Women and Microcredit in Rural Bangladesh: An Anthropological Study of Grameen Bank Lending

Abstract

As Rahman notes in his introduction, microcredit has become the paradigm for thinking about economic (p. 1). Since the limits of welfare-oriented approaches are now well recognized, an ever-growing wave of microlending initiatives are cloning Bangladesh's Bank model in efforts to alleviate poverty and empower the poor. Because of women's higher repayment rates and prioritization of expenditure on family welfare, many of these programs target women specifically, as a means for increasing project cost efficiency and for achieving more effective poverty alleviation. Rahman's study of one of the Bank's oldest village projects is part of a recent literature critiquing the global consensus that microlending to the poor is the key to economic development in the 21st century. Rahman challenges the unqualified success of Bank schemes based on quantitative survey studies to dispute claims that microcredit provides a cost-effective sustainable development model that improves peoples' quality of life. Instead, he argues that microlending to women, particularly, systematically fails to reach the poorest, has a limited effect on increasing household income and treats the symptoms rather than the social causes of poverty.Focusing on grassroots lending practices to women, Rahman critiques the Bank's hegemonic discourse of control that fosters a Grameen Culture through its Sixteen Decisions (code for proper behaviour) and through disciplining borrowers to consider prompt loan repayment their highest priority. His analysis makes an important contribution to the recent debates about the effectiveness of microcredit delivery as he repeatedly demonstrates how Bank culture exists within the larger structure of patriarchy that consequently retrenches partriarchal hegemony and reproduces new forms of domination over women in [Bangladesh] society (p. 51).Microcredit programmes extend financial services for self-employed livelihood projects to those who do not have access to the formal banking sector because they lack traditional forms of collateral (e.g., capital, property). To acquaint the first-time reader on microcredit with the premise of such systems, Rahman begins with a thorough explanation of the operation and philosophy of the Bank since its inception in 1976 (augmented by two Appendices); and he reviews the major studies on lending. His overview of the literature on women in development (WID) and gender and development (GAD) provides the context for his more detailed analysis of Bangladesh's gender and development projects since the early 1970s, particularly those of group-based institutional lending to women.Rahman systematically analyzes (chapters 5-7) each of the major tenets of the Bank's operation within the theoretical framework of Scott's hidden and public transcripts. Within this paradigm, he confronts the ongoing contradictions between ideology and practice in Bank culture. He persuasively demonstrates the connection between the financial success of the Bank and the debt-cycling of borrowers. The Bank's priority of achieving institutional financial sustainability through prompt and profitable returns to donors causes bank employees at the grassroots level to focus on increasing the number of loans disbursed and loan collection. This resonates with the current critique of microcredit in which financial sustainability takes precedence over social change objectives, thus undermining the goals of empowering women. By using the joint liability model of lending (e.g., peer pressure), both bank workers and group members impose intense pressure on borrowers for timely loan repayments. Many borrowers thus maintain their regular repayment schedules, but do so through a process of local recycling; that is, they pay off previous loans with new ones, often from local moneylenders charging high monthly interest rates, thereby increasing borrower debt liability. …