Saturday, October 14, 2006

Dr. Muhammed Yunus and the Grameen Bank

The Nobel peace prize winner established the bank in 1976. Today, over 6 mln poor in Bangladesh alone have become creditworthy customers of retail banking, thanks to his belief that unsecured credit could be an effective weapon to fight poverty. The cornerstone of this model is to galvanize rural women into a powerful customer base, provide them with micro credit, inculcate savings habit and set them off on a journey towards thrift. In fact, as on date, 94% of Grameen Bank’s patrons are women who display a repayment rate of 98%.

The Grameen method is simple. Five poor rural women are made to form a group. Eight groups form a centre, normally in the same village. They meet mandatorily once in a week and discuss and deal only in micro finance. They seek loans for productive, income generating purposes or for education and housing. The loans are approved on the basis of satisfactory credit history and purpose. All the members save regularly and repay weekly and share responsibility.

Since its inception, the Bank has loaned more than $2 bn including to 50,000 beggars who were encouraged to start small businesses alongside or instead of begging.

Dr. Yunus won several other awards and they include: the Ramon Magasaysay Award (1984), the Aga Khan Award for Architecture (1989), the Mohamed Shabdeen Award for Science (1993) and the World Food Prize by World Food Prize Foundation (1994).

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