Per capita income in Bangladesh is estimated to be around 8,800 taka ($ 220) one of the lowest in the world. One can imagine what the income of the bottom half of population would be. It is a struggle for mere physical survival and basic human dignity.
Some of these families do not even have a piece of land to build a house on. They are homeless. It is extremely difficult, if not impossible, for us to fully comprehend the physical and psychological hardship, the instability, uncertainty, anxiety, and loss of self-esteem which homeless poor undergo each day.
Many of those who do own a piece of land find it beyond their means to build even a basic house. Most often the only building material they can afford is jutestick. These are placed side by side to form "wall" and "roof" of a "house". Except for providing some visual image of a hut, it serves virtually no purpose in protecting the inhabitants from the soaking rain in monsoon and incessant chilling breeze in winter. These huts cannot withstand even the moderate onslaught of nature. The cost of such a "house" ranges from 600 taka ($ 15) to 1,000 taka ($ 25).
Next step up from jutestick is bamboo for sidewall and hay or thatch for roofing. Hay and thatch are better roofing material than jutestick but not much more durable. As a result, almost every year, just before the monsoon sets in, these poor families have to find 1,000 taka ($25) to 1,500 taka ($37.50) to repair or replace worn out hay and thatch roof (Hasan, 1994:6).
For an equivalent amount of money in repayments 20 to 30 taka a week the Grameen Bank Housing Programme provides loans for a basic house with strong reinforced concrete (RCC) pillars, tin roof, bamboo walls, and sanitary latrine. For more established borrowers the programme also provides bigger loans for larger and better houses. Thus, in most cases, it is access to capital and not their capacity to repay that keeps the poor exposed to the savagery of weather. Resulting illness and sleeplessness constantly erode their earning potential. This is what is called a ‘poverty trap’.
3.2 Eligibility
The housing loans are only given to existing Grameen borrowers. To be considered for a housing loan, she must have already repaid her first one-year ‘working capital loan’ in full and must be on her second or subsequent ‘working capital loan’ with a meticulous repayment record. The homestead land which is most likely to be in the husband’s name must be transferred to her name. If the family does not own land, she can borrow additional money to buy some. The ‘Centre’ to which she belongs must be at least two years old, with excellent loan repayment discipline, and should be "dowry-free". Preference is given to homeless, landless; abandoned, divorced, and widowed women who have no income-earning male family-members. The first housing loan in the ‘Centre’ goes to the poorest and the most needy.
3.3 Loan Size
Initially, the Grameen Bank wanted to introduce a housing loan of up to 7,000 taka ($ 175) which was the amount put forward in Grameen’s initial proposal to the Central Bank (see Section 2.1). However, in 1984, with the agreement of the Central Bank, a housing loan of up to 15,000 taka ($375) was offered together with a ‘chouchala’ design. In practice the loans ranged between 8,500 and 15,000 taka, the amount depending on whether a new house was being built or an old one was being replaced (in which case some building materials could be reused). Under the Central Bank’s direction the amount was later revised to 25,000 taka ($ 625).
(Note: the word chouchala literally means "four roofs", referring to the hipped roofline of the house).
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A chouchala house, with Grameen Bank red and green symbol being displayed on the top of the door. In the foreground, the owner lady is working (agricultural processing) in the courtyard of the bari. |
The authors of this report feel that back in 1984, the Grameen Bank compromised its
position on the size of the loan and the design of the house. This was possibly to get the
Central Bank’s approval, and get the scheme off the ground. This impression is reinforced
by the fact that as soon the scheme was established, the Grameen Bank went back to its
original position and introduced the 7,000 taka loan together with a simpler, inexpensive
‘dochala’ design. This allowed the Bank to reach its poorest members. The dochala option
became very popular among the borrowers. Presently, dochala houses outnumber chouchala
houses 7:1. In early 1988, the upper limit for a dochala house loan was raised to 8,000
taka ($ 200), and again in late 1991 it was raised to 12,000 taka ($ 300). This reflects
not just the rise in prices of building material but also the increased capacity of Grameen
borrowers to spend more money on housing and their desire to live in better quality homes.
(Note: the word dochala literally means "two roofs", referring to the simple gabled roofline of the basic house).
3.4 Other Related Types of Loans
In addition to the above two types of home loans, Grameen provides loans for the purchase of homestead land. It also provides a loan for up to 1,000 taka ($25) to existing borrowers for the repair of old houses. Borrowers can also take out loans for the purchase of sanitary latrines and hand-operated tubewells for domestic water supply.
3.5 Quality of Homes
The Grameen Housing Programme endeavours to deliver homes which are :
- economical to bring them to the reach of the poorest members of the Centre;
- durable and safe to spare the owners the high recurring repair costs associated with
low-cost rural dwellings;
- simple and adjustable to local technology;
- comfortable.
(Source: Grameen Bank, RCC Pillar Manufacturing Manual)
3.6 ‘Dochala’ House
The dochala House has a recommended minimum size of 20 square meters. It is constructed on four reinforced concrete (RCC) pillars one in each corner and sunk deep into the ground to provide strength against high velocity wind and has a corrugated iron roof on a wooden frame. Every house has a sanitary latrine consisting of a sanitary slab and 4 to 5 RCC rings. The four pillars and sanitary latrine components are supplied at cost by the ‘Grameen Bank Building Materials Project’. The borrower has to purchase the rest of the building materials from the local market. This minimal intervention policy is deliberate. It aims at :
- encouraging opportunity for the incorporation of local materials and technology for
construction and maintenance of the house.
- allowing the owners the flexibility to vary their house by taking into account their
individual needs and desires as well as financial options.
- ensuring greater involvement of the owners in the building process which leaves them
with a sense of accomplishment and ownership.
- eliminating any possibility for suspicion that the Bank may have a vested interest in the supply of building materials.
Appendix F provides the suggested design and dimensions of a dochala house and a complete cost breakdown.
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An under-construction dochala house. A group-member is helping the owner lady in cleaning the plinth. Through the structure, other houses in the bari are visible, two of which (with tin roofs) are Grameen Bank financed houses. |
It should be noted that the design and dimensions that the Bank provides are only a suggestion.
The borrowers are at complete freedom to customise the design to their individual need and
taste. In fact, one study which surveyed 43 houses reports that "it is interesting to note that
not one house was encountered which conformed in all respect to the Grameen Bank’s design."
[Islam, 1989:27].
On page 26, the same study notes that "[The] policy of limited intervention has lead to great diversity in house forms. In each case it reflects the identity of the owner and his need for recognition in the community."
3.7 ‘Chouchala’ House
The chouchala design is similar to the dochala design, except it has eight RCC pillars instead of four, has a "hipped" roof instead a of simple gabled roof, is bigger, and uses more material.
This report does not include the design and cost information on chouchala house.
3.8 Sanitary Latrine
In line with "decision" number 9 which refers to sanitation and hygiene (see Appendix D), all Grameen houses are built with a sanitary latrine. This is a simple construction located outside the house, consisting of a sanitary slab, 4-5 RCC rings, and a super structure. The slab and the rings are manufactured by the Grameen Bank’s House Building Materials Project. The rest of the structure is built by the borrower.
3.9 Around the house
In keeping with Decision Number 4 which says "We shall grow vegetables all year round. We shall eat plenty of them and sell the surplus" a typical Grameen Bank borrower’s house is surrounded by vegetable patches and fruit and nut trees. This not only enhances the appearance of the house but provides much needed dietary input as well as a supplementary source of income. Grameen Bank is the largest seller of seedlings in Bangladesh. Many of the principles known in the West as ‘Permaculture’ are practiced by Grameen borrowers. (Note: Decision Number 5, "During the plantation season we shall plant as many seedlings as possible", complements Decision Number 4 mentioned above).
3.10 Interest Rate
Initially, while the cost of funds from the Central Bank was 2%, the interest rate charged was 5% (simple). After three years the Central Bank’s rural housing loan programme closed down due to dismal repayment performance. As the governor predicted, the rich villagers who borrowed 80,000-taka loans through the nationalised commercial banking system did not repay (Yunus, 1994:19). Some borrowers did not get around to paying even the first repayment instalment. The government of the People’s Republic of Bangladesh wrote off these loans as " bad debts that the poor were unable to pay". Thus the Grameen Bank lost this source of cheap fund and had to resort to the market-rate funds.
However, the 100% repayment of its borrowers allowed Grameen Bank’s housing programme to continue and expand. The interest-rate was then raised from 5% to 8% (simple) which is 7% below the market rate, and is now cross-subsidized by the 20% (simple) interest on the ‘working capital’ loan.
3.11 Collateral
Like the rest of Grameen Bank loans, the housing loans are given without collateral. However, all members of the Centre must approve the loan and sign a pledge promising to assist the loanee in constructing the house, and help repay the loan instalments if she is unable to repay. The borrower also has to sign a pledge promising to repay the house loan as well as her concurrent ‘working capital loan’, and to complete the construction of the house within 15 days. She must also undertake not to transfer ownership of the house to her husband or a buyer until the loan is fully repaid. These pledges are not legal instruments and cannot be enforced by law if the borrowers or their peers decide not to repay the loans. As the loan repayment rate has been 100% since the inception of the programme, and continues to be near-perfect, the need to introduce legal instruments and accompanying costs was never felt.
3.12 Disbursement of the loan
According to Grameen Bank procedures, the disbursement of the housing loan takes place in a Centre meeting in the presence of all Centre members. Whatever little risk there is in carrying such a large amount of cash from the branch office to the Centre meeting is assumed by the bank staff, and not left to the borrower if she were to come and collect the loan amount from the Bank. The loan is disbursed in two or three instalments to avoid idle money in the borrower’s possession costing her unnecessary interest.
Needless to say this is an event of great celebration, with many tears and much laughter. Poor women hug each other and affirm their mutual sisterhood. The days when a monsoon downpour could soak her new born baby, and incessant winter breezes could torture her precious little ones all night, are about to be over. This is indeed all her dreams come true.
The whole process from selection of the loanee to the disbursement of the loan takes 3 to 4 weeks. In special cases (such as a flood) a loanee can get her loan approved within seven days.
3.13 Terms of repayment
Borrowers are expected to repay the housing loan in weekly instalments within as many years as thousands of taka they have borrowed. For example, a borrower who owes 7,000 taka can take as long as 7 years to repay. Hence the weekly repayment instalment can be as low as 20 taka (50 cents). It is heart-breaking to note that the poor who are outside the Grameen Bank system have to spend more money repairing and replacing worn out hay and thatch roofs of their dilapidated houses (see Section 3.1).
In practice most borrowers are able to pay at an accelerated rate, thus discharging the loan quickly and freeing up capital for recycling. One study reports that 100% of the poor sampled were found to be looking forward to applying for housing loans. They were not at all scared of asking for a large amount of credit. The study regarded this as a "highly positive sign of confidence and economic strength among the rural poor." (Islam, 1989:23)
3.14 Land Title in Women’s Name
In Bangladesh, poor women get the roughest deal in life. It is her bad karma that an endless cycle of tragedies befalls the husband and family; that rain does not come on time, that crops fail, that daughters are born. When there is food the husband eats first, then the sons; she would share the leftovers with her daughters. More often than not, she is beaten, abused, belittled, and told to return back to her father who gave less dowry than was implied in the initial stages of the marriage negotiations. In a country where family laws are hardly enforced, women live in a constant fear that they and their dependent children will be abandoned, or that the husband will get himself a second wife.
In desperation so many women kill themselves that it hardly makes a news, or is considered worthy of a police inquiry. Very often they kill themselves by drinking kerosene or drowning. Some hang themselves on a tree even though that is breaking purdah and bringing shame to the family: her body was exposed to the male eyes of the entire village; her soul will never rest in peace in Allah’s heaven.
Bangladesh is the only country in the world where women die before men. Within six months of being born, the under-nourished baby girls lose their natural longevity advantage over better fed male children. It is common for women to resort to the only way they can contribute to family’s income: by economising on food for themselves. Growth stunting through starvation in women is only too obvious in the Bangladeshi country side.
Grameen Bank has a simple policy regarding the land title. It will only provide housing loans to its borrowers which in 94% of the cases are women provided that the borrower holds title in her (or his) own name. Hence, if a family would like the benefit of a housing loan, the husband has to detitle the land and transfer it to his wife’s name. Special legislation in Bangladesh now allows such transfers to take place without the usual fees.
It has been found that land title in the woman’s name has a magical power to bring love, commitment, and stability to the marriage. In fact, the whole work of the Grameen Bank empowers women, and puts them on as equal a footing with men as possible in this conservative Islamic society.
3.15 Organisational Issues
There is a close supervisory and monitoring linkage between the bank worker at the lowest level and the branch managers, area managers, and zonal managers at higher levels. Regular reports, oral and written, are processed at appropriate levels. Senior officials, like the zonal and area managers, very often visit the field.
The supervision from the head office is less rigorous. This is because of Grameen Bank’s system of operation which puts emphasis on area and zonal level decision making. The head office receives weekly, monthly, half yearly, and yearly reports from the zonal offices on all aspects of this housing loan programme (along with other programmes). Regular review meetings are held within the Monitoring & Evaluation Department at the head office to examine all loan programmes of the Bank. There is no separate unit which solely monitors the housing loan programme. This again is because the Bank’s operational system considers all programmes to be a part of an overall social and economic development programme.
Elaborate accounting and statistical records are kept for the house-building loans. Appendix G includes some of this data.
