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Re: Grameen Bank Query



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Parth J Shah wrote:

> Assume that Grameen bank got people to borrow and repay just to pad  their
> portfolio--show more good work than they have actually done.  But the
> borrowers
> must had to pay interest on the loan.  So according to the story, they
> borrowed
> the money, didn't do anything with it, paid back the loan in installments with
> the same money, and also lost their own money equal to the amount of the
> interest.  Sounds rather irrational!
>
> Unless of course the borrowers loaned out the loan to some one else at the
> same
> interest and thereby broke even, or at a higher rate of interest and made
> money!!!
>
> The story as told is rather incomplete.
> parth-

Or may be the question is really "how tightly is the Grameen bank coupled to the
RBI"?  If the coupling is small then the story may well be "complete".  Or if the
coupling is nearly linear and is normalizable over time then it would not be
possible for the Grameen bank to deviate much from the policies of RBI.  Hence,
the interest rate issue is really a coupling issue between the two banks.

Sincerely,
Vamsi M.


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