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Re: Grameen Bank Query



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Dear Amit,
Another monetary innovation will be also very effective in 
alleviating poverty. That of local currency systems. check out the 
full details on the site
www.transaction.net
there is a wealth of information on local currencies. those 
especially built on mutual credit can help in improving the 
employment situation in small towns and large villages.
such a system can co-exist with a micro-cedit system like the grameen 
bank and cooperative banks.

regards
prakash

"Amit Garg" <sutradhaar@bigfoot.com> wrote on Saturday December 23, 
2000 at 10:36pm:
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>Please help make the Manifesto better, or accept it, and propagate 
it!
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>Salutations.
>
>An 'excerpt' from the Grameen Bank website, by it conceiver and 
founder
>Muhammed Yunus. I thought others too might find it interesting. I am 
curious
>to know if any such organisation (ie. based on the notion of 
microcredit) is
>functioning in India.
>
>--------Start of Excerpt---------
>
>by Muhammad Yunus
>Reprinted from the Noetic Sciences Review, Spring, 1997
>
> A Bangladesh "bank of the poor" challenges conventional thinking
>aboutlending --- showing how little money on loan it takes to give 
hope,
>possibility,and a new way of life for thousands
>
>After teaching economics in Middle Tennessee State University, 
U.S.A., for
>several years, Bangladesh native Muhammad Yunus decided, in 1972, 
the time
>bad come to return to his homeland. There he was appalled by the 
scale of
>the misery he encountered in the wake of a famine that had 
devastated the
>already tenuous social life of the struggling nation he had left in 
1965,
>when he became a Fulbright Fellow in the United States. He wanted to 
do
>something to make a positive difference in the lives of Bangladeshis 
most in
>need --- but what ?
>
>In a speech to the State of the World Forum held in San Francisco in 
1996,
>excerpted here, Yunus gave a moving account of a small-scale 
experiment he
>conducted to test a simple hypothesis : The poorest people of his 
nation, if
>given small, low-interest economic loans, could be expected to repay 
in
>full. "From the start, I knew this idea posed a challenge to an 
entrenched
>modes of thinking," Yunus recalls. "I felt there was no way for the 
majority
>of Bangladeshis to significantly change their standard of living, 
unless the
>program of reform could effect a fundamental change in beliefs about 
what
>was possible in order for simple people to solve simple problems."
>
>Setting out on foot in the village of Dhaka, one of the first people 
Yunus
>met was a widow with two daughters. Sufia Khatun, one of 
Bangladesh's 55
>million landless peasants, had borrowed money to make bamboo stools 
which
>she then sold. But the exorbitant interest rate on the loan ensured 
that her
>daily profit was only two cents. "I couldn't accept why anybody 
should make
>so little for such a beautiful skill," Yunus says. All Sufia needed 
to
>vastly improve her economic condition was the equivalent of four 
dollars.
>Yunus lent her the money and her profits soared to one and a quarter 
dollars
>per day.
>
>That was just the beginning. He proceeded to set up a bank that 
would cater
>only to those rejected by traditional lending institutions --- the 
poor, the
>illiterate, and women. Against widespread predictions that his 
experiment
>was doomed to failure, Yunus achieved a level of success that 
exceeded his
>grandest hopes. The institution he created, the Grameen Bank, today 
is
>widely hailed not simply as a new model for economic development in 
the
>Third World, but as an object lesson in the power of the human spirit
>unleashed for the greater good.
>
>"Muhammaded has created the first institution with soul from the 
ground up,"
>said IONS board member Robert Schwartz when introducing Yunus at the 
State
>of the World Forum. "It wasn't added --- it's in the whole thing."
>
>I would like to tell my personal story, going back twenty-five years 
to the
>independence movement in Bangladesh. All of a sudden we were 
confronted with
>a war, a vast amount of bloodshed, horrendous misery. During that 
period I
>was teaching here in one of the American universities, and as soon as
>Bangladesh became independent I went back, thinking I'd join 
everybody else
>to rebuild the nation, creating the nation of our dreams.
>
>But after the national crisis, the situation in Bangladesh didn't 
improve. A
>dreadful famine took place the end of 1974, and I felt helpless to do
>anything. There I was, with my brand-new Ph.D., teaching elegant 
economic
>theories, feeling certain that I had all the theoretical solutions. 
And yet,
>you walk out of the classroom, seeing skeletons all around you, 
people
>waiting to die. There are many ways to die, but there's no more 
cruel death
>than dying of hunger. The death comes inching toward you, and you 
see it,
>and you feel such despair because you can't find one handful to put 
inside
>your mouth, and the world moves on as if nothing has changed except 
for your
>situation.
>
>I couldn't cope with that. Everything I had learned, everything I was
>teaching, seemed make-believe stories with no meaning for people's 
life. So
>I set out to learn how people live in the village next door to the
>university campus. How they inch toward the death that is coming 
their way.
>I wanted to find out whether there was anything I could do as a 
human being
>to delay it, even for one single person.
>
>I went around and sat with people in the village, talking. I found 
that all
>my arrogance, my academic arrogance, didn't exist anymore. I was not 
trying
>to solve global problems; I wasn't even trying to solve national 
problems. I
>abandoned the bird's-eye view that lets you have knowledge of 
everything
>that you see from above, from the sky. I assumed a worm's-eye view, 
trying
>to find whatever comes right in front of you, smell it, touch it; 
trying to
>do something about it.
>
>One day I met a woman who was making bamboo stools. I wanted to 
understand
>how she carried out her life, because, after all, she had something 
to do,
>something to make. After long discussions I found out that she was 
making
>the equivalent of two U.S. pennies every day by making stools. I 
couldn't
>believe anybody could work so hard and make such a beautiful bamboo 
stool,
>and make only such a tiny profit. She explained to me that she 
didn't have
>the money to buy the bamboo which goes into that bamboo stool, so 
she had to
>borrow from the trader who, in turn, imposed a condition that she 
had to
>sell the product to him alone, at the price that he decides.
>
>That explained the two-penny profit. She was virtually a bonded 
laborer. And
>how much did the bamboo cost ? About twenty cents. I was astonished, 
and
>began debating with myself whether to give her twenty cents. I came 
up with
>an idea to make a list of people who needed that kind of money. I 
took a
>student of mine and went around the village several days, and came 
out with
>a list of forty-two people. When I added up the total amount needed, 
I got
>the biggest shock of my life. It added up to twenty-seven dollars !
>
>I felt ashamed of myself, being part of a society which could not 
provide
>twenty-seven dollars to forty-two hard-working skilled human beings. 
To
>escape that shame I took the money out of my pocket and handed it to 
my
>assistant, saying : You take this money and give it to those forty-
two
>people that we met, and tell them that this is a loan, that they can 
pay me
>back whenever they are able to. In the meantime they can sell their 
product
>at whatever price they can get.
>
>After receiving the money, naturally the people got very excited. 
Such a
>thing had never happened before! And seeing that excitement, it made 
me
>think more: what do I do now ? Should I go on giving this money, or 
make
>some arrangements so they can find this money whenever they need 
it ? I
>thought of the bank branch located right on the campus of the 
university. I
>went to the manager and suggested that he lend money to the poor 
people in
>the village that I met. He nearly fell out of his chair. "You are 
crazy.
>It's impossible. How can you lend money to the poor people ? They 
are not
>creditworthy."
>
>I pleaded with him. "At least give it a try, find out, it's only a 
small
>amount of money." He said, no, our rules don't permit it. "They 
cannot
>provide collateral, and such a tiny amount, it's not worth giving." 
He
>suggested that I see the higher officials in the banking hierarchy in
>Bangladesh, maybe they could find a way to give the loan, but he 
could not.
>I took his advice and went to the people who mattered in the banking 
sector,
>everybody told me the same thing.
>
>Finally, after several days of running around, I offered myself as a
>guarantor. I'll guarantee their loan, I'll sign whatever they wanted 
me to
>sign, they give me the money and I take the money and give it to the 
people
>I want to give to, and that would be the beginning. Not so fast, the 
bankers
>said. They warned me repeatedly that the poor people who receive the 
money
>will never pay you back. I said, I'll take a chance.
>
>And the surprising thing was, the people who got the loans were 
paying every
>penny. There wasn't a single penny missing. I got very excited, and 
came to
>the manager, and said, look they pay back, there's no problem. Why 
shouldn't
>you give ? They said, no, they're just fooling you. "Soon they will 
take
>more money and never give it back." So I gave them more money, but 
they
>always repaid. I told the story to the banker and he said, "Sure, 
maybe you
>can do it in one village, but if you do it in two villages it won't 
work."
>So I hurriedly did it in two villages. Guess what ? It worked.
>
>Ever since, it's become a kind of a struggle between me and the bank 
manager
>and his colleagues in the higher positions. They kept saying that 
this
>larger number, five villages, probably will prove their point. So I 
did
>extended the program over five villages, and all it showed was that
>everybody was paying back. But the bankers didn't give up. They 
said, "Ten
>villages." So I did it over ten villages -- then twenty villages, 
fifty
>villages, a hundred villages. It became a kind of a race between me 
and the
>banking experts. I came up with results they couldn't deny, because 
it was
>their money I was giving, but they wouldn't accept it because they 
are
>trained to believe that poor people are not credit-worthy. How can 
they be
>wrong ?
>
>Luckily, I was not trained that way, so I could believe what I was 
seeing,
>as it revealed itself. But their mind, their eyes were blinded by the
>knowledge they had. So finally I thought, why am I trying to 
convince them ?
>I'm totally convinced poor people can take money and pay it back, 
why don't
>I set up a separate bank ? That excited me. I wrote down the 
proposal and
>went to the government to get the permission of the government to 
set up a
>bank. It took me two years to convince the government, because they 
said,
>why should you have a bank for the poor people ? There are a lot of 
banks
>already and we're having enough troubles already. Why do you want to 
create
>more problems for us ?
>
>I told them I didn't want any money from them -- all I wanted was the
>permission to set up a bank. In 1983, the second of October, we 
became a
>bank, a formal bank, independent, and what an excitement for all of 
us, we
>with our own bank that we can continue to expand as we wish. That's 
what we
>did. Today we work in 36,000 villages in Bangladesh. We loan to 2.1 
million
>borrowers. Of those who borrow, 94% are women. We have over 12,000 
staff.
>
>Along the way, I made two observations about the banking system: one 
it is
>designed to be biased against the poor, two, it is made to be 
against women.
>The bankers got mad at me for saying that. "How come you blame us 
for being
>anti-women?" I responded, you just give me the list of all your 
borrowers,
>in all the banks. I said I bet you you can not come up with one 
percent of
>the borrowers as women. They admitted this was so, but they declined 
to name
>it prejudice. What else do you call it ?
>
>I wanted to make sure half of our borrowers were women. But when we 
would go
>and try to persuade the women to join Grameen Bank, it wasn't easy. 
In
>Bangladesh men are not allowed to go out and address a woman in the 
village.
>We did many round-about ways to communicate, and finally began to get
>through. The usual response is : No, I don't need money, why should 
I take
>it? "Give it to my husband." We kept saying, yes, we understand, we 
can give
>it to your husband, but we want to give it to you, if you need it.
>
>This was our beginning, repeated village after village, person after 
person.
>It takes a long time for a Bangladeshi woman to believe she can 
receive
>money and use it and earn income. And after she does, then she finds 
four
>other friends who will join her in a group of five, to borrow from 
Grameen
>Bank. Finally she prepares herself, going over all these hurdles, 
finding
>four other friends, eventually taking the money. Still, the day she 
receives
>her money is seldom a day of excitement. Usually she spends a 
sleepless
>night debating with herself whether she should go through with it or 
stop
>right then, because she has created a lot of problems for the family
>already, being a girl, a woman. She doesn't want to bring any more 
problems
>to the family by borrowing and not being able to pay back.
>
>In the morning her four friends usually come over and encourage her 
to go
>ahead with it -- because their participation depends on hers. So she 
agrees
>to receive that first loan, which is about twelve dollars or fifteen 
dollars
>worth of money. What a treasure ! She can't believe somebody could 
trust her
>with such an enormous amount of money. She will tremble. Tears roll 
down her
>cheeks. Then she promises to herself never to disappoint those who 
trusted
>her with such an enormous amount of money.
>
>She proceeds to work very hard to make sure she pays every penny of 
it ---
>and she does. She has to make weekly repayments in tiny amounts. 
When she
>makes her first installment payment, what excitement. It really came 
true,
>her dream; she can do it. Even she didn't believe that she could do 
it, but
>now she sees otherwise. When she pays her second installment, that's 
another
>revelation. By the time she finishes her loan, she's a completely 
different
>person. She explored herself, she found herself. Everybody said 
she's no
>good, she's nobody. Today she feels she is somebody. She can do 
things, she
>can take care of herself and family.
>
>We noticed many good things happen in the family when the woman is 
the
>borrower in the family instead of the man. So we focused more and 
more on
>women, not just fifty percent, so today our borrowers are ninety-four
>percent women. We reach our first billion dollars of loans three 
years back.
>The bank that started its journey with twenty-seven dollars giving 
loans to
>forty-two people, coming all the way to a billion dollars, that's 
cause for
>celebration !
>
>Nobody believed in us or what we said. The bankers said, "Well, you 
can give
>tiny amounts to tiny people. You can't expand, you cannot reach out 
to all
>the poor people." So coming over with a billion dollar loan to so 
many
>borrowers was quite a revelation. The next year we gave three hundred
>million dollars in one year. Last year we gave over four hundred 
million
>dollars. This year it will be over a half a billion dollars. 
Remember, we
>had no experience running any organization. I was a teacher in the
>university. Nor did my colleagues have experience, we just carved 
our way
>out as we went along. Many were my students.
>
>The four hundred million dollars that we loaned last year, I should 
mention,
>is larger than the combined total of all the rural loans of all 
banks in
>Bangladesh. I returned to my banking colleagues with this : "You say 
poor
>people are not credit-worthy, but for twenty years they have been 
showing
>everyday who is credit worthy and who is not." We give housing loans 
of
>three hundred dollars, adequate to build a house with tin roof, 
concrete
>columns and a sanitary latrine. This appears to loan recipients as a 
royal
>palace -- never in their lives did they think would enter into a 
house with
>a tin roof, let alone live in one. We have given more than three 
hundred
>fifty thousand housing loans. We had no problem in getting our money 
back.
>Our recovery rate has remained over ninety-eight percent all along.
>
>If you can run a bank, lend money, and get your money back, cover 
all your
>costs and make profit, and people get out of poverty level, what 
else can
>you ask ? It seems the legitimate question to ask is: Are the banks
>people-worthy ?
>
>Some have said, "There must be some trick in it, this fellow is not
>reporting it right, he's hiding things." So we have welcomed 
independent
>research on the Grameen Bank. Many who study the project come with a 
lot of
>hostility, but when they finish their work they become great 
admirers of
>Grameen. And all reports say the same thing; that the income of all
>borrowers is steadily increasing. World Bank reports says that one-
third of
>the borrowers have clearly crossed away from the poverty line, way 
above the
>poverty line. One-third just about to cross the poverty line. The 
remaining
>one-third are making progress toward this important goal.
>
>At a population conference in Cairo, evidence was presented that the
>adoption of family planning practices within Grameen families is 
twice as
>high as the national average. Why? We're not a family planning 
organization,
>we're simply a bank. There must be something else. When people start 
making
>their own decisions about life, they also start making decisions 
about the
>size of their families. Sanitation, housing and nutrition are all 
better in
>Grameen families than non-Grameen families, as well.
>
>Poverty is not created by the poor people. Poverty is created by the
>institutions that we have built around us. We have to go back to the 
drawing
>board, to redesign those institutions, so that they do not 
discriminate the
>poor, because the present ones do. We hear about apartheid, we feel 
terrible
>about it. But apartheid practiced by the financial institutions, we 
don't
>feel anything about it. I think it's a responsibility of all 
societies to
>insure human dignity to every member or that society. And I don't 
think we
>have done very well on that part. We talk about human rights, but we 
don't
>link human rights with poverty. If you look at it in a different way,
>poverty is a denial of all human rights.
>
>Grameen-type programs are emerging in many countries. To our 
knowledge,
>fifty-six countries are now involved in Grameen type programs, 
including the
>United States. But it's not yet getting the momentum that it needs. 
On this
>planet 1.3 billion suffer extreme poverty. If we could create an
>institutional facilities to extend credit to them, they would have 
the same
>experience that we have in Bangladesh through Grameen Bank. There's 
no
>reason why anybody should be poor in the whole world. We're trying to
>organize a micro-credit summit next year in Washington, D.C. The 
goal of the
>summit is to reach the hundred million poorest families on this 
planet with
>credit self-employment, preferably through the women in those 
families, by
>the year 2005.
>
>If we can do that, we'll be laying the foundations for a poverty-
free world.
>Working together, we can achieve that goal. I wait for the day when 
our
>children and grandchildren will go to museums to see what poverty 
was like.
>We can make that happen, Let's do it.
>
>
>
>
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