The Grameen Bank has been established under the Grameen Bank Ordinance, 1983 (Ord. No-XLVI of 193) as a specialized bank with a view to providing credit to landless small farmers, Laborers, working women and other disadvantaged groups of people for all types of economic activities including housing, but excluding business in foreign exchange transaction.
All about Grameen Bank
The Grameen bank originates from a project called the Grameen Bank project. The Grameen Bank Project. The “Grameen Bank Project” means the Grameen bank Project sponsored by the rural economic Programme of the Department of Economics, University of Chittagong, in 1976 in village Jobra, Police Station Hathazari, in the district of Chittagong under the direction of Prot.
Mohammad Yunus, the then head of the department of Economics, University of Chittagong. Subsequently, it was adopted by the Bangladesh Bank and participated by few Nationalized Banks and the Bangladesh Krishi Bank.
Capital of Grameen Bank and Resources
Grameen Bank was formally launched under Ordinance with capital contributed by Government of Bangladesh and Nationalized Commercial Banks. Gradually over the years shares of Grameen Bank have been sold to the borrowers of Grameen Bank.
Presently borrowers own 92% (ninety two) percent shares of the Bank. This is most unique in the world that borrowers own the bank.
Besides, capital contributed by share-holders, Grameen bank funds its operation by borrowing from the Government, banks, donors and savings of the borrowers.
Borrowers are organized groups
The Grameen Bank credit programme caters only to the poor. Where congenital credit institution largely failed in reaching the disadvantaged. groups, Grameen bank has succeeded in evolving a delivery system designed exclusively for the poorest in Bangladesh.
People organize themselves in primary groups of five persons and federate into centers. Six groups of above mentioned five members join together to form a centre. The poor, who want to become members of the bank, are encouraged to form groups by finding five like-minded ones who are in a similar economic condition and enjoy mutual trust and confidence.
Group members must be inhabitants of the same village, only one member of a household may be in a group. If several people from a household want to join, they must take membership in different groups in the centre.
Similarly, relatives must not be in the same group. Membership in groups and centre is according to gender. Women comprise their won groups and centers and so do the men.
Each group elects a chairperson and a secretary who hold office for one year only and thereafter leadership rotates among them. The group chairperson is responsible for the discipline in the group. Members conduct their business with the bank through her or him at weekly meetings.
Bank goes to the borrowers to give credit: According to the principles of the Grameen Bank, the bank should go to the people rather than the people coming to the bank. All banking transactions are done at centre at regular weekly meaning attended by borrowers and bank officials.
Housing Loan: Housing is one of the fundamental rights of a hem being but many poor people are deprived of this need. A durable shelter is none of the fundamental requirements for people to be able to organize their actions in a disciplined way and undertake plans and programmers for creative pursuits.
People without a home tend to be uncertain, worried, and unstable, which affects their every action. The ownership of a house infuses people with a sense of confidence and humor that enables to start dreaming of a better life. Furthermore, homestead is also often the workplace for the rural people.
Collateral Security not necessary
Grameen Bank is the first ever financial institution in the world which offers collateral-free loan to the rural people.
When a new group is formed, it is kept under close observation for a month by bank officials to see if the members are conforming to the discipline of Grameen Bank. If found satisfactory, two members will receive loan and their performance is observed.
If their performance is found satisfactory, the next two members will be eligible for loan. The fifth member of a group who is usually the group chairperson or secretary will receive his or her loan when second set of leanness have established their liabilities. Thus, group member’s interest tins a micro-network of mutual accountabilities.
This is the whole basis for a singular fact that Grameen Bank can give loans without demanding a collateral security. Social collateral replaces material collateral.
The credibility of the group as a whole and its future benefits in terms of new loans is in jeopardy, if one member defaults any loan installment.
Replication of Grameen bank
Grameen Bank model of landing to the poor has been acclaimed throughout the world and its sole innovator, Prof. Mohammad Yunus, received many prizes from various Governments and institutions for his great contribution to the poor of the world, particularly that of Bangladesh.
Over 50 (fifty) countries have set up organizations to provide micro-credit to the poor on Grameen bank model. Grameen Trust, a subsidiary organization of Grameen Bank, is entrusted with starting the Grameen model abroad at the request of Governments of those countries.
Evaluation: Grameen Bank has attracted the attention of many quarters as a successful institution. Several independent evaluation teams, both national and foreign, assessed the impact of Grameen Bank in the economic condition of the poorest in Bangladesh and confirmed its profound impacts in terms of significant improvement for the Grameen bank clients.
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