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Grameen Bank



In 2003, Grameen Bank started a new program, different from its traditional group-based lending, exclusively targeted to the beggars in Bangladesh.[23] This program is focused on distributing small loans to beggars. The existing rules of banking are not applied, the loans are completely interest-free, the repayment period can be arbitrarily long, for example, a beggar taking a small loan of around 100 taka (about US $1.50) can pay only 2.00 taka (about 3.4 US cents) per week and furthermore the borrower is covered under life insurance free of cost.

The bank does not force borrowers to give up begging; rather it encourages them to use the loans for generating income by selling low-priced items. Based on a paper presented in the Global Microcredit Summit in 2006 by one of the bank's managers, as of May 2006, around 73,000 beggars have taken loans of about Tk 58.32 million (approx. USD 833,150) and repaid Tk. 34.78 million (about USD 496,900).[24]

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Operational statistics

One unusual feature of the Grameen Bank is that it is owned by the poor borrowers of the bank, most of whom are women. Of the total equity of the bank, the borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh.[3]

The bank has grown significantly between 2003-2007. As of October 2007, the total borrowers of the bank number 7.34 million, and 97% of those are women.[3] The number of borrowers has increased more than two-fold since 2003, when the bank had only 3.12 million members.[25] Similar growth can be observed in the number of villages covered. As of October 2007, the Bank has a staff of over 24,703 employees and 2,468 branches covering 80,257 villages,[3] up from 43,681 villages covered in 2003.[25] Since its inception, the bank has distributed Tk 347.75 billion (USD 6.55 billion) in loans. Out of this, Tk 313.11 billion (USD 5.87 billion) has been repaid.[3] The bank claims a loan recovery rate of 98.35%, up from the 95% recovery rate claimed in 1998.[26] However, many critics doubt this recovery rate and the definition that Grameen uses to come up with this rate.[27]

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Nobel Peace Prize

Grameen Bank received several prestigious awards including the highest civilian award in Bangladesh, the Independence Day Award, in 1994. However, the greatest recognition of the bank's achievements came on 13 October 2006, when the Nobel Committee awarded Grameen Bank and its founder, Muhammad Yunus, the 2006 Nobel Peace Prize "for their efforts to create economic and social development from below."[28] The award announcement also mentions that:

From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.[28]

On December 10, 2006, Mosammat Taslima Begum, who used her first 16-euro (20-dollar) loan from the bank in 1992 to buy a goat and subsequently became a successful entrepreneur and one of the elected board members of the bank, accepted the Nobel Prize on behalf of Grameen Bank's investors and borrowers at the prize awarding ceremony held at Oslo City Hall.[29]

Grameen Bank is the only business corporation to have won a Nobel Prize. In a speech given at the presentation ceremony, Professor Ole Danbolt Mjøs, Chairman of the Norwegian Nobel Committee, mentioned that, by giving the prize to Grameen Bank and Muhammad Yunus, the Norwegian Nobel Committee wished to focus attention on dialogue with the Muslim world, on the women's perspective, and on the fight against poverty.[30]

The Nobel prize announcement was celebrated with a lot of enthusiasm in Bangladesh.[31] Some critics asserted that the award affirms neoliberalism.[19]

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Related ventures

Main article: Grameen family of organizations

The Grameen Bank has grown into over two dozen enterprises represented by the Grameen Family of Enterprises. These organizations include Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti (Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education), Grameen Motsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear Limited, and Grameen Uddog (owner of the brand Grameen Check).[32]

On July 11, 2005 the Grameen Mutual Fund One (GMFO), approved by the Securities and Exchange Commission of Bangladesh, was listed as an Initial Public Offering. One of the first mutual funds of its kind, GMFO will allow the over four million Grameen bank members, as well as non-members, to buy into Bangladesh's capital markets. The Bank and its constituents are together worth over USD 7.4 billion.[33]

The work of Grameen Bank in Bangladesh Inspired the creation of the Grameen Foundation, which aims to share the Grameen philosophy and accelerate the impact of microfinance on the world’s poorest people.[34] Grameen Foundation USA, which has an A-rating from Charity Watch,[35], not only provides microloans in the USA itself (the only rich country where this is done), but also supports microfinance institutions worldwide with loan guarantees, training, and technology transfer.[36] As of 2008, Grameen Foundation supports microfinance institutions in the following regions:[37]

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Criticism

Sudhirendar Sharma, a development analyst, claims that the Grameen Bank has "landed poor communities in a perpetual debt-trap",[38] and that its ultimate benefit goes to the corporations that sell capital goods and infrastructure to the borrowers.[39] It has also attracted criticism from the former Prime Minister of Bangladesh, Sheikh Hasina, who commented, "There is no difference between usurers [Yunus] and corrupt people."[40] Hasina touches upon one criticism of Grameen Bank: the high rate of interest that the bank demands from those seeking credit.[41] Similar to all microfinance institutes, the interest charged by Grameen Bank is higher compared to that of traditional banks, as Grameen's interest (reducing balance basis) on its main credit product is about 20%.[42] The Mises Institute's Jeffrey Tucker has criticized the Grameen Bank,[43] asserting that the Grameen Bank and others based on the Grameen model are not economically viable and depend on subsidies in order to operate, thus essentially becoming another example of welfare.[44] Another source of criticism is that of the Grameen's Sixteen Decisions. Critics say that the bank's Sixteen Decisions force families and borrowers to abide by the rules and regulations set forth by the bank. In response to this, the Grameen bank neither forces or instills its morals into those who do not choose to become a part of the Grameen Bank. Seeing the Grameen Bank as a vehicle out of poverty and abysmal conditions, the Sixteen Decisions are a means for which to bring about positive social changes, and to better the lives of those who live in poverty.

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See also

Sustainable development Portal

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Notes

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References

  1. ^ a b c Ahmed & Ahmed (Chartered Accountants) (2007-08-01). GRAMEEN BANK Profit and Loss Account, for the year ended 31 December 2006 (pdf) (English). Auditors’ Report and Financial Statements OF Grameen Bank. Grameen Communications. Retrieved on 2008-01-17.
  2. ^ Ahmed & Ahmed (Chartered Accountants) (2007-08-01). GRAMEEN BANK Balance Sheet, As at 31 December 2006 (pdf) (English). Auditors’ Report and Financial Statements OF Grameen Bank. Grameen Communications. Retrieved on 2008-01-17.
  3. ^ a b c d e f Grameen Bank At a Glance (English). Grameen Communications (October 2007). Retrieved on 2008-01-17.
  4. ^ The Nobel Prize for 2006. The Nobel Peace Prize for 2006 (2006-10-13). Retrieved on 2006-10-13.
  5. ^ Anand Giridharas and Keith Bradsher (2006-10-13). Microloan Pioneer and His Bank Win Nobel Peace Prize. New York Times. Retrieved on 2006-10-13.
  6. ^ a b c Rahman, Aminur (2001). Women and Microcredit in Rural Bangladesh: Anthropological Study of Grameen Bank Lending. Boulder, Colorado: Westview Press, p 4. ISBN 0-8133-3930-8. 
  7. ^ Brandon Glenn (2006-10-16). ShoreBank leaders had hand in Nobel prize. Chicago Business News. Retrieved on 2007-05-15.
  8. ^ Papa, Michael J.; Arvind Singhal and Wendy H. Papa (2006). Organizing for Social Change: A Dialectic Journey of Theory and Praxis. Sage Publications, p72. ISBN 0761934359. 
  9. ^ "Bangladeshi banker wins Nobel Peace Prize", United Press International, 2006-10-13. Retrieved on 2008-01-16. 
  10. ^ Khandker, Shahidur R.; Baqui, M. A. & Khan Z. H. [1995]. Grameen Bank: Performance and Sustainability. World Bank Publications, p vi. ISBN 0821334638. Retrieved on 2008-01-16. 
  11. ^ *Morduch, Jonathan (October 1999). "The role of subsidies in microfinance: evidence from the Grameen Bank". Journal of Development Economics 60 (1): p 240. Elsevier. 
  12. ^ Sherraden, Margaret S. (1998). Community Economic Development and Social Work. Binghampton, New York: Haworth Press, p 113-114. ISBN 0-7890-0506-9. 
  13. ^ Khandker, Shahidur R.; Baqui, M. A. & Khan Z. H. [1995]. Grameen Bank: Performance and Sustainability. World Bank Publications, p xi. ISBN 0821334638. Retrieved on 2008-01-16. 
  14. ^ Siddiqui, Kamal, An Evaluation of the Grameen Bank Operation (Dhaka: National Institute of Local Government, 1984)
  15. ^ Ghista, Garda (2004). Bangladesh:Towards Economic and Women’s Liberation Via Grameen Bank (English). ProutWorld. Retrieved on 2008-02-04.
  16. ^ Hossain, Mahabub [February 1988]. Credit for Alleviation of Rural Poverty: The Grameen Bank in Bangladesh. Int Food Policy Res Inst IFPRI, P 7. ISBN 0896290670. Retrieved on 2008-01-16. 
  17. ^ Sinclair, Paul (2007-12-22). Grameen Micro-Credit & How to End Poverty from the Roots Up (English). One World One People. Retrieved on 2008-02-04.
  18. ^ Khandker, Shahidur R.; Baqui, M. A. & Khan Z. H. [1995]. Grameen Bank: Performance and Sustainability. World Bank Publications, P. x. ISBN 0821334638. Retrieved on 2008-01-16. 
  19. ^ a b Feiner, Susan F. & Barker, Drucilla K. (Nov-Dec 2006), “Microcredit and Women's Poverty”, Dollar & Sense, The magazine of Economic Justice, Boston, USA: Economic Affairs Bureau, Inc. 
  20. ^ Daniel Perl, Michael M. Phillips (2001-11-27). Grameen Bank, Which Pioneered Loans For the Poor, Has Hit a Repayment Snag. Wall Street Journal. Retrieved on 2008-03-25.
  21. ^ Fraser, Ian (2007-08-03). Microfinance comes of age (English). Cover Story. Scottish Banker magazine. Retrieved on 2008-01-30.
  22. ^ a b Grameen Bank-Village Phone Wins Global Competition for Contribution of Technology to Development (pdf) (English). Development Gateway Foundation (Washington, DC) (2004-07-27). Retrieved on 2008-01-31.
  23. ^ Yunus, Muhammad (July 2005). Grameen Bank's Struggling (Beggar) Members Programme (English). Grameen Communications. Retrieved on 2008-01-31.
  24. ^ Barua, D. C. (2006-11-12). "Five Cents a Day: Innovative Programs for Reaching the Destitute with Microcredit, No-interest Loans, and other Instruments: The Experience of Grameen Bank". Global Microcredit Summit; Nova Scotia, Canada. Retrieved on 2008-01-20. 
  25. ^ a b Grameen Bank Historical Data Series 2003 (English). Grameen Communications (2004-07-21). Retrieved on 2008-01-17.
  26. ^ Credit delivery system (English). Grameen Communications (2002-09-18). Retrieved on 2008-01-17.
  27. ^ Pearl, Daniel; Phillips, Michael M.. "Grameen Bank, Which Pioneered Loans For the Poor, Has Hit a Repayment Snag", The Wall Street Journal, 2001-11-27. Retrieved on 2008-02-04. (English) 
  28. ^ a b The Nobel Peace Prize for 2006. The Nobel Peace Prize for 2006 (2006-10-13). Retrieved on 2006-10-13.
  29. ^ AFP, Oslo. "Yunus unveils vision to end global poverty", The Daily Star, 2006-12-11. Vol 5 Num 903. Retrieved on 2008-01-31. (English) 
  30. ^ Mjøs, Ole Danbolt (2006-10-13). The Nobel Peace Prize for 2006: Presentation Speech. The Nobel Peace Prize for 2006. Retrieved on 2008-02-04.
  31. ^ "Nation parties on Nobel win", The Daily Star, 2006-10-15. Vol 5 Num 850. Retrieved on 2008-02-04. (English) 
  32. ^ Grameen Family of Enterprises. Grameen Website. Grameen Communications (2007-11-28). Retrieved on 2008-01-17.
  33. ^ "Credit where credit is due: The banker who changed the world", The Independent, 2006-10-14. Retrieved on 2008-01-17. 
  34. ^ Grameen Foundation Annual Report 2006 (pdf) (English). Grameen Foundation, Washington, DC, USA (2007-08-01). Retrieved on 2008-01-31.
  35. ^ Top Rated Carities (English). American Institute of Philanthropy (2008-01-15). Retrieved on 2008-01-17.
  36. ^ Grameen Foundation USA (English). 25 entrepreneurs who are changing the world. Fast Company Monitor Grouop. Retrieved on 2008-01-29.
  37. ^ http://www.grameenfoundation.org/where_we_work/
  38. ^ Sharma, Sudhirendar. "Is micro-credit a macro trap?", The Hindu, 2002-09-25. Retrieved on 2006-12-02. 
  39. ^ Sharma, Sudhirendar. "Microcredit: Globalisation unlimited", The Hindu, 2002-01-05. Retrieved on 2006-12-02. 
  40. ^ A new party for Bangladesh's fray (English). Economist (2007-02-22). Retrieved on 2008-01-31.
  41. ^ IANS (2007-02-18). Sheikh Hasina sneers at Nobel winner Yunus's bid to enter politics (English). Webindia123.com. Retrieved on 2008-02-02.
  42. ^ Fernando, Nimal A. (May 2006). Understanding and Dealing with High Interest Rates on Microcredit - A Note to Policy Makers in the Asia and Pacific Region. Manila, Philippines: ADB, p 8. 
  43. ^ Tucker, Jeffrey (November 1995). The Micro-Credit Cult. The Free Market. Mises Institute.
  44. ^ Tucker, Jeffrey (2006-11-08). Microcredit or Macrowelfare: The Myth of Grameen. Mises Institute.

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External links

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