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Page 2 of 10
Back to the Drawing Board
When the repayment situation did not improve as desired, we thought this would be a good opportunity to be bold, and to dare to design a new Grameen methodology, incorporating all the lessons learnt, and the wishes and the desires that we accumulated during the quarter century of Grameen's operation. We debated about it. But finally we decided in favour of it. We sat down to design it part by part, piece by piece, then pilot-tested the system quietly in a few branches to fine-tune the design; tried again in larger number of branches; reworked it; and in the end, came up with the architecture of a new system that we all liked. All the 12,000 staff participated very actively in designing the product at all the stages of its development. Some were critical in the beginning, but by the time it was ready, everybody loved it. The staff was electrified with enthusiasm - because response from the borrowers was so positive. Borrowers who did not show up at their centre meetings for years, started showing up to talk about the new system. Soon they were signing up to start all over again and repay the old loans with the accumulated interest. No reduction in the debt was offered. Still they opted to return.
The designing process formally began on April 14, 2000 (Bengali New year's day). Field-testing began immediately. By the beginning of 2001, the new system, "The Grameen Generalised System" or GGS was ready for launching. We undertook an intensive staff training program for all the 12000 staff. Initially there were signs of reluctance from some staff. There were grumblings, negative jokes, and expressions of frustrations. Some of it we expected, but some we did not. Top management went ahead with understanding and patience. Training continued cycle after cycle. Soon uneasiness about the new system disappeared. Staff became great admirers of the GGS and wanted to put it into immediate implementation in their branches. All the while we were busy designing and debugging the system, our real worry was how to manage the transition from the Grameen Classic System (GCS) to GGS in 41,000 villages without subjecting hundreds of thousands of illiterate borrowers to a big shock, and messing up the accounts in 1175 branches. Transition was very carefully and meticulously choreographed, and put into action by March, 2001. By April, 2002, two years after we began the process, Grameen Bank II has emerged. The transition is now complete. The last branch of Grameen Bank switched over to Grameen II on August 7, 2002, completing the process of transition. The new Grameen Bank II is now a real and functioning institution. This second generation microcredit institution appears to be much better equipped than it was in its earlier version.
In the Grameen Bank II, gone are the general loans, seasonal loans, family loans, and more than a dozen other types of loans; gone is the group fund; gone is the branch-wise, zone-wise loan ceiling; gone is the fixed size weekly installment; gone is the rule to borrow every time for one whole year, even when the borrower needed the loan only for three months; gone is the high-level tension among the staff and the borrowers trying to steer away from a dreadful event of a borrower turning into a "defaulter", even when she is still repaying; and gone are many other familiar features of Grameen Classic System.
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