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Grameen Bank

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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.

Grameen Bank Seal
Grameen Bank Seal

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.

Flag of Bangladesh
Flag of Bangladesh

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.

Grameen
Grameen

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.

Muhammad yunus at weforum
Muhammad yunus at weforum

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.

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File:Grameen Bank Seal.svg
Grameen Bank Seal.svg
File:Flag of Bangladesh.svg
Flag of Bangladesh.svg
File:All-currency-symbol.svg
All-currency-symbol.svg
File:Muhammad yunus at weforum.jpg
Muhammad yunus at weforum.jpg
File:Grameen.JPG
Grameen.JPG
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