Five years on

Batch one: our very first 9 clients (account numbers 0001 - 0009) who joined during March 2007.

Three of these nine accounts reached the savings target of 23,000 taka and withdrew that amount. So what did they use the savings for? 

* 0004 used the withdrawal to stock his small medicine shop (his main income source - he has no land). He had originally told us he'd use it for his daughter's wedding, but finding that he reached the target quickly, he decided to invest it instead in his shop.

* 0007 used his in his small general stores: he is a young unmarried man living with his father who trades in hides. His use of his savings is in line with what he told us when he started: 'for my development'.

* 0008 used hers as she had intended - to marry off her daughter. But she couldn't put all of it into this use because she had to use some for medical treatment of her husband and for consumption while he was ill. This is a quite poor family - the husband is a market porter.

Four of these nine accounts have never withdrawn any savings. What, then, are their plans?

* 0001 has 21,000 in her savings account: she will use it to buy a milk cow and for her son's education, she tells us

* 0002 has 10,000 in savings: she has no plans to withdraw yet - she tells us she'll go on saving 'for my better future'

* 0003 has 8,500 in savings: this is a poor family (the husband works in a shop) and they have 5 daughters, only one of whom is yet married. The savings will be put towards the marriages of the remaining four daughters, they tell us.

* 0009 has only 3000 in savings.He is a low-paid maintenance staff of a government hospital. He is not at home this month so we have not been able to ask him his pans for his savings, nor why he has saved so slowly.

In general, how did these first nine clients use their loans?

Of the eight we spoke to, four used their loans all or mostly for small shops they own. One used them partly in a shop and partly for medical treatment. Two others also used their loans partly for medical treatment and partly for consumption (including marriage expenses). One other used the loans partly for consumption and partly to repay other loans.

Three of these nine clients have closed their original P9 accounts. Two of them later opened fresh P9 accounts. Why did they do that? 

* 0004 closed his account soon after withdrawing 23k taka (see above). He is a shopkeeper who also has considerable savings in another of our accounts - P5. He found P9 'an excellent way to save up quickly', but for the time being is happy to hold his savings in P5.

* 0005 closed her account after getting to the 5000 taka level loan, but she has now opened a new account (0898) and is borrowing and saving again. The family had paid a very large sum to a broker in an attempt to send their son abroad to work, but they were cheated and lost all the money, leaving them in debt and without assets. They closed the account thinking themselves 'now too poor to run an account' but after discussions with staff decided to open a new account. 

* 0008 closed her account about 6 months after withdrawing her 23k savings which was spent on marriage and consumption and medical costs (see above). They told us that things have gone so badly wrong for them that they no longer felt up to running any kind of account. However, they have since rethought that, and in mid-May opened a fresh P9 account in the name of their son (account number 0905).   

Batch two: 10 clients (account numbers 0010 - 0019) who joined during April 2007. 

Six of these ten accounts reached the savings target of 23,000 taka: five of them withdrew that sum, while 0019 has still not withdrawn and holds 43,665 taka (about $550) in his savings. All six continue to borrow and save.

Between the ten of them, they have borrowed a total of over 700,000 taka (about $8,750) of which they have repaid $7,750. They have saved $3,050 of which they have withdrawn $1,500, leaving them with balances totaling $1,550. These are rather large sums for people who are mostly very poor.

None of these ten has closed their account, and all are active: six of them pay in daily, while just two of them pay in only rarely.

Five of them have never withdrawn any savings, suggesting a desire to hold savings over the long term.

We have been interviewing these clients recently. Here are some highlights, organised by recurrent themes.

Theme 1: the top-up is useful to small businessmen.

The father of client 0010 runs a tiny shop selling animal foodstuff; client 0014 is better off, with a small drugstore; client 0015 sells electrical parts; 0016 is the best-off of this group and has failing gold shop and a prospering firewood business. All of them volunteered how much they like the top-up system (see the rules), mostly because it helps them manage inventory better than any other service they know of. 

Theme 2: the continuing importance of daughters' marriages.

Anyone familiar with the rural Bangladeshi scene is aware that finding cash for daughters' weddings is a major worry and a major aim of financial intermediation. This is reflected in the behaviour of this crop of clients. Client 0010 is a schoolgirl who saves with cash given by her parents. When she first reached 23,000 taka she withdrew it and put it into her father's business. Now her mother is determined to save 50,000 to get her daughter married. 

Client 0011 has used past loans and withdrawals for school fees; now she is focused on marriage costs for her only daughter. 0013 used her first withdrawal of 23,000 taka to part-fund the marriage of her first daughter, and now she is saving for the second daughter's marriage. All three clients noted that even though the amount they can save in P9 may not be enough to finance a wedding in total (and must be supplemented with sales of assets, and loans) P9 is by far the most helpful system they have for dealing with marriage expenses.

Theme 3: complex lives.

Client 0010 features in both the two previous themes. Their success with P9 top-ups for business, and with saving towards marriage, has to be set against a difficult background. A local boy fell in love with the account-holder, who is a schoolgirl. She and her parents rejected him. He got into a fight and bit the schoolgirl's older brother. The parents felt compelled to start a legal case against him. This costs a lot in legal fees, and in forced payments to the police each time they come to the village to 'investigate'. They also felt compelled to safeguard their child from scandal by getting her married off as soon as possible - hence their current interest in saving hard in P9.

Batch three: 10 clients (account numbers 0020 - 0029) who joined during May 2007.  

All ten of these clients are still in P9 (though one saved up, withdrew a large sum, closed his account and then opened a new one). But they are not as active as Batch Two (see below) since several of them pay in somewhat infrequently.

Nor have their transactions been quite as large, in total, as Batch Two. Between the ten of them, they have borrowed a total of about $6,250 of which they have repaid $5,200. They have saved $2,050 of which they have withdrawn $850, leaving them with balances totaling $1,200. And only two of them have so far saved up to the 'target' amount and withdrawn sums of 23,000 (another is close to doing so). However, one other who has never withdrawn holds currently $350 in savings. Altogether 7 of the ten have never withdrawn, being content so far to use the liquid part of the loan when they need cash, and to save for some future need.

Behind these numbers, as ever, are some interesting stories. Client 0025, for example, is a beggar whom we have known feor a long time. She once tried joining Grameen Bank's 'Struggling Member' scheme (a sort of 'Grameen Lite' with very small loans for the extreme poor) but it didn't suit her. She likes P9 for its flexibility which adapts to her extremely uncertain cash flow (she often uses the 'top-up' facility). This has been especially helpful recently, as she was caring for her mother during a long terminal illness, and trying to cope with the fact that her elder daughter has married and left to live with her husband's family. She wept as she told us her story. She plans to save up 20,000 taka in P9 to finance the marriage of her second daughter. So far she is a a little short of 4,000 taka. 

Batch three: 10 clients (account numbers 0020 - 0029) who joined during May 2007. 

All ten of these clients are still in P9 (though one saved up, withdrew a large sum, closed his account and then opened a new one). But they are not as active as Batch Two (see below) since several of them pay in somewhat infrequently.

Nor have their transactions been quite as large, in total, as Batch Two. Between the ten of them, they have borrowed a total of about $6,250 of which they have repaid $5,200. They have saved $2,050 of which they have withdrawn $850, leaving them with balances totaling $1,200. And only two of them have so far saved up to the 'target' amount and withdrawn sums of 23,000 (another is close to doing so). However, one other who has never withdrawn holds currently $350 in savings. Altogether 7 of the ten have never withdrawn, being content so far to use the liquid part of the loan when they need cash, and to save for some future need.

Behind these numbers, as ever, are some interesting stories. Client 0025, for example, is a beggar whom we have known feor a long time. She once tried joining Grameen Bank's 'Struggling Member' scheme (a sort of 'Grameen Lite' with very small loans for the extreme poor) but it didn't suit her. She likes P9 for its flexibility which adapts to her extremely uncertain cash flow (she often uses the 'top-up' facility). This has been especially helpful recently, as she was caring for her mother during a long terminal illness, and trying to cope with the fact that her elder daughter has married and left to live with her husband's family. She wept as she told us her story. She plans to save up 20,000 taka in P9 to finance the marriage of her second daughter. So far she is a a little short of 4,000 taka. 

Batch four: 6 clients (account numbers 0030 - 0035) who joined during June and July 2007. 

We are dealing with June and July 2007 together in this batch since only 6 clients joined in that two-month period. 

All but one of these six clients still have taken plenty of P9 loans. One has taken 6 loans (biggest 13,000 taka), another three clients have taken 5 loans (and one of these has also taken 3 top-ups), another took 4 loans and just one client took only one loan. None of them has ever withdrawn any savings.

It seems odd, then, to find that despite this record, two of the six haven't transacted for several months and another three pay less often than the average for earlier batches. This report then gives us an opportunity to look into the varied reasons why some relatively active clients stop transacting or transact infrequently.

Three cases involve clients leaving the area, but... One of these cases (account 0031) reveals the utility of the cash-loan element of the P9 system as opposed to the saved element. The client was a school student who hoped to get a job overseas. He took 5 loans and three top-ups, totaling almost 26,000 taka and saved 8,500 of them, so he took just over 17,000 taka in cash. This he used (along with other sources) for processing his passport and emigration costs, and he left for Dubai in December 2011. By then he and his family had paid down enough of his loans to leave his P9 loan outstanding balance somewhat smaller than his savings balance and this ensured that he did not leave a debt behind for his mother. She has paid in small amounts on his behalf very occasionally since. The family counts their use of P9 highly successful. There is now 8,555 taka in savings and a loan outstanding balance of 7,320.    

Account holder 0032 left the area for the port city of Chittagong a year after opening her P9 account leaving behind a loan balance of 1,800 taka and savings of just 666. This, then, is an example of the happily rare case of lending risk turning sour on us. Another client (0034) shifted his furniture business to a neighbouring town: at that time his loan and savings balances were equal. These two accounts have been left open temporarily as we await definitive news of what these clients intend to do.

The three other cases each have a story behind them. Client 0030 has taken 5 loans (totaling 23,000 taka) and right now her savings and loan balance are roughly equal at around 8,000. She is married to a boatman with a very irregular income, there are three school-age children and the family is landless and illiterate. The cash element of her P9 loans has mostly gone on boat repairs and medical treatment. She is a Grameen bank client and her current loan from that source is on a larger scale than her P9 borrowings: her last Grameen loan was 30,000 taka. Her husband is using the Grameen loan to help finance a better boat, leaving our client to use P9 as a slow-but-sure way to build up savings for her daughter's marriage. She pays in a small amount (often as little as 10 taka) every few days.

Client 0033 gathers and sells firewood. Until recently he did this from a small shed in Hrishipara village, and transacted in P9 regularly. But he gave up the shed and now works as an itinerant firewood seller, and the fact that he is no longer available on a daily basis has sharply reduced his transactions. Discussions on going on as to how to make it easy once again for him to pay in. The last of these six clients is another case where a change in daily habits has led to a downturn in his transactions.

Batch five:  13 clients (account numbers 0036 - 0048) who joined during August 2007.

Six of these thirteen clients have reached the savings target of 20,000 taka or more, at least once. This month, we will review the circumstances in which they achieved this. 

The rich, the poor, the religious, and the secretive...

Client 0037 is a six-year old girl. Her father, who runs a small stall selling cigarettes, tea and betel nut, is poor in at least two senses - his income is low and irregular, and his status is low, partly because he has no home of his own and lives in his parents-in-law's compound. The account is run by his wife, the girl's mother. They have used the account actively, taking 15 loans and 17 top-ups in the five years. The biggest loan was 13,000 taka. They pay 20 taka a day almost without fail into their account, sourced from the stall, and so far they have withdrawn 20,000 taka of savings, then again 11,000. In the long term the purpose of the account is the girl's future, but in the short term everything goes into the stall: the big savings withdrawals have funded some improvements and the loans and top-ups are used for maintaining inventory. They find the top-up system particularly useful for paying suppliers at short notice. The family also has a P5 account with us, and the wife is a member of Grameen Bank. 

Client 0038, by contrast, is quite well-off by local standards. She was attracted to P9 by its flexibility and its power to form savings quickly. She saw it as a way of buying furniture for her home. Accordingly, after 10 P9 loans she had built up 23,000 taka in savings which she withdrew and spent on furniture. That was in October 2011. But by then, as she explained to us, her husband had grown older and more status-conscious, and was persuaded by a conservative imam at his local mosque that he shouldn't get involved with banks. He told his wife first to close their Grameen Bank account, and then their P5 account with us. She held out for P9, saying it was an exceptional kind of account ("I told my husband that in P9 the loan is interest-free"), but to no avail. She brought her loan balance down to her current savings balance and then stopped transacting. She says "I didn't want to close my P9 account but if I didn't there would have been a clash with my husband".

Client 0042 borrowed nine times from her P9 account, then withdrew 23,000 taka of savings and placed it in her P5 account with us, where it earns interest. Her husband, who buys and sells fish in the local market, is poor but has reasonably regular income. He argued that with a large savings balance in the P5 account, life would be simpler if they used the P5 account for their borrowing needs. They closed the P9 account in July 2010. Our staff continue to discuss the pros and cons of this move with the client. Many of our P9 clients also run P5 accounts.

Client 0044 is a widow living with her mother-in-law. She uses P9 as a way of building an independent financial life for herself. She conceals her account ownership from her mother-in-law. She has taken 13 P9 loans, repaying them through sales of home-fried rice. She withdrew her target savings of 23,000 taka and used it to help her married daughter. Recently she has not been transacting very frequently, and our staff are following up the case to see how they can best help her.

Client 0047 used P9 intensively, taking 15 loans and 7 top-ups and repaying from the income of her husband who ran a small clothing shop in Kapasia market. She withdrew her target savings of 23,000 taka in January 2009. We don't know what she did with it as her husband has moved his shop to another market and she rarely visits Hrishipara these days. Still, she keeps her account open (she has savings of 12,500 in it) and transacts from time to time.

Client 0048 wasn't available for an interview: she was visiting relatives. What we know of her is that she is the wife of a small-time trader and that they have about three-quarters of an acre of crop land - a typical upper-poor household. She has taken 12 P9 loans and withdrew her target 23,000 taka of savings in October of 2010. She continues, when at home, to transact almost every day, paying in small sums ranging from 5 up to 100 taka daily.