GRAMEEN in the UK

2. GRAMEENin the UK Set up, mission and future development Background The Grameen Bank in Bangladesh is the institution that pioneered ‘microcredit’ for the poor, beginning as an action research project in 1976. It has now become the world’s largest bank that caters exclusively to the financial needs for the financially disadvantaged around the world. To date they have disbursed over US$11.35 billion in small loans for self-employment to 8 million people, mostly women. The Grameen Bank approach uses a well-designed and widely tested methodology of peer group borrower groups which has been successfully replicated in more than 40 countries around the world. At the invitation of the Glasgow Caledonian University in December 2009, the Grameen Bank conducted a Fact Finding Mission within the city of Glasgow where there was identified a great opportunity for a microcredit programme due to the high rates of unemployment and deprivation statistics, as published by the Scottish Government. There are communities where individuals have very limited access to financial services, partly because the current financial institutions that provide credit require to undertake background credit checks and/or seek collateral under terms of their lending criteria. Based on the understood areas of priority need - as identified by Government unemployment and poverty statistics - Grameen in the UK will initially support clients within the Glasgow City boundaries thereafter moving out to West Dunbartonshire, North Ayrshire and Inverclyde regional authorities once staff resources to facilitate future demand are in place. Whilst the primary objective is to support at least 1,500 households within these areas in the next 3 to 4 years, the longer-term objective will be to create and operate a sustainable microcredit program that reaches increasing numbers of families from a network of branches located across the UK. Whilst necessary adaptation will be made as required for the UK market, the programme will be implemented in accordance with the essential values and principles of the Grameen Bank approach.

3. GRAMEENin the UK Grameen methodology The credit delivery and recovery mechanism of Grameen Bank forms the core of Grameen methodology used in the UK; • Focus on the most disadvantaged communities with greatest need. • Borrowers ‘self select’ themselves into groups of 5, each running / planning to run their own separate businesses. • No financial background checks or collateral required. Decisions based on mutual trust. • Each group attends a maximum 5 day - 2 hours per day - ‘advice and training’ course to ensure all have awareness of Grameen process, how to run a business, operate a bank account, budget, etc. • All services are provided to clients within their communities at a location and time of their choosing. • The borrowers choose their investment activity on their own , with peer group support if required. • All loan transactions are conducted openly within the groups – from approval through to collection. • Different levels of loans are available for future business growth – up to £1000 initially then £2500 in year 2, £5000 in year 3. Approval for future loans is dependant on overall group meeting attendance (greater than 85% expected) and group members repayment record. • Repayments are broken into weekly instalments to make it easier for the member ( up to 4 weeks payment holidays allowed, one weeks notice required). • Integration of a savings program through Tesco Bank for future financial security.

4. GRAMEENin the UK Loan products available The successful repayment of the First Tier Loan is required to gain access to additional and higher amount of loans for most borrowers; • First Tier Loans The First Tier Loan is the basic loan offered to all new members. The loan sum will range up to a maximum of £1000 with repayment over a maximum of 52 weeks. • Second, Third Tier Loans & Subsequent Loans Second Tier Loans of up to £2500 and Third of up to £5000 may be offered dependant on attendance at Group meetings and repayment history. The loan terms will again be up to 52 weeks with flexible terms available at the discretion of the Lending Officers. Further loans may be made available thereafter at the discretion of our Lending Officers. • Special Loans There may be opportunities for seasonal income generating activities in various localities in Scotland. Based on the client demand the CEO may choose to introduce Special Loans that offer the clients of Grameen the opportunity to take advantage of these seasonal activities for additional income generation. • Micro Enterprise Loans Grameen in the UK retains the right to provide additional loans to assist in the further development of any existing businesses. Charges As a non profit charitable foundation future financial sustainability is key to ensure long term viability of the programme. Whilst no administration charges are applicable for any services provided, an appropriate interest rate is applicable from 17.95% to 23.95% on a reducing balance basis ( APR 19.5% to 26.8%)). For illustrative purposes - an initial loan of £1000 over a 52 week period equates to an overall interest payment of £119.39.