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Micro-Leasing, The Grameen Bank Experience
Topic : Leasing
This paper critically examines the Grameen Bank leasing program but is not a full impact assessment. The paper is divided into the following sections:
- An introduction and review of the financial landscape of leasing;
- A description of the operational aspects of the leasing programat Grameen Bank;
- A case study of one borrower’s experience with the Grameen leasing program;
- An evaluation of the leasing program and its successes and failures;
- Recommendations of new products and practices that will improve the efficacy of the leasing program.
Analysis of program level data and a case study show that the program is successful in terms of outreach and repayment performance. Key conclusions are:
- Poor people have diverse credit needs.
- Different and flexible products are needed to help poor people graduate out of poverty.
- It is possible to issue medium term loans without large down payment to small borrowers.
- Good institutional set-up and a carefully designed product is needed for members to use the product to their advantage.
- Despite the success of the group lending methodology of credit delivery, members within a group have different entrepreneurial ability. New products such as leasing can be used to reward a good member within a group.
- The key to success is constant supervision, monitoring and knowing one’s clients well.