Grameen Bank Approach
MBK has adopted the Grameen Bank methodology initiated by Nobel Laureate Professor Muhammad Yunus and further developed by his colleagues in Bangladesh.
MBK focuses exclusively on the bottom 25 percent of the households. The programme is implemented using a specialized delivery mechanism and with specialized people. Its system consists of seven principles:
- Provide small working capital for additional income-generating activities (Rp.1-1.2 million or $100 in the first cycle) to be repaid in small instalments over a period of up to one year.
- Clients are members of a self-selected group (5 women) and of a village centre (20-25 women).
- There is no collateral and no guarantor, and other women in the centre are not required to pay for defaulters, however they provide peer support.
- Clients must repay their working capital in full on a timely basis
- Clients attend weekly village centre meetings, during which they repay their working capital in weekly instalments
- The working capital must be used only for agreed income-generating activities.
- Field staff visit their clients in their villages, the clients do not visit the bank, the reverse of conventional banks.
Operational Manual and Forms
Based on the experience of leading microfinance institutions in Indonesia and abroad, as well as its own experience in Indonesia, MBK has developed operational manuals and forms to implement its field programme (see Resources).
Four Key Success Factors
MBK believes that the implementation of a successful microcredit programme requires the following four factors (see figure below):
- High degree of credit discipline
- Human resource development
- Accounting and efficiency
- Strong supervision and control all the way to where the lending activities takes place
