Grameen Bank
The Grameen Bank was established in 1976 when Professor Muhammad Yunus, Head of the Rural Economics Programme at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank was established with the sponsorship of the central bank of the country and support of the nationalised commercial banks in selected districts in Bangladesh in 1979. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation.
‘Grameen’ means ‘village’ in Bengali. The Bank is owned by the rural poor. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government. As of December, 2008, the Grammen Bank has 7.67 million borrowers, 97 percent of whom are women. They have 2,539 branches, provide services in 83,566 villages, covering more than 99 percent of the total villages in Bangladesh.
Mission and Objectives
- extend banking facilities to poor men and women;
- eliminate the exploitation of the poor by money lenders;
- create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;
- bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and
- reverse the age-old vicious circle of “low income, low saving & low investment”, into virtuous circle of “low income, injection of credit, investment, more income, more savings, more investment, more income”.
Methodology
The Grameen Bank adopts the following methodology to its Empowering Women through Microfinance: Evidence from India and Gender Equality:
- There is an exclusive focus on the poorest of the poor (esp. women);
- Borrowers are organized into small homogeneous groups.
- Special loan conditionalities which are particularly suitable for the poor (very small loans given without any collateral, loans repayable in weekly instalments spread over a year etc);
- Simultaneous undertaking of a social development agenda addressing basic needs of the clientele;
- Design and development of organization and management systems capable of delivering programme resources to targeted clientele;
- Expansion of loan portfolio to meet diverse development needs of the poor.
The Grameen Bank and Women
The Grameen Bank gives high priority to poor women, who are the least likely to receive credit from formal institutions and are particularly vulnerable to poverty.. A striking characteristic of the bank 97 % of Grameen Bank’s borrowers are women. Grameen Bank works to raise the status of poor women in their families by giving them ownership of assets.
The Grameen Foundation
Due to its success in Bangladesh, the Grameen Bank has been replicated worldwide. The Grameen Foundation was founded in 1997, and works with 58 microfinance institutions, and has touched more than 45 million people in 23 countries.
Nobel Peace Prize
Muhammad Yunus and the Grameen Bank were awarded the Nobel Peace Prize in 2006 for their work in poverty reduction in rural Bangladesh.
References
- Bornstein, David. The Price of a Dream: The Story of the Grameen Bank. Oxford University Press, NY: 2005, ISBN 0-19-518749-0
- Cockburn, Alexander, “A Nobel Peace Prize for Neoliberalism?”
- Counts, Alex, Give Us Credit , Crown, 1996, ISBN 0-8129-2464-9
- “Micro Loans for the Very Poor”, New York Times, February 16, 1997
- Sachs, Jeffrey. “The End of Poverty”. Penguin Books, NY: 2005, ISBN 0-14-303658-0
- Yunus, Muhammad (with Alan Jolis), Banker to the Poor: The Autobiography of Muhammad Yunus, Founder of Grameen Bank, Oxford University Press: USA, ISBN 0-19-579537-7