"I felt ashamed of myself for being part of a society which could not provide even twenty-seven dollars to forty-two hardworking, skilled human beings," so Muhammed Yunus started his own bank.

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Grameen Bank

By Linda Baxter

"If we are looking for one single action which will enable the poor to overcome their poverty, I would focus on credit”. (Dr Muhammad Yunus)

The beginning

Twenty five years ago, Muhammed Yunus, a Bangladeshi economics teacher, was visiting a village when he met a woman who made bamboo stools. She couldn’t afford to buy the bamboo to make the stools, so she had to borrow the money from the bamboo sellers and then pay them a large part of the profit from each one she sold. There was so little money left for her to keep that she couldn’t afford to buy more bamboo, so she had to borrow more money. And so the cycle continued with no way out for her. She couldn’t borrow money from friends or family because they were as poor as she was. She couldn’t borrow from the bank because she had no collateral (property or land) to guarantee that she would pay back the loan.

Yunus went around the village and found forty-two people who were in the same situation - trapped in a cycle of poverty with no escape. When he added up the amount of money that they needed to break free of the cycle, it came to just twenty-seven dollars. As Yunus says “I felt ashamed of myself for being part of a society which could not provide even twenty-seven dollars to forty-two hardworking, skilled human beings.”

He lent them the money and told them to pay it back whenever they could. He got all of it back, so he went to other villages and did the same thing. He always got his money back. The official banks didn’t want to get involved in what he was doing, so Yunus started his own bank. The Grameen bank was born, and with it a new approach to lending money – ‘micro-credit’.

But what makes the Grameen bank so different?

The conventional banking system is based on the principle that the more you have, the more you can borrow. Grameen gives priority to those who have nothing, particularly the poorest women. The loans are small and repayments are made in small amounts spread over a year, with a built-in insurance scheme so that the family doesn’t become responsible for the loan if something happens to the borrower. There is no legal contract between the bank and the borrower, and no danger of legal action if the repayments are not made – the relationship is based on trust and good faith.

Repayment rates are very high for two main reasons. Firstly, borrowers know that they cannot borrow again if they don’t repay the first loan. And secondly, they must join a group of other borrowers who all share some responsibility for other members’ loans and are encouraged to make group decisions. So there is considerable peer pressure and support from the group to encourage them to pay it all back.

Another important difference from conventional banks is that Grameen has a social programme. The system encourages the borrowers to do practical things to improve their living conditions, health and level of education. These are known as the ‘Sixteen Decisions’ which include, for example, not continuing the dowry system, growing fresh vegetables, organising clean drinking water and good sanitation, education for children, and being ready to help each other whenever necessary. Conventional banks would not consider this to be any of their business.

The success

The bank now lends over a billion dollars to more than two million borrowers, 96% of them women, and involving more than half of the villages in Bangladesh. The repayment rate is 99%. The rural economy of the country has improved greatly since the bank started. And the success has spread. This year it was estimated that there are now over 7,000 microcredit organizations in the world, lending to over 16 million of the poorest people.

Grameen’s success in Bangladesh has also shown that the developing world has lessons to teach richer countries like the USA and Britain. Both countries have begun to encourage microcredit schemes based on the Grameen model, in an attempt to deal with their own levels of poverty.

original link on British Council URL learnenglish central magazine home credit

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It’s good idea to help poor people via this system bank, a lot of them have good objects in many sectors industry, agriculture….. to prove the country economic, we have to create this type of bank and take those poor in consideration.

The artice about grameen bank is very interesting.After reading this artice i come to know that how the
grameen bank is originated and where it is originated.developing countries has to learn a lot of things from this grameen bank microcredit approach.International monetary fund and world bank has to put focus this system and has to provide support whenever needed.I really appreciate muhammed yunus for his ideal.

Trust and good Faith. Here we have a beautiful sentence. It teaches us a useful lesson that we should pay attention on. Without these basic elements, it is very difficult for a society to live and gets improvement in a peaceful environment. Giving a chance for everyone is a good way to achieve a better world. Helping each other makes happy people and this is the best profit. 
But upon all these good ideas something wrong comes to my mind. Nowadays the biggest borrowers throughout the world are the states and we are not sure if that huge amount of money is being spending in a right directions and if their behavior lets us to talk about Trust and good Faith.  

the article of grameen bank success is a nice one. i have all respects to dr. muhammad yunus. his bank has done much for the rural poor, especially the women of his country named bangladesh. but what level of improvement grameen bank could make for the poor people of bangladesh should be taken into consideration.
i think the goal of micro credit to break the poverty cycle of the rural women could not be achieved as the article focus. crore of people of bangladesh should be benefited as 2 million members are beneficiary of the bank (if a family consists of 5 members 1 crore people should be benefited & in b.desh perspective 5 members in a family r common). though grameen bank is running from early 80s what extent of poverty has been reduced in bangladesh? and like grameen bank now thousands of ngos (non govt organisations) are running with their micro-credit program. but their success is not  up to the mark.
i think the interest rate of micro-credit is so high that the borrowers have to repay about all of the benefit of their business to repay the ngo's (like grameen bank) loan.  it is like the story of the bamboo sellers who took most of the benefit of the village woman.  with micro-credit program of the ngos people are only becoming borrowers. this program aren't making them capable to break poverty.  in the story 42 people were in a cycle of poverty and now there are crore of people are trapped in the poverty cycle.
the goverment of bangladesh taking various kinds of programs and initiatives to reduce the poverty of the country. govt. has also micro-credit program with a very lower interest rate. govt. is giving various kinds of allowances to the poor people. it is taking social security programs, education for all & quality education program, employment building programs etc. yet poverty rate of bangladesh is very high. so then where is the success of grameen bank?

WHen I read the Grameen Article, I was in shock, because some time ago a I myself thought about something similar, but I never thought it could be possible, because a lot of people, in my country for instance, are greedy and if they can avoid compromise I think a lot would prefer to run away with the money.
Any way, I think it's a good idea USA & Britain use the system for their levels of poverty. 
In the other hand, I find sad that nowadays many credit Institutions abuse of the need of money people have, speaking for some credit Institutions I know in my country. They are just too greedy, and it's awful because they take you to a vice cycle in which you have to ask more and more moeny to the bank, and in the end yuo work for the bank, and very little of your income end in your pocket for you to cover your basic needs, so there's almost nothing left to give yourself some pleasure, with holidays or other leisure activities.

A couple weeks ago i read my morning newspaper written article about Muhammad Yunus the founder of Grameen Bank, it was very interesting to know that he came to a world class seminar with a very simple hand made clothes which was made by one of their customer in Bangladesh (who obviously comes from the poor). He did not wear a kind of Hugo Boss blazer, or a world well known designer as other Director would usually wear. He told stories about Grameen Bank's managers who deliver the loans to their customer's house themselves by riding a bike rather than riding a car.
They are using a fan instead of using an air conditioning in their office, As we all know that Bangladesh's weather is quiet hot and humid.
This is a good example for others, right?

In the article, the author mentioned that women account for 96% of the borrower and the repayment rate is 99%, it makes me wonder if women are more trustworthy than men or considering 'shy' they dare not to be in default on their loan.

great bank . there are a lot of people who need a little money to improve job . but banks utiize them only for its profit . it gets back money more than it gives . so even if people make profit . they cant use it to improve their job because they have to pay back . and as a result nothing improve only banks are getting profit day by day 

Credit has always been a problem in our country, especially for the poor. The poor have no access to capital, money and opportunities because banks require a lot of things if you want to avail of their services. Of course, the poor do not have property or a stable source of high income so they are stuck in a cycle of being "just employees or laborers." But there is an alternative for the impoverished.
 
Micro credit or micro financing was established for the poor so they can have the means to start a business. Most companies who offer micro financing are cooperatives or small associations. You have to be a member to avail of credit. I believe this is a grassroots solution to end the cycle of poverty in developing countries. The government should support organizations who provide affordable micro credit to the poor because this is the foundation from which they can lift themselves from poverty. If we want to help each other then all available means should be given to those who need it, particularly those underprivileged. Consequently, crime and violence would decline because those who are deprived are given a chance to have a better life.
 
This is what is missing from conventional banks. Commercial banks are so focused on making profit they become insensitive to the needs of their customers. In other words, these banks are like greedy capitalists. They want you to give more and more until you have nothing in return. In the same way, bank customers are not concerned if they are not able to pay their loans. A few bank patrons who go default wouldn't hurt a big bank. But numerous clients who fail to pay, would lead the bank to bankruptcy. Such is not the case for micro credit.
 
Grameen bank is an ideal example of how the financial world should evolve. Trust and good faith are essential when we deal with complex matters like money. This article exemplifies how people, if given the opportunity, can redeem themselves without resorting to wicked practices. Banks who care about the state of their clients can expect their customers to faithfully repay their obligations.
 

 Reciting and amazing for Grameen bank, respect for mr. Muhammad Yunus, Some ngo try to practice this concept in country. in my view, this is a alternative economic in the new wave economic. may be it was a antitesis from main concep economic (capitalism).

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