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Banker to the Poor: The Story of the Grameen Bank
Grameen Bank and Muhammad Yunus are synonymous and both are institutions by themselves. You cannot think of one without the other. And yet, very few may be familiar with the travails and the ordeal that Muhammad Yunus went through at a personal level in setting up the Grameen Bank, which has till now loaned funds to at least 12 million poor people of Bangladesh and has become an intrinsic part of the growth story of one of the poorest countries in the world. No doubt Muhammad Yunus shot to international fame with the award of the Nobel Peace Prize in 2006, but this was a long overdue recognition of years of daunting task by any standards. It was a very strong sense of social responsibility that propelled Muhammad Yunus on this path to work out a system of micro-credit and micro-enterprise. Quite early in his life he realised that a good 50 per cent of the population that constituted the poor of his country did not figure in the calculations of the economic planners. In fact, he is at pains to emphasise that economics as a social science has discredited itself by rejecting those who languish in poverty. Muhammad Yunus has charged economists with remaining silent when banks have insisted on the ridiculous and extremely harmful generalisation that the poor are not credit-worthy. On the contrary, according to him, credit is a human right and there should be a system to ensure this right for all people.
He goes on to say, “by missing the lively world of self-employment, the ‘science’ of economics has moved away from the promise it once held of becoming an exciting social science. Instead, it has grown more and more into a business science”. Realising the latent capability of women in building the social fabric of the society, he decided that every bit of micro-credit would be extended through women. He has no objection to giving loan to men but this also has to be channelised through women as only they can think of the family first and the self last. Muhammad Yunus also realised that poverty is the great leveller and while no two moneyed people may react the same way in a given situation, all poor people will react more or less in the same way because for them their life itself is at stake. This is the crux of his theory of lending without collateral because “the poor will never risk not repaying.” Indeed the loan recovery rate of the Grameen Bank is close to 100 per cent. Studies in over 40 developing countries have also shown that when women gain equality the birth rate falls. With micro-credit and enterprise women have more options open to them in life other than child bearing, in particular the ability to earn a livelihood. The style of the book is at once striking in its simplicity and what grips you is the sensitivity of Muhammad Yunus to his environment, to the economic situation and the poverty prevailing in his country. After all, Muhammad Yunus comes from a rather well- to-do-family, his father had a thriving jewellery business, and Muhammad Yunus had no compulsions of working among the poor. For that matter, he could have pursued an academic career. The sense of social responsibility, however, was too over powering and took him to a road that has made him a household name not only in Bangladesh but in numerous developing countries. There is a lot that our economic planners and bankers can learn from the Grameen Bank experiment. In fact, the corporate social responsibility (CSR) exhibited by our banks, as also by many corporate houses, is virtually nil. It is interesting that Prof. Yunus started his experiments by lending as little as US$ 27 only to 42 people in 1976. No review of this book would be complete without the mention of Mr. Gongopadhaya, the then Deputy Governor of the Central Bank of Bangladesh. who brushed aside all arguments and reservations and gave Muhammad Yunus his first break.
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