Bank has reversed the conventional banking wisdom by removing
collateral requirement and created a banking system which
is based on mutual trust, strict supervision, accountability,
participation and creativity. At GB, credit is the entry point
and it serves as a catalyst in the overall development process.
GB sees credit as an empowering agent, an enabling element
in the development of socio-economic conditions of the poor
who have been kept outside the banking orbit on the simple
ground that they are poor and hence not bankable.
Yunus, the founder of Grameen Bank and its Managing Director
reasoned that if financial resources can be made available
to the poor people at terms and conditions which are appropriate
and reasonable, "these millions of small people with
their millions of small pursuits can add up to create the
biggest development wonder". This conviction of Professor
Yunus had its root in the traditional bank's structure which
has been designed in a way that would never help the poor
who constitute the largest segment of the society and the
ones who are desperately in need of credit.
origin of Grameen Bank
of Grameen Bank can be traced back about 20 years from now
when Dr. Muhammad Yannus, Professor and Head of the Rural
Economics Programme in the University of Chittagong, launched
an action research programme to examine the possibilities
of designing a comprehensive banking framework to provide
the banking services to the rural poor.
The action research project which he called the "Grameen
Bank Project" (Grameen means rural) came into being with
the following objectives in mind:
- To extend the banking facilities to the poor men and women.
- To eliminate the exploitation of the money lenders.
- To create opportunities for self employment for the vast
unutilized and under utilized manpower resources.
- To bring the disadvantaged people within the framework of
some organizational format which they can understand and operate
and can find socio-political and economic strength through
- To reverse the age-old vicious circle of "low income,
low savings, low investment "into an expanding system
of" low income, credit, investment, more income, more
credit, more investment, more income".
The project demonstrated its strength in the village Jobra
(a village adjacent to the Chittagong University -
the initial site of the action research project) and some
of the neighbouring villages during 1976-1979. From there,
with the sponsorship of the central bank of the country and
support of the nationalized commercial banks, the project
was extended to Tangail district (a district north of Dhaka,
the capital of Bangladesh). With the success in Tangail the
project was extended to several other districts in the country.
In October 1983, the Grameen Bank Project was transformed
into an independent bank by a Government Ordinance with the
name Grameen Bank. The Government provides 10% share capital
of the Bank while 90% is held by the borrowers of the Bank.
of the Bank views credit as a powerful weapon He asserts that
credit is a fundamental human right. The more credit one can
receive, the more resources he can command, the more powerful
he is. Credit creates entitlement to resources and is the
basis for the economic emancipation of the poor in general
and the poor women in particular. The collateral based conventional
format denies the right to credit for the poor people which
in turn dispossess them in their fight against the economic
and other related odds around them. The Grameen approach emphasizes
the creation of enabling conditions in which every human being
may have the opportunity to carve out dignified ways of living
for herself/himself. GB views its loans as means to gain command
over resources. With its effective use a poor person converts
her/his latent skills in generating an income and creates
self-employment without having to be constrained by the limitations
of wage employment. Besides, self-chosen economic activities
increase the sense of participation and strengthens the base
of self-help. Professor Yunus puts it as "creating favourable
conditions for making a living through self-employment is
a much more dignified way of solving the unemployment than
initiating a system of doles and welfare payments".
in recent years has not only expanded its credit operations
which are targeted at the poorest of the poor in rural Bangladesh,
it has also rapidly diversified its activities. Grameen today
is the focal point of a global network of institutions and
individuals who provide micro-credit to fight poverty. Within
Bangladesh, the Bank has undertaken major investment initiatives
in those sectors where the poor have the comparative advantage
in terms of their skills, enterprise and productive capacity.
A number of social development oriented companies have been
established under the Companies' Law to boost economic growth
of vital economic sectors like agriculture, fisheries and
has now become a national institution that provides credit
to the rural poor in Bangladesh. It is today also owned by
the poor, whose paid up share capital amount to Taka 200 million.
Credit provided by Grameen in 1994 exceeded the total amount
of all other financial institutions and NGOs put together
in Bangladesh. Grameen is committed to the goal of alleviation
of poverty and empowerment of the rural poor. To fulfill its
strategic objective, Grameen has grown institutionally, its
credit operations have expanded rapidly and its programmes
have become more diversified.
has a large clientele, comprising over two million of the
poorest households in the country. The immediate task is to
ensure that they succeed in finally overcoming their poverty
and attain further development in a sustainable way. Grameen's
modus operandi has clearly demonstrated that poverty can be
alleviated within a short time and new opportunities created
for self employment, higher incomes, improved housing, better
health & nutrition, children's schooling, and altogether
a better quality of life. A substantial number of Grameen's
clientele, according to some evaluations, have already succeeded
in overcoming absolute poverty. It is Grameen's firm conviction
that a majority of its borrowers will cross the poverty line
in the next five years.