Interest rate charged by Grameen Bank

With Muhammad Yunus entering Bangladesh politics, the politicians have found an easy way of trashing him by talking of the 'exorbitant' interest rate charged by Grameen Bank.

Stung by criticism, the Deputy Managing Director of Grameen Bank Dipal Chandra Barua writes in "The New Nation", the different loans and interest rates charged by his bank.

• Basic Loan: Income generating loan of Tk. 1,000 for borrowers with a year-end interest of Tk. 100 equivalent to 10% at flat rate. Due to the loan being paid in weekly installments the interest rate stands at 20% on declining balance.
• Housing Loan: Interest rate on housing loans is 8% (declining basis) with a payback period of five years. This interest rate is halved, when calculated at flat rate. Around seven hundred thousand homes have been built using this loan scheme.
• Higher Education Loan: Interest is 0% i.e. no interest is charged while students are studying. A 5% is charged as service charge after graduation. This scheme allows children of our members to obtain higher education in various fields like healthcare, engineering enabling them to finish their honours and masters degrees.
• Struggling Member Programme: This special programme is designated for beggars, charging 0% interest. As of December 2006, about 90,000 beggars have received loans under this programme.
• Village Centre Construction Loan: Members take this loan for constructing local village centers. No interest is charged i.e., interest rate is zero.

He also states that "Government financed agencies like PKSF and their affiliated NGOs provide loans at a flat interest rate of 12.50% that becomes 25% when calculated on a declining basis."

See also the article in The Daily Star Yunus, politics and interest rates by Safi Khan.