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Re: Grameen Bank Query

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

Grameen has some sister organizations in India. Here is the link: 

I also found this Interview with Dr. Younus very interesting, especialy his 
views on the role of goverment.  He says "Governments should not do such 
programmes because they create bureaucracies, which become self- serving and 
defeat the purpose for which they are created. The best way is to create 
market entities that are doing things in a self-sustaining way."

Here is the link to the rest of the interview: 

Also there is a very well known org in India called SEWA - www.sewa.org that 
has been active since the 1970's.


>From: "Amit Garg" <sutradhaar@bigfoot.com>
>Reply-To: debate@indiapolicy.org
>To: <debate@indiapolicy.org>
>Subject: Re: Grameen Bank Query
>Date: Sat, 23 Dec 2000 22:06:55 -0800 (PST)
>Please help make the Manifesto better, or accept it, and propagate it!
>An 'excerpt' from the Grameen Bank website, by it conceiver and founder
>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) 
>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 
>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, 
>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 
>of Bangladeshis to significantly change their standard of living, unless 
>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 
>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 
>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, 
>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 
>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 
>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. 
>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 
>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 
>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. 
>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 
>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. 
>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
>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 
>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 
>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 
>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 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 
>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 
>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 
>it prejudice. What else do you call it ?
>I wanted to make sure half of our borrowers were women. But when we would 
>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 
>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 
>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 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 
>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 
>worth of money. What a treasure ! She can't believe somebody could trust 
>with such an enormous amount of money. She will tremble. Tears roll down 
>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 
>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 
>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 
>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 
>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 
>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 
>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 
>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 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 
>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 
>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 
>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.
>This is the National Debate on System Reform.       debate@indiapolicy.org
>Rules, Procedures, Archives:            http://www.indiapolicy.org/debate/

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This is the National Debate on System Reform.       debate@indiapolicy.org
Rules, Procedures, Archives:            http://www.indiapolicy.org/debate/