Aditya Sahu IM 20 Sec A Roll 14 Digital CV

Grameen Bank : An Innovation that changed banking philsophy

 

The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following 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".

   

In the class we focused on the difference in style of management and in delivery of product. We started out by discussing the difference between a traditional banking system and the Grameen micro-credit system. 

 Let's have a copmarive analysis between Grameen bank and Traditional bank

		TRADITIONAL BANKING	GRAMEEN BANK
1.	Purpose	Maximising Profit (Profit Motive)	Reducing Poverty
2.	Collateral	Needed. Without which no loans will be given.	No collateral needed
3.	Ownership	Businessmen – Rich People	By the Poor
4.	Loan Amount	Large Amounts	Very Small Amounts
5.	Type of Lending	To individuals	To small groups of people –Solidarity lending
6.	Type of Interest	Usually Interest is compounded	Simple Interest
7.	People Money given to	In most developing countries there seem to be a bias towards men.	Women are the primary focus. In fact women make up 97% of Grameen Bank Customers
8.	Location	Primarily located in urban areas	Primarily located in rural areas

The key learnings from this class were how a person motivated to bring about change in the society can work in a field he/she is completely unknown with. It is an inspirational example indeed. 

Another takeway is the clarity of objective. Since the Grameen Bank had clear objectives of bringing people out of abject poverty, it chose an altogether different path than the conventional banks. And the success behind this great initiative can be attributed to the vision that Prof. Muhammad Yunus had and the efforts that were in line with his vision.