GRAMEEN BANK

Back with my new blog!!!
Food Security Bill is in news again. The supporters of the bill say that it will help the poor of the country while the critics of the bill say that it is not creating resources for the poor nor is it empowering them.

Well the classic solution to this issue is creating methods through which poor people can help themselves. One such solution was given by Muhammad Yunus-the Bangladeshi banker, economist and Nobel Peace Prize recipient. According to him if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, "these millions of small people with their millions of small pursuits can add up to create the biggest development wonder." With this intention in mind he started introducing collateral free loans for the poor in Bangladesh. Yunus developed his revolutionary micro-credit and micro finance system with the belief that it would be a cost effective and scalable weapon to fight poverty. Yunus told his story and that of the bank in the book "Banker to the Poor," co-authored by him and Alan Jolis.
                   
Based on this concept GRAMEEN BANK was set up in 1983 with the belief that credit should be accepted as a human right.

                             




•The Grameen Bank is a Nobel Peace Prize-winning microfinance organization and community development bank founded in Bangladesh
•Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity.
•GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral.
•At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable.
•GB has 8.349 million borrowers, 97 percent of whom are women. With 2,565 branches, GB provides services in 81,379 villages, covering more than 97 percent of the total villages in Bangladesh.

Objectives: 


•extend banking facilities to poor men and women;
•eliminate the exploitation of the poor by money lenders;
•create opportunities for self-employment for the vast multitude of unemployed people in rural          Bangladesh;
•bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational  format which they can understand and manage by themselves; and
•reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low  income, injection of credit, investment, more income, more savings, more investment, more income".

The four principles of Grameen Bank -
• Discipline
• Unity,
• Courage
• Hard work

Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks.

Comparison between Conventional Bank and Grameen Bank

CONVENTIONAL BANK	GRAMEEN BANK
Conventional banking is based on collateral	Grameen banking is collateral- free.
Conventional banks look at possession of person	Grameen banks look at the potential of the person
The major clients of Conventional banks are rich and men	The major clients of Grameen Bank are poor and women.
Objective- to maximize profit	Objective -financial services to the poor, particularly women and the poorest
Branches are mostly located in business districts and urban centres	Branches are mostly located in the rural areas
Legal instrument between the lender and the borrower	No legal instrument between the lender and the borrower
Interest on conventional bank loans are generally compounded quarterly	All interests are simple interests in Grameen Bank.

The success of the Grameen microfinance model inspired similar efforts in about 100 developing countries and even in developed countries including the United States. In India also government has taken many initiatives to make the growth inclusive. The SIDBI Foundation for microcredit (SFMC) is a department of Small Industries Development Bank of India (SIDBI) and a non-governmental organization that provides bulk loans to Microfinance institutions (MFIs) in India. Punjab National Bank is known for its initiatives in field of microfinance in India.The bank has transformed life of many farmers in and around Punjab and Harayan.

Mohammed Yonus with his innovative and revolutionary idea transformed life of millions of people.He is an inspiration for all of us

Keeping Reading !!!