Two key components of the loan system implemented by the Grameen Bank of Bangladesh are:
A) Heavy penalties for late payments and constant individual monitoring of loan recipients by bank employees.
B) Formation of solidarity groups and peer monitoring of loan recipients within the same village.
C) Heavy penalties for late payments and peer monitoring of loan recipients within the same village.
D) Constant individual monitoring of loan recipients by bank employees and exclusion from receiving future loans in the event of default.

Question

Quizplus · Accepted Answer

The Grameen Bank's model is known for its innovative approach to providing microcredit to the impoverished without requiring collateral. Two fundamental aspects of this model are the formation of solidarity groups, which are small informal groups that apply for loans together and support each other in ensuring repayment, and peer monitoring, where members of these groups monitor each other's progress and help ensure that everyone meets their repayment obligations. This system fosters a sense of community and mutual responsibility, significantly contributing to the high repayment rates observed with Grameen Bank loans.

Two Key Components of the Loan System Implemented by the Grameen