Man on a noble mission

Grameen Bank, the brainchild of Mohammad Yunus, has achieved remarkable success in lending money to the poor of Bangladesh. The founder-chairman has pledged to rid the country of poverty by the year 2030, writes Shiv Kumar

Grameen Bank, the Nobel Prize-winning initiative that lends money to the poor of Bangladesh, came about quite by accident. "At a village just outside my university campus, I saw some poor women who were completely indebted to a money-lender. I made a list of all the loans taken by the women from him. In all 42 women owed the money-lender a total of 846 Taka," says Dr Mohammad Yunus, founder-chairman of Grameen Bank, in an interview with The Tribune.

The Dean of Economics, Chittagong University, with a freshly acquired Ph D degree from the US, quickly dipped into his pocket to pay off the money-lender and, thus, was born the only bank that lends money to the poorest of the poor. Grameen Bank does not charge compound interest. Nor does it penalise defaulters. In fact the bank gives them additional loans to start life afresh. To top it all, Grameen Bank claims a repayment record of 99 per cent.

Today, Grameen Bank is Bangladesh’s highest tax-payer and has begun initiatives like Grameen phone which takes mobile services to the nook and corner of Bangladesh. The bank today has 7.5 million borrowers, mainly poor women and beggars, living in one of the poorest countries of the world.

The idea of Grameen Bank was conceived when Dr Yunus failed to get normal banks to fund the poor. "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," says Dr Yunus.

Initially, Dr Yunus managed to get loans for several women to start their businesses by standing guarantor for the borrowers. "Though all the loans were paid back, the bank’s officials were uncomfortable with lending to poor women. I then applied for a banking licence, and this is how Grameen Bank was born in 1983," says Dr Yunus.

The mild-mannered professor clad in a simple kurta, typical of a Bengali intellectual, insists that the bank grew on its own. "Our intention was not to set up a big bank," says Dr Yunus. But today the bank has grown globally. Like cooperative banks in India, Grameen Bank is owned by the borrowers themselves but with a difference. The managing committee comprises nine women chosen by the share-holders, very much like India’s Mahila Griha Udyog, which owns the Lijjat brand of papads.

Dr Yunus insists that a borrower does not have to submit any documents, nor sign any papers while taking a loan. "Instead, we promise that we will not take a borrower to court in case of a default. However, Dr Yunus admits that borrowers often try to wriggle out of their commitment to pay back their loans. "We persuade them and tell them that the bank belongs to them. If they don’t pay back, the bank will be in trouble and there will be no one to give them a fresh loan," says Dr Yunus. Grameen Bank does not write off any of its loans. "If a cow bought on loan from the bank dies, we turn the loan into a long-term loan and advance a fresh loan to the borrower to buy another cow. There is no penal interest and borrowers are allowed to pay in small weekly instalments.’’

Along the way, Grameen Bank has set up a social base in Bangladesh’s villages where its officials have emerged as major facilitators for its borrowers. "Our employees meet borrowers at least once a week and enquire about their problems. The bank’s officials also ensure that the borrowers’ children are sent to school. Most of the 7.5 million borrowers are illiterate women but we ensure that their children go to school." With many of the children topping their classes, Grameen Bank has started giving monthly scholarships. "We give 20,000 scholarships every year. More than 18,000 doctors, engineers and professionals in Bangladesh owe their education to Grameen Bank.’’

The don-turned-banker says the bank has achieved remarkable success in lending money to the poor of Bangladesh. "In the past four years we have provided loans to 100,000 beggars in order to help them start small businesses. The beggars buy small merchandise that they try to sell in the houses they beg from," says Dr Yunus. Now, he says, some 10,000 beggars have stopped begging entirely while the rest are part-time beggars.

Dr Yunus feels that Bangladesh has been successful in gradually eradicating poverty. From 1 per cent a year in the 1990s, poverty has begun to decline at the rate of 2 per cent a year. "At this rate we would pull out half the population of Bangladesh from the clutches of poverty by 2015. But if the rate of decline touches 2.5, we will complete the target ahead of 2015.From then on, it would take another 15 years to eradicate poverty in Bangladesh.’’

"I have set a date in 2030 when not a single person in Bangladesh will be poor. Then we will build a poverty museum to show it to our children," adds Dr Yunus.

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