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Re: Grameen Bank Query

Please help make the Manifesto better, or accept it, and propagate it!
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
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.


"Amit Garg" <sutradhaar@bigfoot.com> wrote on Saturday December 23, 
2000 at 10:36pm:
>Please help make the Manifesto better, or accept it, and propagate 
>An 'excerpt' from the Grameen Bank website, by it conceiver and 
>Muhammed Yunus. I thought others too might find it interesting. I am 
>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 
>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 
>when he became a Fulbright Fellow in the United States. He wanted to 
>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 
>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 
>full. "From the start, I knew this idea posed a challenge to an 
>modes of thinking," Yunus recalls. "I felt there was no way for the 
>of Bangladeshis to significantly change their standard of living, 
unless the
>program of reform could effect a fundamental change in beliefs about 
>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 
>met was a widow with two daughters. Sufia Khatun, one of 
Bangladesh's 55
>million landless peasants, had borrowed money to make bamboo stools 
>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 
>vastly improve her economic condition was the equivalent of four 
>Yunus lent her the money and her profits soared to one and a quarter 
>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 
>was doomed to failure, Yunus achieved a level of success that 
exceeded his
>grandest hopes. The institution he created, the Grameen Bank, today 
>widely hailed not simply as a new model for economic development in 
>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 
>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 
>theories, feeling certain that I had all the theoretical solutions. 
And yet,
>you walk out of the classroom, seeing skeletons all around you, 
>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 
>your mouth, and the world moves on as if nothing has changed except 
for your
>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 
>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 
>that you see from above, from the sky. I assumed a worm's-eye view, 
>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 
>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 
>the equivalent of two U.S. pennies every day by making stools. I 
>believe anybody could work so hard and make such a beautiful bamboo 
>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, 
>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 
>twenty-seven dollars to forty-two hard-working skilled human beings. 
>escape that shame I took the money out of my pocket and handed it to 
>assistant, saying : You take this money and give it to those forty-
>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 
>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 
>think more: what do I do now ? Should I go on giving this money, or 
>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 
>It's impossible. How can you lend money to the poor people ? They 
are not
>I pleaded with him. "At least give it a try, find out, it's only a 
>amount of money." He said, no, our rules don't permit it. "They 
>provide collateral, and such a tiny amount, it's not worth giving." 
>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 
>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 
>I want to give to, and that would be the beginning. Not so fast, the 
>said. They warned me repeatedly that the poor people who receive the 
>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 
>you give ? They said, no, they're just fooling you. "Soon they will 
>more money and never give it back." So I gave them more money, but 
>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 
>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 
>and his colleagues in the higher positions. They kept saying that 
>larger number, five villages, probably will prove their point. So I 
>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, 
>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 
>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 
>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 
>why should you have a bank for the poor people ? There are a lot of 
>already and we're having enough troubles already. Why do you want to 
>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 
>borrowers. Of those who borrow, 94% are women. We have over 12,000 
>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 
>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. 
>Bangladesh men are not allowed to go out and address a woman in the 
>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 
>It takes a long time for a Bangladeshi woman to believe she can 
>money and use it and earn income. And after she does, then she finds 
>other friends who will join her in a group of five, to borrow from 
>Bank. Finally she prepares herself, going over all these hurdles, 
>four other friends, eventually taking the money. Still, the day she 
>her money is seldom a day of excitement. Usually she spends a 
>night debating with herself whether she should go through with it or 
>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 
>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 
>to receive that first loan, which is about twelve dollars or fifteen 
>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 
>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 
>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 
>revelation. By the time she finishes her loan, she's a completely 
>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 
>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 
>borrowers was quite a revelation. The next year we gave three hundred
>million dollars in one year. Last year we gave over four hundred 
>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 
>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 
>people are not credit-worthy, but for twenty years they have been 
>everyday who is credit worthy and who is not." We give housing loans 
>three hundred dollars, adequate to build a house with tin roof, 
>columns and a sanitary latrine. This appears to loan recipients as a 
>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 
>fifty thousand housing loans. We had no problem in getting our money 
>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 
>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 
>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 
>we're simply a bank. There must be something else. When people start 
>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 
>board, to redesign those institutions, so that they do not 
discriminate the
>poor, because the present ones do. We hear about apartheid, we feel 
>about it. But apartheid practiced by the financial institutions, we 
>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 
>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 
>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 
>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 
>children and grandchildren will go to museums to see what poverty 
was like.
>We can make that happen, Let's do it.
>This is the National Debate on System Reform.       
>Rules, Procedures, Archives:            

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