The Grameen Bank

THE GRAMEEN BANK

The Grameen Bank is a unique kind of cooperative savings bank which addresses itself exclusively to the poor and landless. It aims to break the vicious circle of absolute poverty and bases its strategy on the initial premise that this is only possible if these people are given the chance to take their destiny into their own hands.

Professor M. YUNUS, Founder and Managing Director of the Grameen Bank, puts it like this:
"First we must recognize that poverty is neither created nor sustained by the poor. The roots of poverty can be found in our institutions, concepts and theoretical frameworks. The Grameen Bank questioned the basic principle of one such institution - the institution of banking. Financial institutions are based on the axiom that banking can only be done on the basis of collateral. This one principle immediately rejects a very large segment of the world population from access to credit, and thus prevents them from taking control of their own fate."

The Grameen Bank has proved that even without collateral, a bank can still build up good relations with the poorest of the poor and grant them credit, and this, in a cost-effective way.

Started up in 1976 as a small "one-man project", the bank today reaches 1.5 million borrowers in 32,000 villages in Bangladesh. 93% of the customers are women. Every month the Bank grants about ECU 17.4 million in loans, and 97% of the loans are within due time repaid. The bank is primarily oriented towards women. This choice is a result of the fact that married women, rather than men, continue feeling and being responsible for their family and relations.

The Grameen Bank has successfully replaced the classic collateral system with an efficient social organization and operation in tune with the social realities and needs with which all bank "workers" are very familiar. Potential members are guided by and with their companions, both before becoming members of the Bank and throughout the repayment period.
The first loan a woman receives is solely intended for the start-up of her own "commercial activity". In this way, not only is she being given the chance to take her destiny into her own hands, but the Grameen Bank is also, in many respects, indirectly raising the quality of life for its members and their families.

Grameen also provides housing loans (usually 260 ECU, ten years repayment period) to its borrowers whose housing situation is pitiable. More than 150,000 tin-roof houses with sanitary latrines have been built. Grameen hopes to see new and better housing for all its 1.5 million borrowers.

Savings are an important part of Grameen banking methodology. The obligatory savings practices of Grameen have helped Grameen borrowers to save more than 40 million ECU in their collective bank accounts.

Membership of the Grameen Bank requires a collective effort. Not only do the women set up a group fund together, but they also build and maintain their meeting area collectively.
Ultimately, by becoming shareholders in the bank, the women are giving special expression to this collective membership.

Professor YUNUS:
"The poor have shown that they can move out of poverty if the policies and intuitions cease to be biased against them. Alleviation of poverty is more a question of removing barriers than offering special favours to the poor. Recognizing credit as a basic human right will remove one formidable barrier."

THE FUTURE
The Grameen Bank is itself marking out the limits to its growth: 1,200 branches all over Bangladesh strikes it as being a limit which it does not want to exceed.
Whilst in Bangladesh it is looking for diversification in the products it can offer its clients, the Grameen Bank feels it is very important for its philosophy to be propagated and its organization to be reproduced elsewhere. The bank itself is obliged to organize itself to receive and train the many interested visitors and candidate "replicators". The fact that the system is not limited to the social, cultural and economic circumstances of "developing countries" (such as, for example, Malaysia, Burkina Faso, Vietnam, etc.) is apparent from the successful start-up of this credit system for specific groups in Western oriented economic systems such as the United States, Canada, France and Norway.