Grameen’s Banking for the Poor

Meaning “rural” or “village” in the Bangla language, the Grameen Bank began as a research project and grew into a revolutionary system to provide money to the poor in the most beneficial way possible. In 2006, founder Muhammad Yunus of the Grameen Bank and the bank itself received the Nobel Peace prize “for their efforts to create economic and social development from below” . While a professor at the University of Chittagong in Bangladesh, Yunus began a research project exploring a banking service to provide credit to the rural poor in 1976. By 1983, the Grameen Bank became independent, and was able to start making loans to the rural poor in Bangladesh.

The Grameen Bank does not require its customers to have good credit, (or even any at all), collateral, or any previous capital, but relies on “mutual trust, accountability, participation, and creativity” of the customer.  Instead of turning down the poor, the Grameen Bank provides those with the will to work the chance pull themselves up out of poverty. It is the Grameen Bank that has inspired the emergence of microlending. Through the use of the Internet, anyone in the world is able to make a small investment into a small business across the globe through a web-based microlending firm like Kiva.com or MicroPlace.com, and will eventually be repaid by the borrower just like at any normal bank. With websites like these and the Grameen Bank, helping those in need is no longer making donations, it is microlending.

It is a goal of Grameen Bank to “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”.

By making money available to the poor for them to start their own business, the Grameen Bank has been able to help “these millions of small people with their millions of small pursuits can add up to create the biggest development wonder”. By assisting the poor in rural areas to create a life of their own, not just donating food, water, and shelter, the Grameen Bank is developing these communities into thieving villages of entrepreneurs.