system and moved to the next best thing, a weekly repayment system. Today, some twenty years later, our loans are still paid in the same way, week by week, though now they are made to our frontline bank workers who meet weekly with borrowers in their villages.
    Our repayment rate has remained high all along. Generally, it is our success in getting high repayment while serving very poor people in disaster-prone areas that surprises people the most about Grameen's success. People sometimes assume that faithful repayment of loans must be part of Bangladeshi "culture." But nothing could be further from the truth. In Bangladesh, the wealthiest borrowers make it a habit not to pay back their loans. I am amazed by the mockery that goes on in the name of banking. Public deposits go through the banking system, through the government banks, through private banks, to people who will never pay back the money.
    If Grameen was to work, we knew we had to trust our clients. From day one, we knew that there would be no room for policing in our system. We never used courts to settle our repayments. We did not involve lawyers or any outsiders. Today, commercial banks assume that every borrower is going to run away with their money, so they tie their clients up in legal knots. Lawyers pore over their precious documents, making certain that no borrower will escape the reach of the bank. In contrast, Grameen assumes that every borrower is honest. There are no legal instruments between the lenders and the borrowers. We were convinced that the bank should be built on human trust, not on meaningless paper contracts. Grameen would succeed or fail depending on the strength of our personal relationships. We may be accused of being naive, but our experience with bad debt is less than 1 percent. And even when borrowers do default on a loan, we do not assume that they are malevolent. Instead, we assume that personal circumstances have prevented them from repaying the money. Bad loans present a constant reminder of the need to do more to help our clients succeed.
    While we struggled to develop an effective and reliable credit delivery and recovery mechanism during our pilot phase, we also worked on making sure that women benefited from the program. We set a goal of having half of our borrowers be women. This took us more than six years to achieve. In trying to attract woman borrowers, we fought against the normal practices of Bangladeshi banks, which effectively exclude women. To say that our financial institutions are gender-biased is an understatement. When I point out the gender bias of banks, my banker friends grow irritated with me. "Don't you see our ladies' branches all over town?" they argue. "They are designed to serve women only."
    "Yes," I answer, "I see them, and I also see the idea behind them. You want to get women's deposits. That is why you make ladies' branches. But what happens when one of the ladies wants to borrow money from you?"
    In Bangladesh, if a woman, even a rich woman, wants to borrow money from a bank, the manager will ask her, 'Did you discuss this with your husband?' And if she answers, 'Yes,' the manager will say, 'Is he supportive of your proposal?' If the answer is still, 'Yes,' he will say, 'Would you please bring your husband along so that we can discuss it with him?' But no manager would ever ask a prospective male borrower whether he has discussed the idea of a loan with his wife or whether he would bring his wife along to discuss the proposal. It is not by chance that