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Grameen Bank

Page history last edited by Brian D Butler 11 years, 4 months ago

Grameen Bank

 

The Grameen Bank (Bengali: গ্রামীণ ব্যাংক) is a microfinance organization and community development bank started in Bangladesh that makes small loans (known as microcredit or "grameencredit"[4]) to the impoverished without requiring collateral.

 

The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied which utilizes the peer-pressure within the group to ensure the borrowers follow through and use caution in conducting their financial affairs with strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services, and runs several development-oriented businesses including fabric, telephone and energy companies. Another distinctive feature of the bank's credit program is that a significant majority of its borrowers are women.

 

The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, a Fulbright scholar at Vanderbilt University and Professor at University of Chittagong, launched a research project to examine the possibility of designing a credit delivery system to provide banking services targeted to the rural poor. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. The organization and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize in 2006[5]; the organisation's Low-cost Housing Programme won a World Habitat Award in 1998.

Grameen Bank has sometimes been accused of charging relatively high interest rates and putting people in a debt-trap. Some have also doubted whether the business model of the bank is a sustainable one without the explicit and implicit donor support that it receives. At the same time, it is often cited as a success story in microfinance and serves as a model for institutions with similar philosophy world-wide.

 

read more:  http://en.wikipedia.org/wiki/Grameen_Bank 

 see:  www.grameen-info.org and  http://en.wikipedia.org/wiki/Grameen_Bank

 

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Links from GloboTrends:

microcreditemerging markets ,   microcredit and inflation Economic Development

 

 

 

Disruptive business models

 

Disruptive business model innovations that are driving "real" positive social change and simultaneously "real" profits - Grameen Bank for example

 

 

 

For investors in emerging markets:

 

The two distinct fields of microcredit and Microfinance are hot right now, as investors seek ways to not only find attractive returns, but to also invest in projects with unique social appeal.  Seeking economic development of some of the poorest regions on earth, this movement was initially brought to the world stage by the incredible efforts of such groups as the Grameen Bank of Bangladesh and Professor Prahalad of the University of Michigan.  Since then, there has been a boom in the credit markets to service the bottom of the pyramid marketing, as banks, individuals and commercial stores have collectively realized the value that can be obtained by extending credit to the emerging consumer classes.  In response, we are seeing how the new opportunities with consumers of low income is transforming commodity markets around the world, as projects such as the Bolsa Familia in Brazil spur a whole generation of buyers to seek new automobiles, washing machines, etc.  See our discussion on the Rise of purchasing power in emerging markets

 

 

Criticism

 

There is, however, criticism towards microfinance institutions. In 2001, a Wall Street Journal article raised questions about the Grameen Bank, including repayment rate, collection methods and questionable accounting practices.

 

On a larger scale, some argue that an overemphasis on microfinance to combat poverty will lead to a reduction of other assistance to the poor, such as government welfare.

 

Research on the actual effectiveness of microfinance as a tool for economic development remains slim, in part owing to the difficulty in monitoring and measuring this impact. Questions have arisen regarding whether microfinance can ever be as important a tool for poverty alleviation as its proponents and practitioners would submit

 

 

 

 

 

 

 

 

 

 

 

 

 

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