Grameen Bank

A man named Muhammad Yunus wanted to help.

He lived in a land called Bangladesh. He gave small amounts of money to families. This helped them start small jobs.

This became the Grameen Bank. Most people who use the bank are women. They use the money to build homes or buy tools. This helps them take care of their families. It is a way to help people grow.

The bank helps many people live better lives.

Muhammad Yunus wanted to help poor people in Bangladesh.

In 1974, he gave $27 to 42 families. This money helped them make things to sell. This idea grew into the Grameen Bank. The name means "Village Bank."

The bank gives small loans called microcredit. People do not need to own big things to get a loan. Most members are women. About 97% of members are women.

They use the money for many things. They buy tools or start small businesses. Some use loans to build homes. This helps families have better lives.

The bank works on trust. There are no written contracts. Members also follow the Eighteen Decisions. These are rules for good social habits. One rule is to send children to school. This helps the next generation. The bank's success has spread to many countries. It has even started projects in the United States.

Grameen Bank is a special bank in Bangladesh. It helps people who are very poor. Most banks ask for big things as a guarantee before they lend money. This is called collateral. Grameen Bank does not require this. Instead, it uses small loans called microcredit. These loans help people start small businesses. This helps them become financially independent.

The bank works using a system of trust. There are no written contracts between the bank and the people. Instead, members use solidarity lending. This means they work in groups. While only the individual must pay back their own loan, group members often help each other. This builds a strong community. Members also follow the Eighteen Decisions. These are rules for good social habits. One important rule is to send children to school.

Muhammad Yunus started this work long ago. He was a professor at the University of Chittagong. In 1974, he gave $27 to 42 families during a famine. This helped them make items to sell. He started a research project in 1976 in the village of Jobra. The project moved to the Tangail District in 1979. Finally, the government made it an independent bank in October 1983.

Grameen Bank has achieved many big things. In 1998, its housing program won a World Habitat Award. In 2006, Yunus and the bank won the Nobel Peace Prize. The bank has lent huge amounts of money. By 2005, it had loaned over $4.7 billion. By the end of 2008, it had loaned $7.6 billion. Around 97% of its members are women.

The ideas from this bank have spread far and wide. Similar projects now exist in more than 64 countries. It even grew into Grameen America. That branch has 19 locations in eleven US cities. The bank also uses technology to help. The Village Phone program helped 80 million people get information. This shows how small loans can change the whole world.

Grameen Bank is a specialized community development bank located in Bangladesh. It focuses on a method called microfinance to help people escape poverty. Most traditional banks require collateral, which is an asset like a house used to guarantee a loan. Grameen Bank does not require this. Instead, it provides small loans known as microcredit or "grameencredit." This system is designed to help the impoverished build businesses and gain financial independence.

The bank operates on the principle that loans are more effective than charity for reducing poverty. It targets groups that are traditionally underserved by formal financial services. This includes the unemployed, the illiterate, and people living in extreme poverty. A major focus of the bank is supporting women. In fact, approximately 97% of the bank's members are women. The bank also uses a system called solidarity lending. In this system, borrowers work in groups to build trust. While there is no formal joint liability, group members often help if someone cannot pay. This social support helps maintain high repayment rates.

To support its members, the bank has created several different types of loan programs. One is the "Low-cost Housing Program," which helps people build better homes. The bank also supports seasonal agricultural loans and lease-to-own agreements for livestock or equipment. Another unique project is the Village Phone program. In this program, women entrepreneurs use wireless payphones to provide communication services in rural areas. This program has benefited more than 80 million people by providing access to news and market information. The bank even started a program in 2003 specifically for beggars in Bangladesh.

The history of the bank began with the work of Muhammad Yunus. He was a professor at the University of Chittagong. During the Bangladesh famine of 1974, he gave a personal loan of US$27 to 42 families. This money allowed them to make goods for sale without facing high interest from predatory lenders. In 1976, he launched a research project in the village of Jobra. This project tested his methods for providing banking services to the rural poor. The project expanded to the Tangail District in 1979. By an ordinance on October 2, 1983, the project became the independent Grameen Bank.

Building the bank required help from many different people and organizations. Bankers Ron Grzywinski and Mary Houghton from ShoreBank in Chicago helped Yunus incorporate the bank. They used a grant from the Ford Foundation to assist with this process. The bank's funding sources have changed over the decades. Originally, donor agencies provided most of the capital at low rates. By the mid-1990s, the central bank of Bangladesh became the main source of funding. Recently, the bank has also used bond sales to raise money. These bonds are guaranteed by the Government of Bangladesh.

Grameen Bank has achieved significant global recognition and scale. In 1998, its housing program won a World Habitat Award. In 2006, Muhammad Yunus and the bank were jointly awarded the Nobel Peace Prize. The scale of its lending is massive. By the beginning of 2005, the bank had loaned over US$4.7 billion. By the end of 2008, that number reached US$7.6 billion. The bank's success has inspired similar microfinance projects in more than 64 countries. It has even expanded into the United States through Grameen America. As of 2017, Grameen America had 19 branches in eleven different US cities.

The bank also promotes social change through the Eighteen Decisions. These are a set of values that borrowers recite at every branch. These decisions encourage positive social habits, such as educating children. Because of these values, almost all borrowers now enroll their school-age children in regular classes. The bank also encourages members to become savers. Since 1995, 90% of the bank's loans have been financed through interest income and customer deposits. This creates a cycle where local savings fund new loans for the same community. This system helps foster long-term social mobility and economic stability.