Grameen Bank

In the middle of 70s Muhammad Yunus , the founder of Grameen bank in Bangladesh, became concerned about poverty and the effects of famine and hunger. He set up a ‘village bank’ as an experiment in Joba in 1976 which was lending small amounts of money for local start up initiatives. Since the bank was doing really well, in 1983 the `village bank´ was transformed into an independent bank. Regarding its ownership, Grameen bank allows its clients to purchase shares of the Bank upon reaching a certain level of savings. Therefore, the shareholders of the organization are the clients themselves. Surprisingly, although working for and with the poor and even beggars.

Grameen bank has 6.6 million clients and a recovery rate of 98% which a lot of western bank see as unattainable. Its net profit has reached US$ 20million in 2006. Moreover, it boasts over $3 billion in assets and its contribution to the Bangladeshi GDP of over 1% . The financial figures show that Grameen bank is a competitive alternative to the commercial banks and that the poor can also borrow, invest and save. Grameen bank has several missions. However, the most important one is to propose an economically sensible solution to poverty by providing banking services targeted at the poor. As one of the ways to achieve its goal the Bank provides small credits to poor without any collateral in order for them to start, develop or support their small entrepreneurships. The bank’s system is based on “mutual trust, accountability, participations and creativity”.

The Bank also provides other services and supports communities by operating fabric, telephone and energy companies. Concerning it ICT (Information and Communication Technologies) policies, the Bank has developed a `Village Phone Plan´. Though one might think it is a wild idea to set up a telecommunication business in poor areas where people have never seen a telephone, or even electricity; the program became a great success. It allowed the integration of the poor into the economy, access information, increase of the poor’s self-esteem, etc. The bank promotes the advantages of market opportunities to people within their communities. It pays great attention to women (women comprise 97% of bank’s borrowing clients ) and children of the poor societies. The Bank helps them to create self-employment opportunities and, among other actions, it provides over 6,000 scholarships each year and gives student loans to the young who attend professional schools.

Grameen Bank is being accused of charging relatively high interest rate, requiring people to pay back when the times are not good for the latter (as they can be pushed to do so by peers from the community). It was also accused of lacking sufficient funds to support its operations. Such accusations might, and probably will, continue in the future. However, in the most cases microfinance and Grameen Bank’s experience are sighted as good and successful initiatives.