Grameen Bank

[wlm4 at cornell.edu (Will]

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POOR PEOPLE: A GOOD RISK
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The following is excerpted (with Permission) from an article by David
Nielsen in American Banker

"If we are looking for one single action that will enable the poor to
overcome their poverty, I would go for credit," he said. "Money is power,"
he added. "I have been trying to make the world accept and treat credit as a
basic human right."

Dr. Muhammad Yunus likes to think small, and he wishes more banks would do
the same. Mr. Yunus is the founder of the Grameen Bank in Bangladesh, which
specializes in making very small loans to impoverished people. From a $30
loan out of his own pocket 28 years ago, Mr. Yunus has built a lending
institution with 1,000 branches serving more than two million people.

This year, Grameen Bank will lend about $500 million, with the average loan
only $100. Grameen's customers live in poverty, yet 98% of the loans are
repaid with interest. Mr. Yunus says that U.S. banks could learn form this
example."Looking at the total amount of money they write off each year, it
would be better if they do business with poor people," said Mr. Yunus. "It
is a big market opportunity."

"I wanted to help create a better future for Bangladesh. I tried to bring
the relevant issues facing the country to the ground level in front of my
students," Mr. Yunus said. In 1974, a devastating famine struck Bangladesh,
killing more than one million people. "It gave me a big jolt," he said. "I
couldn't live with teaching elegant economic theories and walking around and
seeing people dying. I wanted to learn from people, not from textbooks."

Mr. Yunus began investigating how he could make a difference in the lives of
the poor. He discovered that many people needed small amounts of capital but
were not being served by local banks. In 1976 he made a personal loan of $30
to a woman who made bamboo stools. This loan had two elements that became
the model for Grameen's loans today: It was to a woman and a group of 41
friends supported her.

Grameen's loan applicants don't need collateral, but must form a borrowing
circle of at least five friends who serve as a built in support and counsel
group. Most of Grameen's loans are for subsistence activities such as buying
a livestock or planting a crop, and 94% of Grameen's loans are to women.
"Women have a longer vision in changing the life of their family," according
to Mr. Yunus. "The children benefit immediately from these loans. A man
often has different priorities."
Grameen's efforts have resulted in stunning changes for its borrowers.
Almost half of the bank's customers have raised themselves above the poverty
line.
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William Myers
Alternatives Federal Credit Union
301 West State Street, Ithaca, NY 14850-5431
Voice (607) 273-3582 ext 817
FAX 277-6391
E-Mail Alternatives-Myers@Cornell.edu
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************************************************** **********
William Myers
Alternatives Federal Credit Union
301 West State Street, Ithaca, NY 14850-5431
Voice (607) 273-3582 ext 817
FAX 277-6391
E-Mail Alternatives-Myers@Cornell.edu

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