Book Review

The success of Grameen Bank, a flagship organization pro-viding collateral-free credit mostly to women in ruralBangladesh, has led to a burgeoning literature spanning manydisciplines. One strand of the literature deals with theoreticalissues in economics, such as the use of joint-liability contractand social collateral by the bank to circumvent the problem ofasymmetrical information inherent in all financial transac-tions. Another track of the literature examines the economicimpact of the bank on the borrowers and their communities.Yet another group of papers examine the social impact of thebank, especially its effect on the empowerment of women inBangladesh. The book, Women and Microcredit in RuralBangladesh: Anthropological Study of the Rhetoric and Realitiesof Grameen Bank Lending by Aminur Rahman belongs to thislatter group. The major thesis of the book is that the publicreason for Grameen Banks targeting of womenempower-ment and betterment of their livesis at variance with actualpractices. Another theme, though not as well developed, is thatthe banks attempt to reach financial sustainability is creatingincreased debt burden for its borrowers and is in conflict withits original mission of poverty alleviation.

This provocative book is the outgrowth of the authors Ph.Ddissertation based on thirteen months of ethnographic fieldresearch on Grameen Banks lending in one village. The maintheoretical tool used is that of public and hidden transcriptsthe

Grameen Bank andWomens Empowerment inBangladesh: A Review Essay

by Asif Dowla

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official views and policies of Grameen Bank and the realitiesfaced by the borrowers and bank workers in the field. This bookis part of a recent genre of negative evaluation of the allegedempowerment of women via credit in Bangladesh.

The official policy of the bank is that the borrowers willself-select the members of their borrowing group. The authorcontends that the practice of group recognition by a superiorofficer of the bank suggests that the hidden transcript is that itis the bank officer who really decides on the exclusion, inclu-sion, or replacement of borrowers, not the women themselves.

He reports that outside male bank workers, because ofpatriarchy, cannot recruit local women for participation in thecredit program directly. The staff is forced to contact womenthrough the mediation of male members of the households,most often husbands. This, the author argues, creates a powerhierarchy between bank worker and early organizers of loancenters, and it is used for loan approval and installment collec-tion. He suggests this is another example of the discrepancybetween public and hidden transcripts.

The author finds anomalies between the public and thehidden transcripts in the social development goals of the bankas well. For example, officially borrowers are supposed to shunthe practice of accepting and giving dowry. The author foundnumerous examples of borrowers accepting and giving dowry,again contradicting the public transcript. Similarly, many bor-rowers did not stick to the announced practice of using the pitlatrines. In many cases, because of the condition imposed bythe bank (one pit latrine per housing loan), a family has morethan one pit latrine as many of them have more than one hous-ing loan.

According to the official policy of the bank, the staff willsupervise the borrowers to ensure that they use their loans forincome generation and pay installments from their earned

Asif Dowla is Associate Professor of Economics at St. Mary's College of Maryland.audowla@.smcm.edu

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income. The author found little evidence of loan-use supervi-sion by bank workers. In fact, his research found that 78% ofloans in the village he studied were used for purposes otherthan those approved by the bank. In addition, the authorreports that in a majority of cases, women pass along theirloans to men or male relatives. The public transcript of thebank suggests that borrowers own the bank, but the hiddentranscript is that many borrowers do not understand what itmeans to be owners, despite the fact that they nominally ownshares, and that the ownership is meaningless, as they dontreceive any dividends from their shares. The public position ofthe bank is that female members are the majority on the boardof directors (9 out of 12) but the hidden transcript is that theseuneducated women are powerless in the face of the minority ofmale board members. The author reports that participation incredit programs has led to an increase in both verbal aggressionand physical assault for a majority of the women. Theincreased pressure for timely repayment creates tension amonghousehold members and at times leads to verbal and physicalaggressions against women. This is yet another example of theanomaly between public and hidden transcripts.

Of all the things in the book, I found the statement thatGrameen Bank targets woman to take advantage of their posi-tional vulnerability the most disturbing and unfortunate. Healleges that bank workers use this vulnerability to recruit andextend loans and the men in the households rely on it to usewomens loans and to pay their installments. Unfortunatelythe author does not provide any solid evidence to back up hisclaim. His only evidence is statements from the bank workerswho tend to justify avoiding recruitment of men, but even theynever claim that women are targeted because they have limitedmobility and a greater sense of shame. The author does notreport if he ever asked the women themselves why the banktargets them and if they concur with his hypothesis.

Another weakness of the book is that it is based on thestudy of one village and as a result it suffers from fallacy of

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compositionwhat is true for one village may not be true forall villages where Grameen Bank has a branch. Village studiesin itself are very useful as they help to understand the dynam-ics and the qualitative changes that occur when poor womenhave access to credit. This book was successful in that respect.However, the author failed to underscore the inherent limita-tion of studying one village and failed to warn the reader notto generalize the conclusions.

Women in rural Bangladesh are, in general, shy and appearsubmissive. However, the author failed to point out how thischanges dramatically once they become members of GrameenBank. In fact, Grameen borrowers who have been in the bankfor a longer period are almost always less shy and dominated,and more assertive, than those who have recently joined. Toquote Achia, one of authors respondents:

Before I joined the bank, I was very introverted andshy to speak in front of people. When I came to myhusbands homestead ten years ago, people used to gos-sip about my quietness. After I joined the bank I havestarted to change my behavior. Within five years withthe loan center I have become more vocal. In the cen-ter we meet different members, we talk with eachother, we quarrel with each other, we fight for eachothers kisti, which makes one more open and vocal.Now I am the center chief, and shouting and screamingat other members is my regular job at the center meet-ings. In fact, the survival needs in the center makes onemore vocal and self-expressed. (p. 95)

Afterward, even the author concedes, Grameen borrowersin general are more vocal and articulate compared to otherwomen in the village who are not Grameen members (pp.9596).

Grameen Bank had to face the same patriarchal norm thatthe author mentions to implement its policy to target mainlywomen. In its earlier days the bank faced opposition from hus-

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bands and religious leaders for its policy of lending almostexclusively to women. Even highly educated civil servants andprofessionals were opposed to lending money to women whileso many men were jobless and without income. One officialof our central bank even wrote me a menacing letter demand-ing that I explain fully and immediately why a high percent-age of your borrowers are women. Curiously, my reply askingwhether the central bank had ever asked the other banks in thecountry why they have such a high percentage of male bor-rowers went unanswered (Yunus, 1999, p. 73). Even theharshest local critics of Grameen Bank concede that the biggestachievement of Grameen Bank is the empowerment of women,not enchainment as suggested by the author.

We are told repeatedly that the dominant patriarchal normis hard to break and Grameen is only perpetuating this norm.The author does an excellent job of explaining why the patri-archal norm is dominant. Instead of suggesting that GrameenBank is perpetuating the stranglehold of the norm, the authorshould have pointed out how and to what extent the bank hasweakened the patriarchal norm. Readers are never told howGrameen is slowly eroding the patriarchal norm and, evenafter two decades of existence, still has to fight that norm.Contrary to what Rahmans hypothesis might suggest, the sit-uation has improved more for women members of GrameenBank, though perhaps not as much as some of its adherentssometimes claim. At a minimum, membership in the bankenabled women to get out of their homesteads to conduct busi-ness with an outside male for an extended period without beingaccompanied by a male relative. Anyone who visits a villagewhere Grameen Bank and other NGOs are in operation isstruck by how patriarchy has been put on the defensive, if notentirely defeated. How this happens, and why it is not hap-pening faster, are exciting subjects for further study.

Pursuant with his theme of dominant patriarchal norms,the author criticizes the policy of electing uneducated womento the board of the bank. Not many banks in Bangladesh,

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indeed even banks in the USA, can claim to have 9 out of 12female board members. Granted these women may not under-stand the intricacies of modern finance, but they are smart andsavvy enough to understand the ramifications of policychanges at the field level. Putting women on the board will notchange the countrys historical norm of male dominationovernight. But it is a symbolic change and a very good begin-ning at that. The authors own data reveals the efficacy of thepolicy quite effectively. In chapter 5 he tells us the story of amemberSofiawho organized most of the centers in thestudy village and controlled the loan operation of these centersthrough her informal network. She was so empowered thatthe patriarchal male bank worker had to listen to her deci-sions about new loan approvals, and use her influence in theircenters to collect installments (p. 86). Then later in chapter 7the author seems to share the frustration of the bank workerthat Sofia did not get elected to the board even though she waselected as a candidate by the borrowers of her own branch andseven other branches. I wish the author had also reported thefeelings of the borrowers in the study village when Sofia didnot get elected to the board. I would not be surprised if theborrowers themselves did not also feel disappointed, becauseif Sofia had been elected it would have brought status andencouraged pride for the study branch (134135) as did thebank workers. If this is not a sign of empowerment I dontknow what is.

He chides the bank appropriately for not having enoughfemale staff and suggests that this is another example of the dis-crepancy between public and hidden transcripts. The authorsown story suggests why it is so difficult for a female to hold ajob as a bank worker in rural Bangladesh. He describes a pub-lic fight between a center chief and the husband of a borrower,and how the female bank worker failed to stop the fight. Theseverbal altercations later led to a fight between the two lineagesin the village (p. 125). The patriarchal norm that Aminur crit-icizes is the biggest hindrance to recruitment of female staff.

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He is justified in criticizing the attitude of male bank workerswho perpetuate the stereotype that female workers are not aseffective as male workers. A possible way to increase femalestaff will be to recruit locally. Local recruitment might createprecisely the kind of problem that the author was alluding tobank staff colluding with their relatives or members of theirown clan to control access to credit, or local staff being caughtbetween their obligation to local forms of domination andserving the banks mission. To avoid these conflicts, Grameen,as a policy, does not hire staff locally and male bank workersare not allowed to work close to their home villages. But thisargument cannot be used to explain why more female staff can-not be hired at the head office.

The accusation that the majority of women pass on theirloans to men has been made before. But to claim that thissomehow precludes womens empowerment is a mistake. Itsuggests that women are empowered only if they always usetheir loans independent of men. This dichotomous indicator ofempowerment does not match the reality of life in ruralBangladesh. Households in Bangladesh are managed jointlyeven though men dominate in the distribution of authority anddecision making. In this context, a more realistic measure ofempowerment via credit would be to evaluate whether credithas had an equalizing effect on household decision making.

The allegation of increased incidence of violence as a resultof membership in the bank is equally problematic. Becausethere is no benchmark, we cannot definitely say whether vio-lence has increased. It could well be true that the increasedincidence of violence may be a nationwide trend. The authorhimself reports that violence has decreased for some members,a finding other researchers have confirmed. Arguably, scarcitywithin the household is the major source of mens violenceagainst women. Previous studies as well as Kabeers analysis(1998) clearly show that credit has a powerful mitigating effecton this source of violence, because it helps to reduce scarcity.Interestingly she found that the incidence of violence increased

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for women who were speaking up and questioning maleauthority for the first time, empowered by credit.

In the end, the author himself falls victim to his ownmethodology. He has his own public and hidden transcripts. Inthe main body of the book (chapter 6) he criticizes the bankspolicy of collecting interest payments and subscription toemergency funds in the last weeks of the loan cycle. Then inthe endnotes he writes By the end of 1996, the Grameen Bankhad modified the repayment terms. Now the interest paymentsare spread over fifty weeks and accepted with the installmentpayments. Collection for an emergency fund was terminated in1996 (p. 127). He does not tell us what led to this policychange. The actual cause behind the policy change was aprotest by borrowers in Tangail. Another change in policy thatoccurred as a result of this protest is that borrowers were givenownership of savings in the group fund after ten years of mem-bership. This shows that when the members hidden transcriptbecame a public transcript through organized protests, thebank changed its policy. Earlier we mentioned the authorsreservation about the effectiveness of having poor illiteratewomen on the board of directors. Putting women on the boardis another means through which a hidden transcript can bemade public.

I found chapter 7 the most interesting part of the book. Inthis chapter the author shows that there is a short-term trade-off between sustainability, and poverty alleviation and empow-erment. He does a good job of explaining how the objective ofachieving sustainability too rapidly can undermine the originalsocial mission of poverty alleviation and empowerment ofwomen. Critics of microfinance argue that to attain greateroutreach, MFIs have to be sustainable at any cost. Aminur sug-gests that to meet the challenge of financial sustainability, bankworkers employ coercive methods and use local power hier-archies in installment collection and loan investment instead ofthe borrower empowerment and solidarity envisaged by thebanks in its public transcript (p. 127).

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The book shows that trying to achieve sustainability byscaling up the outreach created problems for Grameen Bank.The increased pressure for enhanced disbursement promptedthe banks staff to ignore well-known policies of the bank, forexample, not to approve loans that exceeded borrowers capa-bility to repay and not to give loans to persons who do notmeet the official criteria. The author suggests that to attain sus-tainability the staff gave multiple loans to the same member.This created the problem of cross financing, i.e., using oneloan to payoff another loan, and increasing the debt burden forthe household. Given the insecurity and uncertainty thatcomes with living in rural areas, the debt burden had adverseconsequences for the welfare of the household and manyhouseholds are falling in a trap of perpetual debt cycle. Thepressure of sustainability, again, led to disbursement of loansto the better-off households. Since better-off households haveless to loose by defaulting, this created serious problem inmaintaining the repayment rates. In other words the bankended up in a vicious cycle of increased disbursement toincreased default to increased lending to better-off householdsto further increased default.

The findings of the book provide some valuable lessons forGrameen and MFIs in general. It suggests that the increasedsize of the organization is severing the chain of communicationbetween borrowers, staff in the field, and upper level manage-ment. During the early days of the bank, a worker could anddid communicate his or her personal observations to the man-aging director. Many of the early innovations and ideas camefrom these types of communication between bank staff andupper level management. As the staff has grown to 13,300,these types of open and constructive exchanges have becomemuch more difficult.

The most worrisome finding from this book as well asfrom other researchers is that a collusive arrangement is devel-oping between bank workers and influential borrowers, withthe latter using this to foster their own interests and expand

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their own influence and networks. The author describes indetail how this power hierarchy develops (p. 84). The reasonfor keeping the group size limited to five people and for therotating of center chiefs was to neutralize the influence of oneor a few borrowers. As a policy, staff are rotated among cen-ters every year and they are transferred out of a branch afterthree years, a practice that is followed to avoid the problem ofcollusion between staff and the members. The book suggeststhat the attempt is failing.

Another finding of the book is that the members areunaware of many of the policies and their implications.Because of the pressure to attain sustainability, the workloadof the staff has increased enormously. They have less time toexplain the policies and procedures and to provide social inter-mediation, i.e. to give advice on loan use, and so forth. Manymembers feel that the bank has lost sight of its mission and hasbecome a bank of loan collection only. This is quite unfortu-nate because the bank is losing the trust of the members that ithas worked so hard to attain. At the end of the book theauthor writes, The Grameen Bank has shown past capacity tobring changes in its policies; it therefore holds the promise toincorporate the policy recommendations of this research forthe betterment of the institution and its poor borrower (p.153). I want to end this review by agreeing with the authorentirely on this point and by expressing similar optimism.

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NotesI am grateful to Jonathan Conning, Michael Cain, Tanweer Akram, and

Dustin Buehler for comments.1. As of May 2000, Grameen Bank is in operation in 40,032 villages; this

amounts to more than half of the villages in Bangladesh.2. Naila Kabeer (1998) provides an excellent survey of the literature on credit

and women empowerment in Bangladesh. Her main thesis is that both the neg-ative and positive evaluation of womens empowerment through credit missesout an important dimension of the problemwomens own perception of whatcredit does to their lives.

ReferencesKabeer, Naila. (1998). Money cant buy me love? Re-evaluating gender, credit

and empowerment in rural Bangladesh. Institute of Development StudiesDiscussion Paper 363.

Rahman, Aminur. (1999). Women and microcredit in rural Bangladesh:Anthropological study of the rhetoric and realities of Grameen Bank lending.Boulder, CO; Oxford: Westview Press. ISBN: 0-8133-3713-5.

Yanus, Muhammad. (1999). Banker to the poor: Micro-lending and the battleagainst world poverty. New York: Public Affairs. ISBN: 1-89162-011-8 hc.

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