An Islamic Analysis of the Grameen Bank

Whatever good comes from this book, it is from Allah, and whatever bad is from me and Satan. May Allah forgive me.

Table of Content
INTRODUCTION PART I | INSIDE THE GRAMEEN BANK
IPresentation of GB A. Historical Background B. Core principles C. Organization Structure Role of Managers Ownership of the Bank D. Products Loan Products Savings Products E. System of functioning Group formation Loan procedure Collection/disbursements F. Audit G. Replication all over the world Well do it for you! How to replicate? H. Social ambitions Kabliwala 16 Decisions

II-

Effects A. Socio-economic life B. Psychological C. Women empowerment

III-

Grameen Success Factors A. Leadership B. Human Resources Motivation Close to the poor Internal recruitment Leave us! C. Independent organization D. Evolution

Conclusion of Part I

PART II | ISLAMIC INSIDE

IIIIIIReligious leaders and GB Interest rate Out of poverty, but then? A. Ultimate goal B. Debt to death? C. Beggars alone

D. Education E. That being said IVWomen empowerment A. B. C. D. E. F. G. Who defines? Women VS Men We are different Less babies, ? Shyness is good Do you want the status quo? Some clarifications

Conclusion of Part II

PART III | DEVELOPING AN ALTERNATIVE

IIICase study: the Rural Development Scheme Key elements for an alternative A. For the sake of Allah B. Musharaka/Mudaraba C. Islamic education D. Muslim women E. Develop sectors needed for the country F. A community fund IIIThe Positive Circle

CONCLUSION

APPENDICES
APPENDIX 1 | GB KEY INFORMATION APPENDIX 2 | SALARY POLICY APPENDIX 3 | GRAMEEN COMPANIES APPENDIX 4 | SOME ISLAMIC FINANCE CONCEPTS

REFERENCES

I would like to thank GB staff who takes care of us interns, as well as Muhammad Yunus who took the time to discuss with us.

INTRODUCTION

In the Name of Allah, Most Gracious, Most Merciful.

Islamic finance. It has become a buzz last decades, the impressive amount ($500-700 billion) coupled with the impressive growth (around 15% a year in average) makes it the industry to be in, so that nearly all major international banks have now their own Islamic banking services to get a share of this huge market. There have been a lot of criticisms. One of them is that Islamic finance industry only benefits the rich. It is true that today Islamic finance services mostly target the rich and offer them the possibility to invest their (often petro-) dollars without feeling guilty of disobeying Allah. There is nothing wrong with benefiting the rich and offering them a halal way to invest their money. It is wrong though if it only benefits the rich, while we know that the very objective of the Islamic economic system is to alleviate poverty and foster socio-economic justice and development. Unfortunately, the best two Islamic finance principles that are Mudaraba and Musharaka are not the most used. With the former the investor brings the capital, the entrepreneur his labor, then share profits (or losses); in the latter the investor gives money and help in management and the entrepreneur put some money as well and do the business, then you share profits. It is no more a creditor/debtor relationship, but a true partnership, between brothers in faith. It really answers what a poor needs: capital, management support and hope. Giving support, capital and hope to the poor: this is what today we call microfinance. But microfinance has not been a product of the Islamic finance industry, while the latter has all the necessary tools to make it work and really change the situation of the poor, Muslims or not, everywhere. It is indeed in the Islamic tradition to make everyone benefit from good. When I heard of microfinance and understood how it worked, it just made sense that Muslims should be at the forefront of this kind of system. If the one considered as the father of microfinance (or microcredit to be more precise1), namely Muhammad Yunus (Nobel Peace Prize 2006) is indeed a Muslim, the institution he founded, the Grameen Bank (Bank of villages) is not Islamic2. If the principle of helping others to leave poverty

Microfinance and microcredit will be used for one another. But strictly speaking, microcredit is only one part of microfinance, just like credit is part of the general term finance. 2 This point will be discussed more deeply in the book.

and be financially independent is Islamic, there are several things that contradict the Islamic values. The most obvious is the use of interest (riba3) which is strongly condemned by Islam. But it is in the Islamic spirit to take what is good from others (Muslims or not) and use it. And if you want to learn about microfinance, the best thing is to go where it started, at the pioneer microcredit institution in the world, the Grameen Bank. That is why when I saw that the Grameen Bank offered internship opportunities to know more about their functioning, I thought it would be beneficial to go there. I prayed isthikharah4, and applied. A couple of days later, I was accepted. I then read Banker to the Poor by Muhammad Yunus, where he tells the story of the Grameen Bank, and a brother summed up The Poor always pay back Grameen II, the second book telling the evolution of the Grameen model. So here I was, going six weeks to Dacca, capital of Bangladesh, to learn how microfinance works on the field. My goal was to understand how it works in depth and give an Islamic analysis of the Grameen Bank model. This book tries to fulfill this goal. Ultimately I and the brothers from Quantis hope to establish the Islamic microfinance model5 that will be spread throughout the Islamic world and the rest of it, to change the lives of millions of people for the sake of Allah. If He wants.

Riba means interest. In the past, some scholars said that riba only refers to usury, but now they all agree on the fact that even small interest is riba. 4 Isthikharah is a prayer that Muslims performs to ask Allah to help them make a choice. 5 We hope to actually go beyond merely microcredit, but to think of a comprehensive financial model to finance all needs of a community. The last chapter gives an overview of the model.

PART I

INSIDE THE GRAMEEN BANK

1.

Presentation of GB6

A. Historical background

1974. Bangladesh was hit by a very tough famine. Nobody could avoid it: people were dying in the streets. Muhammad Yunus, then Professor of Economics at Chittagong University, was struck by the discrepancy between the beautiful economic theories he was teaching and the awful reality he was seeing: what is the point of having those theories when people are starving at your doorstep? So he decided to go to the villages, meet the poor people, understand their needs and start doing something more useful than teaching theories. He met a 21-old poor mother. A middleman lent her 5 taka (Tk.) (at this time it was equivalent to US $0.20)7 to buy bamboos, then she would sell the bamboo stools to him for Tk. 5 and 50 paisa ($0.228): she was making a 2-cent profit a day. She didnt want to take loan from moneylenders because they charge usurious interest rates. Muhammad Yunus was shocked: she couldnt get out of poverty because she didnt have 20 cents to buy bamboos. After thinking about it, he finally came to the conclusion that what those people needed was the starting capital. It would enable them to buy the products themselves and then resell it on the market, making more profits and being independent, from middlemen and moneylenders. He therefore started a project with some of his students. They collected data about Jobra village, located next to the University. The outcome was that 42 people needed $27. Muhammad Yunus gave the money and this is how everything started. In 1976, the Grameen Bank Project was established. At that time it was under the Janata bank, a governmental bank, which accorded a loan under the guarantee of M. Yunus. In 1983, the Grameen Bank was established as an independent bank under a special law passed for its creation. In 2006, Muhammad Yunus and the Grameen Bank won the Nobel Peace Prize, which gave tremendous publicity to GB and microcredit in general. And in June 2009, the total amount of loan disbursed by Grameen Bank (GB) was US $ 7.78 billion, with a total number of borrowers of 7.75 million. $6.91 billion had been repaid so far. From March 08 to February 09, GB disbursed $ 951.48 million. The loan recovery rate is 97.93%. After this short introduction on GB historical background, lets see how GB works concretely.

6 7

Please refer to Appendix 1 for GB key information. On August 18 2009, exchange rate is US $ 1 = Tk. 68.8. 8 All amounts given in this book in $ are US $.

B. Core principles

Before going into the functioning details, it is worthy to point out some of the core principles of GB model, namely: The poor dont go to the bank, the bank goes to the poor. No collateral are required. The bank is owned by the borrowers (well talk about it later). The poor are not poor because of them, but poverty has been enforced on them by the system. Poor dont need technical or business training, they have skills, but unused skills. The money they receive is the tool that will make them use those unused skills, and unleash their potential. Poverty does not belong to a civilized world, poverty belongs to museums.

C. Organization

Structure When a borrower wants to join the Grameen Bank, she has to form a group9 (or join one existing). 5 (minimum) to 10 (maximum) members form a group. Each group elects a Group Chairman and a Secretary, who can be changed every year. A center is 8 to 10 groups put together. The Group Chairmen of the groups select or elect10 a Center Leader, whose main tasks are to run the weekly center meeting, to approve loan proposal and submit them. During the center meeting money is collected from borrowers, by the Center Manager11 (employee of the bank). The center is usually a tiny room located in the village. 60 to 70 centers are supervised by the Branch Office. At the Branch Office are a Branch Manager, a Second Officer (who is the accountant), a Messenger (who posts documents, makes tea) and the Center Managers. Then, 8 to 10 branches form an Area. The Area Office is under the responsibility of an Area Manager, assisted by a Program Officer. 8 to 10 Area Offices are under a Zonal Office (also called General Office), managed by the Zonal Manager. There are 40 Zonal Offices, under the supervision of the Head Office (HO), which is composed of 13 departments, including audit, accounting, training
9

We will give a detailed description of the Group formation process later on. If there is not a consensus, then elections are conducted. 11 The detailed roles of bank managers are given in the next section.
10

GB is thus organized in a very structured way, with different level of management and responsibility. The GB pyramid below gives a summary of this organizational structure:

Monitoring office (no field activities)

Head Office
40 Zonal Offices 270 Area offices

Activities on the field

2557 Branch Offices Centers Groups Borrower

Figure 1. The Grameen Bank Pyramid.

Role of Managers Starting from the Zonal Manager to the Center Leader (who is a borrower, not an employee of the bank), here are their detailed roles12: Zonal Managers (~ Tk. 40,000 / month13) Visit, supervise and monitor branches, Supervise centers, Supervise accounting, Take part in the recruitment process of center managers, Approve big loans, up to Tk. 500,000 (higher loans must be approved by Head Office), Develop new branches, Maintain staff meeting, Motivate staff, Attend 2 big seminars, presided by M. Yunus, at Head Office in February and August, where rules and regulations of GB are discussed. Area Managers (~ Tk. 30,000 / month) Visit branch, 1 or 2 per day, Visit center,
12 13

This information was given during interviews with managers at every level. For more information about salary policy, please refer to Appendix 2.

Monitor collection sheets, Investigate loan utilization, Prepare and send documents for branches, Manage cash flows.

Branch Managers (~ Tk. 15,000 / month) Send center managers and make sure they are on time for center meetings, Visit 2 center meetings, these are surprise visits to control center managers, Make all disbursements, Receive all money collected (with help of the Second Officer), check amounts, Check how much the branch has received/spent for the day, Put excess of money in commercial banks (each branch has an account in a commercial bank)14, If the branch has more than 100,000 Tk, send money to Head Office. It is more interesting for the branch to put the money at the Head Office since it offers 12% interest (which is also the interest they charge when giving loans to branches), which is not the case of commercial banks. Money is put in commercial banks for safety reasons, not for financial ones. Centre Managers (~ Tk. 6,000 / month) Start center meeting, Collect money, Motivate borrowers to pay back if needed, Investigate the way they use the loan, house-to-house, After collection, inform borrowers of new marketing policies, Visit 2 centers per day, then go back to branch and gives cash to Second Officer. Center leaders (borrower (s)elected by other members) Start and end the center meeting: there is a system (very formal), Check borrowers attendance at center meetings, make sure everybody signs the presence book, Collect money per group and give it to center manager, Submit loan proposal to Center Manager (no loan without her recommendation), Go to investigation with Center Manager and assist him/her (the center leader knows everyone), Go to Branch Office for disbursements.

Ownership of the Bank The bank is owned by 95% by borrowers (who have shares of the bank) and by 5% by the Government. The Board of Directors is composed of 13 members: - Muhammad Yunus as the General Director of the Bank, - 3 members from the Government,
14

The maximum amount a branch can keep at office is 20,000 Tk (there is a maximum amount because of risk of robbery, etc.).

9 elected borrowers.

How are the 9 borrowers elected? Elections take place every 3 years. Centre Leaders select or elect the Branch Representative. Branch Representatives select or elect the Area Representative. Bangladesh is divided into 9 regions, with around 30 Areas by region (270 Area Offices in total). The Area Representatives select or elect the Regional Representative, who is a Board Member. The Board Meeting takes place thrice a year. The bank is therefore based on a democratic system. It gets GB borrowers used to this system. We will see in the book that GB does not only provide credit to the poor, but has also social objectives for the poor.

D. Products

GB offers two kinds of financial products, loans and savings accounts. Loan Products
1.

Basic Loans

Up to Tk. 12,000 for first time, 20% interest in declining method (10% flat rate) if the loan is for 1 year period, Businesses to be chosen by borrowers, Weekly installments.

Method of interest calculation: Interest Example for Tk. 10,000: Interest 2. Microenterprise loan

= 10%.

After 3 successful years of basic loans, Minimum of Tk. 20,000, No maximum.

3. Flexible loan

If problems (seasonal businesses, family problems, illness) are faced by a borrower to pay installments, she can benefit from some arrangements (lower installments, extended period of repayment). When her financial situation is better, she goes back to the basic loan highway (as called by GB staff).

4. Housing loan

After 3 successful years of basic loans, 1-year period, 8% in declining method (4% flat rate).

5. Higher Education loan

For children of borrowers studying at University, No interest, no installments during the studying period, 5% interest after finishing studies.

By February 2009, 32,202 students received this type of loan. GB also offers scholarships for student under University (College) with excellent results. It is only for borrowers children. There is no repayment. By February 2009, scholarships amounted to $ 1,332,393, having benefited 70,076 children. 6. Struggling (beggar) member loan (started in July 2002) GB does not go to beggars and tell them to stop begging since it would not work. Beggars can become members without having to leave begging. The aim is to get them involved in generating-income activities and make them realize that it is makes more economic sense to stop begging. Here are the details of the program:

Interest free loans, No compulsory installments, they pay back when they want, Motivation to pay back is that they can borrow more money afterwards. There are also religious (I dont want to go to Hell as one member said), self-respect and reputation (my neighbors know that I took a loan) factors, There is a tendency to repay the loan, If the borrower dies, nobody pays back.

This is very similar to Qard Hassan in Islamic finance. Literally a good loan, Qard Hassan is an interest-free loan, encouraged by Allah in the Quran:
Who is he that will lend to Allah a Qard Hassan so that He may multiply it to him many times? 15 And it is Allah that decreases or increases (your provisions), and unto Him you shall return .

Results of the program (up to Oct. 2008, i.e. 6 years after the program started):

15

103,489 members, Amount of disbursement: Tk. 122.76 million,

Surah 2, verse 245.

Loan repaid: Tk. 89.90 million, i.e. about 73%, Number of members who left begging: 13 920 (about 13% of members), 6 919 became normal GB member.

Savings Products 1. Personal savings account

Open for all, 8.5% interest, Minimum of Tk. 20 per week per borrower, Every member has to open a personal savings account, This saving account represents 80 to 90% of all savings accounts.

2. Grameen Pension Scheme (GPS)

Only for borrowers and staff, Monthly deposit scheme, 12% interest, Very popular.

3. Fixed deposit

Open for all, 1-year deposit at 8.75% interest, 2-year deposit at 9.25% interest, 3-year at 9.50% interest, No withdrawal during the period chosen.

4. Double in 7-year

Open for all, 10.4% interest, Receive the double of amount saved after 7 years.

5. Monthly Profit scheme

Open for all Minimum initial deposit of Tk. 20,000, Receive 850 Tk per month for Tk. 10,000 deposit, i.e. 8.5%.

6. Life Insurance Savings

Only for borrowers, Savings of this account will be used to repay a loan in case of death of the member, 3% for borrowers (of their loan) Obligatory account, 3% for husband optional.

It has been said that obligatory savings accounts are actually a kind of collateral. It is not very accurate, since the obligatory savings are really low compared with loans provided.

E. System of functioning

This section is very practical, we will see step-by-step how GB works: How groups are formed, How loans are approved and supervised, How collection/disbursements are done.

Group formation According to the principle whereby the bank goes to the poor, it is an agent of the bank (the Center Manager) who goes to the village to meet the poor. She (or he) goes door-to-door, targeting landless people, and meet villagers. She asked women about their situations, their families (married, widowed). She then explains to them what GB is about, what it does and how it works. After this initial phase, women interested form a group of 5 members. To become a member, potential borrowers are evaluated according to the following criteria: She should be poor, which is defined as landless and assetless16, Close neighbor to other members, A permanent resident of the village, Like-minded, similar age and educational status of other members, No blood relations among members, they should come from 5 different households.

Then all women come with their groups to a meeting arranged, at the village, with the Branch Manager. He introduces himself and briefs them about GB. He underlines the fact that conventional banks ask for collaterals because banks are for rich people, but GB does not required any because it is for the poor. Then they decide a time, date and place (in the village) for the first day of the continuous meeting. This refers to a 7-day training about GB functioning and procedures. During these 7 days: Women will be trained and familiarize with GB discipline (for example to stand up and greet in a particular military like way). Women will learn how to write their name (most of them are illiterate). They are always excited to learn how to write their names, it is for most of them the first time they learn how to write something, and it gives them confidence. They will learn and apply the 16 Decisions17.

16

For GB, landless means absolutely landless *they have priority+ or owns less than 50 decimals of cultivable lands. Assetless means absolutely assetless or owns less than 1 acre of medium quality, single-cropped. 17 We will come back on these 16 Decisions later on.

They will deposit Tk. 5 a day in a personal savings account. They will be trained on how to elect a Group Chairman and Group Secretary, as well as their roles, namely: o For the Group Chairman: Be present on time during center meetings and collect signature for attendance, Present orally proposal for group members, Supervise loan utilization of group members, Deposit money from group (loan and savings) during center meetings. For the Secretary: Assist Chairman, Replace Chairman in case of absence of the latter.

As for the members, their role is: Attend on time, Sign, Give installments or savings to Chairman, Keep pass books (where all information about their repayment and savings are written), Utilize loan properly, Implement the 16 Decisions in household.

During Grameen I18, loans were given according to the 2-2-1 format, meaning that only 2 members (Chairman excluded) could receive loans. The group would decide who would be the first to receive loans. The most helpless are to be given priority. If the first two use their loans properly, then 2 other members would receive loans, and finally the Chairman. Now, with Grameen II, all members can get a loan without waiting for other members. During the 7 days, Group Chairman and Secretary change every day, so that every member experiences leadership. The Branch Manager asks them questions to check if they understand well. The Center Manager, as well as the Branch Manager, visits each house. The Branch Manager meets with husbands, fathers and other male relatives to start open discussions with them, explain to them what GB is and correct misconceptions and rumors. At the end of the 7 days, the Program Officer (Assistant of the Area Manager) comes and members have an oral test. After completion of this interview, the Group is finally recognized. And loans can be given.
18

Grameen I was the old Grameen system. Some of its elements have been modified in order to make it more efficient, the new system is called Grameen II.

Loan procedure The different steps to get a loan are the following:

The member who wants a loan discusses it with members of his group, The Group Chairman refers the request to the Center Leader, The Center Leader goes to the Center Manager for approval, The Center Manager meets with group members to discuss the loan, The Center Manager fills in the 78 form, where there is different information (name, husbands name) of the borrowers. The Center Leader should sign this form, The Center Manager fills in Form #2 (loan application) and gives it to the Branch Manager, After his approval, he sends it to the Area Office, The Area Manager (or Program Officer) reviews the application. After the Area Manager signs, the form is sent back to the Branch Manager on the same day, The Branch Manager receives the letter and tells the Center Manager, The Center Manager, during next center meeting, tells the borrower to come to the Branch Office, The borrower comes to the Branch Office and gets the loan from the Branch Office.

The process lasts 7 days. For bigger loan, especially microenterprise loans, the Area Manager has a limited power, up to Tk. 50,000. For loans exceeding this amount, the Zonal Manager should give his approval, up to Tk. 500,000, after which it should be approved by the Head Office.

Collection/disbursements Money is collected at the weekly center meetings. All borrowers of the center meet, give their disbursements, and have their pass books updated. After the Center Manager collects money and fills in the collection sheet, he then brings money to the Branch Office. The Second Officer, who is the accountant, reviews the cash flows on the collection sheet. The latter is also to be approved by the Branch Manager. It is then sent to the Area Office, where data are computerized by IT operators. Each Area has 3 operators and 3 computers, supervising 8 to 10 branches (1 operator for 2 or 3 or 4 branches). This is the Management Information System Center (MIS Center). Operators checks and enters account information into computers. They then print the updated collection sheet, which is sent to the Branch Office. 90% of branches are thus computerized, at the Area level. It is planned to experiment the computerization of the Branch staff, by giving them computers. This will be accompanied by a card system by which all needed information are stocked into the card, which can then simply be plugged into the computer and deliver account information. This will allow Center Managers (whose workload is very heavy) to make their work easier, faster and more reliable. All disbursements happen at the Branch Office. Only he can disburse money.

F. Audit

The Audit Department is at the Area level. It is independent. Branches are audited every 6 months by 3 auditors. Audit lasts for 7 to 10 days. Not only auditing the Branch Office, auditors also go to villages, attending center meetings and checking pass books of borrowers. Social situation of borrowers is also a concern for auditors. They will assess the following social indicators of all members:

Members children going to school, Sanitary facilities, Drinking water, Trees.

Below is a detailed description of when a member is considered to have moved out of poverty19: 1. The family lives in a house worth at least Tk. 25,000 or a house with a tin roof, and each member of the family is able to sleep on bed instead of on the floor. 2. Family members drink pure water of tube-wells, boiled water or water purified by using alum, arsenic-free, purifying tablets or pitcher filters. 3. All children in the family over six years of age are all going to school or finished primary school. 4. Minimum weekly loan installment of the borrower is Tk. 200 or more. 5. Family uses sanitary latrine. 6. Family members have adequate clothing for everyday use, warm clothing for winter, such as shawls, sweaters, blankets, etc. and mosquito nets to protect themselves from mosquitoes. 7. Family has sources of additional income, such as vegetable garden, fruit-bearing trees, etc., so that they are able to fall back on these sources of income when they need additional money. 8. The borrower maintains an average annual balance of Tk. 5,000 in her savings accounts.

19

Feb. 2009, M. Yunus, Grameen Bank at a Glance, Grameen Bank, p.33.

9. Family experiences no difficulty in having three square meals a day throughout the year, i.e. no member of the family goes hungry any time of the year. 10. Family can take care of the health. If any member of the family falls ill, family can afford to take all necessary steps to seek adequate healthcare.

G. Replication all over the world

Well do it for you! Muhammad Yunus tells that when they presented GB abroad, some people would say: its not for my country, in my country people dont have this drive your people have. To prove it was wrong, GB answered: well come to your country and do it for you! In order to provide training, technical and financial support to organizations who wanted to import Grameen model, Grameen Trust (GT) was established in 1989. Grameen Trust is an independent nonfor-profit organization. GT is convinced that the Grameen model can be replicated all over the world. The argument is quite simple: there are poor everywhere, even if it is at different levels of poverty, but there are poor everywhere. And they need exactly what poor people in Bangladesh need: an institution that trusts them and gives them loans without collateral, so that they can start their business and get out of poverty. Grameen America is often mentioned by GT staff to prove that Grameen model can work in developed countries as well. Grameen America is operating in New York City, where it has today over 1,000 members. Concretely, Grameen Trust sends its agents all over the world to provide training to local organizations, and replicate the model. Even if the agents do not know anything about the countries they are sent to, they go and do their job. And it worked. Today GT has operated in 38 countries, with a number of 144 partners. The cumulative loans disbursed of all GT partners are $ 3.96 billion, reaching a total of 6.56 million members. From a financial point of view, the local organization pays the salary of the GT agent, but GT does not charge anything else. To fund its activities, it organizes workshops, training, Grameen International Dialogue Program In an interview with Professor Latifee, Director of Grameen Trust and one of the pioneers of GB, he said that there are two main challenges when they go abroad: language and security. Therefore, GT encourages its agents to do their best to learn the language as soon as possible. Pr. Latifee also said:
You may not have the language, but you have money: money has its own language.

GT insists also on the importance of respecting local customs and cultures.

As for security, GT tells their agents to be very careful. And even if in some areas there are troubles, GT is still working there with the poor and get their support. No major problems have happened so far. Another obstacle mentioned is found in developed countries: the social security system. Most of the time, as soon as you start something independent, social benefits stop. People are reluctant to take the risk of starting their businesses when they can get money without working. Pr. Latifee explains that every human being has some sense of dignity, and therefore would prefer to be self-reliant rather than depending on social benefits. GT tries to work on this human side to convince them to start their own businesses. Grameen Bank also worked in the past with local authorities to solve this problem. In 1988 (GT was not yet established), the Womens Self-Employment Program (WSEP) launched a Grameen-like program called the Full Circle Fund (FCF) in Chicago. With the help of M. Yunus, they managed to convince the State of Illinois to give welfare recipients who became FCF member a waiver from the law (whereby they could not receive welfare benefits while joining) for an experimental period. Because it worked, the law in Illinois has been amended and people can borrow while still on welfare.20 How to replicate? Here is the step-by-step process for a person who wants to replicate Grameen model in his/her country: Step 1 Learn Grameen model. Not only by reading books or the website, but by being trained. Step 2 Decide of a legal structure for your organization. Step 3 Get funds. It is essential at the beginning to have an external source of funds, to cover operational costs (office, staff) and to provide financial services to the borrowers. Step 4 Develop a team, train them. Step 5 Develop criteria to define who is poor. Target a category (GT only works with documented people). Step 6 Decide areas where you will be operating. Step 7 Get in touch with poor people (you can contact associations for this) and start Grameen model (group formation, training about Grameen system)

H. Social ambitions

Kabliwala

20

Yunus, Muhammad, (1999), Banker to the Poor, Aurum, p.197.

Kabliwala. This term used by Bangladeshi villagers refers to moneylenders from Afghanistan. In the past, they would come, lend money, then leave, and come back one year after to get the money back, with very high interests charged. GB approach is different, since it objectives is not only to provide money to the poorest, but to improve their socio-economic conditions, which encompasses health, education, technology That is why money is accompanied by an educational program. GB is not only a cash provider, it also aims at promoting values among its members. Whether we agree or not with all these values will be discussed later on. The social program of GB is summarized in the 16 Decisions. 16 Decisions These decisions are a number of statements that have been formulated in discussion with borrowers. The bank sat together with its members, talked about problems, then found solutions. They were 10 at the beginning, then 6 were added. Even if they were more than 16, it was decided to focus on these ones. Drawings representing decisions have been done for every decision. The 16 Decisions are:
1. We shall follow and advance the four principles of Grameen Bank --- Discipline, Unity, Courage and Hard work -- in all walks of our lives. 2. Prosperity we shall bring to our families. 3. We shall not live in dilapidated houses. We shall repair our houses and work towards constructing new houses at the earliest. 4. We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus. 5. During the plantation seasons, we shall plant as many seedlings as possible. 6. We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health. 7. We shall educate our children and ensure that they can earn to pay for their education. 8. We shall always keep our children and the environment clean. 9. We shall build and use pit-latrines. 10. We shall drink water from wells. If it is not available, we shall boil water or use alum. 11. We shall not take any dowry at our sons' weddings, neither shall we give any dowry at our daughters wedding. We shall keep our centre free from the curse of dowry. We shall not practice child marriage. 12. We shall not inflict any injustice on anyone, neither shall we allow anyone to do so.

13. We shall collectively undertake bigger investments for higher incomes. 14. We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her. 15. If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline. 16. We shall take part in all social activities collectively.

2.

Effects

A. Socio-economic life

According to a recent internal survey, 68% of Grameen borrowers families have crossed the poverty line.21 Another study22 showed that 52% of GB members that have been with the bank for 10 years or more have got out of poverty. The 48% remaining have not mainly because of two factors: a family member is sick (so all the spending is on the sickness) or a female borrower doesnt have males to help her in the business (so she cannot go to the market to sell items for instance). All borrowers I met during my internship and who have been with GB for several years have really improved their socio-economic situations. Most of them were very poor, with very tiny houses, before joining GB. Now they have comfortable homes, three meals a day, businesses that generate good incomes, and send their children to schools. That being said, to be fair, as interns we do not choose where we go, the bank sends us. So the fact that we only met with successful borrowers does not necessarily means that the bank is always successful, as the study mentioned by M. Yunus showed. And we dont really hear any criticisms about GB either. B. Psychological

When you visit borrowers, you quickly notice their pride to have succeeded in business. Thank to GB, they have received money for the first time in their lives and were shown trust. They succeeded to pay back, and succeeded to improve their lives and the lives of their families. Psychologically speaking, it gives them confidence and pride. They realized that they were capable of succeeding and going beyond mere survival. One borrower told us that now she feels more respected in the community, because she is doing business, while before she had no money, therefore no respect.
21 22

See Grameen Bank at a glance, Grameen Bank, p.17. th This comes from a study mentioned by Muhammad Yunus during the 56 Grameen International Dialogue, 25 July 5 August, Dhaka, Bangladesh.

Is there any drawbacks? This is a question that will be answered in the second part of this book.

C. Women empowerment 23 Related to the previous point is what is called women empowerment. Some cultural traditions, that are unfair, have been imposed on women, putting them down. For instance, the dowry given during weddings. This dowry is not what Islam demands, namely that the husband gives it as a gift to his wife, but it is an amount of money given by the wifes family to the husbands. As a result, women are seen by poor families as a burden: not only she does not bring money at home, but it is a cost when she gets married Also women were too often abused, whether by their husbands or by their mothers-in-law. They also have never received education. The consequence of all of this is a very negative image of themselves, and a difficult life. So, when GB appears, give them money and (therefore) some power, it changes something in their lives. I remember one borrower saying that her husband respects her more since she joined the bank. It has been said that GB disturbs the traditional structure of the family. It is true (we will come back on this point). But it is not true to say that it went to the point where now women are working outside when men are sitting at home. Most of the time, the loan received by the wife is used for businesses run by the family members: her, her husband and/or other relatives. Men are not becoming househusbands, so much so that one reason for a member failing in getting out of poverty is, as already said, the absence of male relatives to help in the business. Another example of the social change related to women is the fact that before it was not well seen for women to talk face-to-face to men. A manager of GB told me that before they used to talk to women behind a veil. But, step-by-step, day-by-day, it changed. And now it is no more an issue. The disappearance of this shyness is seen as a progress and a step in women empowerment. Should we be happy that now shyness is seen as something backward? I dont think so. Also, proof of this empowerment is that in the last elections of Bangladesh, 85 women have been elected, all members of GB. To conclude this section (where we tried to only describe, without critical analysis, which will come in Part II), the fact that now women are given financial power is indeed a major change in the familial structure of Bangladesh, not necessarily a good one, but a change.

23

I put empowerment into quote/unquote because the concept itself is to be discussed. It is a Western concept that brings with it some ideological values that have to be taken into account when using the term.

3.

Grameen Success Factors

A. Leadership

Grameen Bank is Muhammad Yunus, Muhammad Yunus is the Grameen Bank. The two are inseparable. In GB offices, his photo is everywhere. When the employees talk about the bank, you will hear Professor Yunus says that, Doctor Yunus thinks this. It is without doubt that the strong personality and leadership of Muhammad Yunus is a (if not the) key success factor of GB. When you read his book Banker to the Poor where he tells GB story, you see the life of a very determined person. At every important stage of his life, from his involvement for Bangladesh independence to his huge efforts to make GB happen, his determination is always here and quite impressive. Also, Muhammad Yunus takes actions. He does not only talk, he makes things happen and he does not waste time. For example, his involvement for Bangladesh liberation: he was in the United States, but when the war started he immediately formed a group of Bangladeshi professional to take actions (collect money, create awareness among the media) to change what he could change from where he was. And the story of GB is enough to show that he takes actions. Muhammad Yunus is a man with a vision. When you listen to him, he really seems to believe in it, aiming at putting poverty into museums. He not only has a vision, but he inspired others to follow him to reach it. We will talk about GB human resources in next paragraph, but it is impressive how employees are inspired by him. It sometimes goes too far I (and others) find. When he enters, everyone stands up (and most of the time applauses). Muhammad Yunus is like a guru. If you think I am exaggerating, please read below what Grameen Trust Colleagues wrote to congratulate him after he received the Nobel Peace Prize:
Heartfelt Congratulations to our Guide and Guru Professor Muhammad Yunus, the Father of 24 Microcredit, on winning the Nobel Peace Prize 2006 .

When he speaks, everybody listen. I have yet to hear one criticism about him or his ideas from anyone in the bank. For sure, the Nobel Prize he received has put him on this pedestal. And most Bangladeshis have great respect for the man who made Bangladesh known to the world. This leadership reminds me once when I asked an Imam in America who graduated from Medina University What do the Muslims need the most today? His answer was one word: leaders. When we say Muslim leader, we do not mean leaders that are Muslims only, but leaders who take Islam as the center of their lives and lead Muslims (and the world, because at the end of the day this is the duty of Muslims to lead the world to the worship of their Creator, to justice and peace for all) to be
24

March 2009, Grameen Trust at a glance, Grameen Trust leaflet, last page.

attached to the worship of Allah, in all fields. We need those leaders, who will lead the Ummah to bring back the golden age of Muslims, the age where they were leaders of humanity in science, in economics, in social justice, in morals, all this to please Allah. Leaders whose science is at the service of others, who devote all their lives to Islam. But, alhamdulillah we do have some leaders, who are changing things here and there, even if we dont see them on TVs, even if they will never receive the Nobel Prize As for Muhammad Yunus, this strong leadership can also be a weakness of the bank: what happens when the guru is no more here? It is difficult to see the future of the Grameen Bank without Professor Yunus.

B. Human Resources

Motivation One thing that is really impressive in GB is the motivation of employees. From top to down, everyone seems to be completely devoted to GBs mission. There is no bonus on individual performance, but motivation is here, and everywhere. For example, you often see Center Managers staying until 10pm at the Branch Office, working on collection sheets with a candle (electricity goes off very often in Bangladesh). I and another intern once asked a Branch Manager what he liked the most in his job. He said the best part of his work is that he mixes with poor people, help them and become a friend of them. Another impressive example of this motivation is GB employees who are sent abroad to replicate GB model. Humayun, an Officer of the bank, told me that he was waiting for his application to be approved for going to Columbia to replicate GB model over there. Humayun has never been abroad, he does not know Columbia, he does not speak Spanish (but is trying to learn now). He will go for at least 2 years and up to 5 years if needed. He has a wife and three children, but it does not seem to affect his motivation. He sees as a challenge that he wants to overcome, his will to succeed is his motivation. Another GB agent just came back from 4 years in Kosovo for the same purposeTell me in which big company do you find employees with such a motivation? Working full-time to help poor people is indeed a wonderful and motivating job. But I think that proud is also a major factor motivation, the pride to be part of this movement, of this Nobel Prize bank, of working with Muhammad Yunus. A pride and a will to prove to the world that GB model can work and alleviate poverty everywhere. One tool introduced by GB to motivate its staff at the Branch level is: the 5 Stars for achievements. These color-coded stars are received by a branch when they achieve 100% of a specific task. Here are the different stars25: 1. Green star for 100% repayment rate,

25

See Grameen Bank at a glance, Grameen Bank, pp.17-18.

2. Blue star for earning profit, 3. Violet star for self-financing26, 4. Brown star for ensuring education for 100% of children of Grameen borrowers, 5. Red star if all borrowers families are out of poverty. Close to the poor Another very important point regarding GB staff is that it is close to clients. The motto whereby it is the bank which goes to the poor is surely a major success factor of the bank. Center Managers know the borrowers, the relationship is not built in office but on the field, in borrowers villages. The Grameen Family is an expression often quoted, whether by staff or borrowers. And as said before, the promotion of the 16 Decisions by GB employees make borrowers see that it is not only about money. As one manager told me: we become their friends. Internal recruitment All recruitments at the top levels are done internally. All managers you will meet at the Head Office have started as Branch Managers. After some years they were promoted to the next step, and after some years, to the next one, etc. It is very important since all managers of the bank has been on the field, so they know what they are talking about when talking about being close to people, living conditions in villages or helping the poorest in rural areas. It builds consistency among employees. Leave us! What happens a lot in big companies, Muhammad Yunus explains, is that employees keep their jobs because they dont want to lose them, not because they enjoy working. So at GB, it is made very attractive for employees to leave the bank: he does not want to keep unhappy employees. Every employee leaving the bank (everyone can go on retirement after 10 years) will receive Tk. 2.5 million as a lump sum.

C. Independent organisation

From the beginning, it was an objective of Muhammad Yunus to have GB independent. It started as a bank owned mostly by the Government to a bank owned by 95% by borrowers today27. In 1995, GB decided not to receive any more external funds. Last installment received, which was in the pipeline, was in 1998.28

26

New branches are expected to break-even within the first year of operation. They are required to fund themselves entirely with the deposits they mobilize. 27 The remaining 5% are owned by the Government. 28 See Grameen Bank at a glance, Grameen Bank, p.4.

This independence gives freedom to the bank, they dont have any pressure from outside, they only focus on their objectives and their members needs. It can define its own strategy without having to please external shareholders. Money can be invested if the projects they think are worth it, they can develop projects that are not very profitable without having shareholders putting their veto. GB has therefore no obstacles on this side to achieve its mission. From borrowers point of view, without doubt it builds trust and devotion to GB, since GB is their bank. As said before, out of the 13 Board Members, 9 are (s)elected by borrowers. Every important decision is discussed with them, being close to their needs and having an on-field point of view from the first concerned people. That is why, when children of GB members who graduated ask GB to help them find jobs, M. Yunus answers:
No, you should have your own way, take this pledge for yourself and repeat it every morning: I should never seek a job to anybody, I should give jobs. Your job is to give job. People look for jobs, but you dont have to because your mothers own a bank, so you have endless money. The thing is how to use it to give jobs.

D. Evolution

GB is in constant evolution. It always has new projects and programs. The best example is the move from Grameen I to Grameen II. This change aimed at improving Grameen model to make it simpler and more efficient. Proof of this evolution are the numerous sister companies created by GB. The strategy of GB is to start social businesses29 for every social problem. Sister companies are independent so that Grameen Bank can focus on its core business (providing microcredit to the poorest). Also, if the sister company fails (and it does happen) GB is not affected. These companies can be created in cooperation with multinationals, like Danone. Examples of sister companies30 are: 29

Grameen Shakti, whose role is to sell solar to GB members, Grameen Trust, whose role is to provide technical and financial support to replicate Grameen model abroad, Grameen Fund, which is a social venture fund for new entrepreneurs, Grameen Danone Food Ltd., whose role is to sell yoghurts with needed vitamins at very low cost to poor children, Etc.

Social business is the new concept of M. Yunus, defined as: a business whose purpose is to address and solve social problems, not to make profits for investors. It is a non-loss non-dividend company. 30 You will find the whole list in Appendix 3.

This evolution of GB is a success factors since the bank adapts itself to the needs of its borrowers, whether by changing its model or by starting new programs to go further in poverty alleviation.

Leadership, Human Resources, independence and evolution are the key success factors of GB. And, as usual, when success comes, it brings more success. A lot of borrowers joined GB because of word-of-mouth. It went like every successful program: at the beginning only a few people try it, and when others see the effects it has, then people join massively. The success stories of borrowers contribute to GB success in different ways: It makes publicity for GB since other potential borrowers are attracted by their neighbors successes, It gives GB a reputation abroad as well, since the system seems to work, It motivates GB staff to see poor people grateful to their work, It is also good financially speaking: borrowers who earn good money will save good money which means more funds for GB.

Finally, the Nobel Peace Prize received in 2006 has given worldwide recognition to Muhammad Yunus, GB and Bangladesh. Pride went beyond GB staff and members, it was spread among the population. It gave glory to Bangladesh, as one local student told me. No doubt that this reward and worldwide recognition sparked GB success nationally and internationally.

CONCLUSION OF PART I

The objective of Part I was to give an in depth understanding of Grameen Bank approach, model and functioning. Grameen Bank has helped a lot of people to overcome poverty. Most people I have met at the bank are very devoted to their job and to GBs mission. There are a lot of optimism, hard work and, surely, sincerity. It is well-known (especially by successful people) that a lot of people enjoy criticizing every effort you may do, just for the sake of it. It is as if they could not be happy without criticizing. It reminds me of one story that comes back often in Islamic books, it goes like this: One man, his son and their monkey were in the street. The father was riding the monkey and the son was walking next to them. Then people started to say: Look at this mean father, letting his young child walking when he relaxes on the monkey! So the father came down and let the son ride the monkey. But then people started to say: Look at this son, he has not respect for his father, he lets him walk when he enjoys the monkey So the son came down, and here are the latter and his father both walking next to the monkey. And people went on: Look at those crazy people, they have a monkey and dont use it. So finally the father took the monkey on his shoulders! Point being: whatever you do, people will always find something to criticize you. But here we talk about dishonest criticism. There is another type which is fruitful: constructive criticism. Here the objective is not to criticize but to improve the model. In the next part, I will actually neither criticize for the sake of it, nor criticize to improve the model. I will try to show what in the Grameen model is against Islamic teachings and principles, or what values are brought that might be opposite to Islamic values. Why does it matter? It matters because I have seen sincere employees working with this bank, faithful Muslims, but they seem to be very nave about what they are doing. It matters because I know that this model is being (or is to be) replicated in several Muslim countries, and I dont want to see more and more brothers and sisters in a system that can be harmful for them, not only in this life

It matters because this is the duty of every Muslim when he sees something wrong, to warn his brothers and sisters, to try to correct it with his hand if he can, or his tongue, or - at least to reject it in his heart. This book is an attempt to correct it with my tongue, and we are working with other brothers on an Islamic microfinance model to bring concrete alternatives with criticism31. It matters, finally, because at the end of the day we are here to worship our Creator, obeying his commands, for our well-being and others, in this life and in the next. So if we spend our whole lives doing something which displeases him, then we missed our purpose of life:

103. Say: "Shall we tell you of those who lose most in of their deeds? 104. [They are] those whose efforts have been wasted in this life while they thought they were doing good?" (Surah17)

31

The last part of this book is about alternatives.

PART II

ISLAMIC INSIDE

I-

Religious leaders and GB

Often when people want to discredit an enterprise, they exaggerate and even come up with rumors to be sure that people will not try it. And here what was said about GB: if you take a loan, you will become Christian if you cannot repay the loan, they will take you to another country it is a Christian organization And so on.

Most of the time these rumors came from moneylenders, since GB broke their usurious businesses. But opposition also came from religious leaders. The problem is that either criticism is not relevant, or that it is not followed by an alternative. So Islam is perceived as part of the problem rather than the solution. Put it this way: you are a very poor mother, you dont have enough food to give 3 meals a day to your children. And then comes GB, it offers you money to start a business. But the religious leaders come and tell you that if you take a loan, you will go to hell. Actually, this sentence is not completely false. Nobody knows if this person will go to hell, but Allah told us that some actions bring us towards it, and dealing with interest rates (whether receiving it or charging it) is one of them. But, here you are: a poor mother not able to feed your children and the only thing that comes from the representatives of Islam is you will go to Hell. Threat is not bad in itself, but if not accompanied by an alternative, is not the most useful. And when the mother does take the loan and sees her socioeconomic situation improving, now she is definitely looking down to those leaders. And actually, having discussed about it, it seems that now, after many years, some religious leaders have more or less accepted it. It is no good news. Religious leaders accepting what religion strongly condemns The thing is that if people dont know their religion, if the ones representing it have nothing to offer and if they appear as being aggressive (as it has been the case in some locations), then they are, and Islam is, seen as a problem to deal withwhen Islam should be seen for what it is: the solution to mankind problems. So from the bank point of view, it is like: Religious leaders caused us problems, they were strongly opposed to it, but now, with time, relationships are better. Everything is reverse: the problem is not that they were opposed to it, but that they did not oppose to it the right way. The fact that they accepted it after time is not a good thing, it is actually very bad, maybe worse. But why? What is the problem from the Islamic point of view with the Grameen model? We will try to answer this question in next paragraphs.

II-

Interest rate

From a technical point of view, there is a strong problem with GB model: it uses interest. There is a consensus among Muslim scholars that interest is forbidden, even if it is small (which by the way is not the case for GB). There are different levels of prohibition in the Shariah32, for instance smoking is forbidden (haram) but not at the level of alcohol. As for interest, it is among the most serious sins, it is considered as a major sin. The condemnation in the Second Surah of the Quran is very clear:

275. Those who eat riba will not stand (on the Day of Resurrection) except like the standing of a person beaten by Satan leading him to insanity. That is because they say: "trading is like riba," whereas Allah has permitted trading and forbidden riba. So whosoever receives an admonition from his Lord and stops eating riba shall not be punished for the past; his case is for Allah (to judge); but whoever returns (to riba), such are the dwellers of the Fire - they will abide therein.

276. Allah will destroy riba and will give increase Sadaqt [charity] and Allah likes not the disbelievers, sinners.

32

Shariah means literally the way. The Shariah is therefore the way established by God so that human beings can live on earth with justice, and reach well-being, in this life and the next. This way is composed of beliefs ('aqda), spirituality (ihsn) and law (ahkm).

277. Truly those who believe, and do deeds of righteousness, and perform As-Salt, and give 33 Zakt , they will have their reward with their Lord. On them shall be no fear, nor shall they grieve.

278. O you who believe! Be afraid of Allah and give up what remains (due to you) from riba (from now onward), if you are (really) believers. 279. And if you do not do it, then take a notice of war from Allah and his Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your 34 capital sums), and you shall not be dealt with unjustly (by giving more than the capital sums) .

A Muslim believes that he will be judged after death. So he must orientate his whole life towards pleasing Allah, in every aspect. Whether at home or outside, in the mosque or at the office, with family or strangers, in business or school, he should always try his best to follow the teachings of the Quran and the example of the Last Messenger Mohammad, peace and blessings be upon him. Everyone will make mistakes and commit sins, but we should make all needed efforts to avoid them, and repent when we commit them. Therefore, following that, it is obvious that a Muslim should not take nor charge any amount of interest, because it would mean committing a major sin. The fact that GB uses interest is enough in itself to refuse the model. I am not saying that GB staff are not Muslims (may Allah protect me from saying such things), but there are without doubt, consciously or not, involved in a very serious matter. Of course, I am not the first to point this out. And the answer given by Muhammad Yunus is the following:
Many Islamic scholars said it is not against the Shariah. They say riba has been banned by Islam because it is a tool of exploitation but here the poor have the advantage. It is owned by them, so they cant exploit themselves. Also regarding profit sharing (on which Islamic finance is based), here it is more than profit sharing, because you are giving 100% profits back to the poor, since they own the bank.

33

As-Salt refers to the prayer, an obligation for all Muslims. Zakt refers to a tax taken from Muslims savings to be given to specific categories (poor people,) it is obligatory for Muslims who have a minimum amount of wealth. 34 This verse prohibits both charging or receiving interest.

Logically speaking, it does not really work. First, about the fact that money comes back to them because they are the owners, if we want to be rigorous, we should check if the amount given and received by every member of the bank is exactly the same. It is not the case. And if it was, then what is the point in charging interest? Second, excess of cash from savings are sent from branches to the Head Office. Then it is reinvested by HO in commercial banks where they receive interests. In this case, it is only about taking interest, the fact that poor people are owners of the bank or not does not change anything. Third, about 54% of GB depositors are banks own borrowers. It means that the rest are depositors but not borrowers, i.e. they simply receive interests. The argument given does not include these depositors. And we have seen that both giving or receiving interest is prohibited.

We can say: this is just debates for philosophers. After all, GB is helping poor people and Islam is not against that. For sure Islam is not against helping poor people! But in Islam, end does not justify means. You cannot do whatever you want for a noble cause. You cannot disobey your Creator because you think your way is better. Because Allah knows everything, is Just, cannot be wrong and want Good for His creatures. So if He forbids something it is for our good. Now, if I disobey Him because I think that my way is good, it is as if I am telling God that He is wrong, that my way is better than His. This is a really serious matter. No Muslim would ever say that this way, but we have to be careful: sometimes our deeds can speak badly for us. If we accept that end justifies means, then we can do whatever we want. But in Islam you cannot do whatever you want, if you want to go to Paradise. Now for the religious, legal explanation, I would leave it to the scholars.

III-

Out of poverty, but then ?

A. Ultimate goal

Alleviating poverty is one of the main objectives of the Islamic economic system. A lot of values (working hard, solidarity) and rules (paying Zakt on annual savings for the poor) have been established by Allah and His Messenger (peace and blessings upon him) to end poverty. A famous saying from the Second Caliph of Islam, and the second most pious companion of the Prophet (peace and blessings be upon him), Umar (may Allah be pleased with him) goes: If poverty was a person, I would have killed him. So, in this objective of poverty alleviation, GB is in accordance with Islam. No doubt about it.

However, we should not forget that the only purpose of mankind is to worship Allah, as stated in Surah 51 of the Quran:

56. I have not created Jinns and men, except so that they worship me.

Therefore, worshipping Allah is our purpose in life. Keeping this in mind, every rules, beliefs, principles or objectives of Islam is to reach this goal, since it is why we are here. Islam is the way to follow to completely fulfill this worship. Then, if poverty alleviation is an important objective of the Islamic system of life, it is not an end in itself. The goal is not to take people out of poverty, period. The goal is to get people out of poverty so that they may worship their Creator better. When you dont have food to eat, you might not be as strong and focus on worshipping Allah. You will be concerned on how to survive, you might fall into humiliation, you might fall into sins in order to survive (like dealing with riba in our case), etc. So poverty is a big trial and can bring people far from worshipping Allah35. We have already said that a means used by GB, namely interest rate, is not accepted from an Islamic point of view. But there is also a difference between GB and the Islamic vision regarding the end. From an Islamic perspective, if someone gets out of poverty but forgets his Creator and disobeys Him, then this poverty alleviation is not a good thing. Whether something is good or not is according to what brings us closer or not to Allah. And looking at the effects of GB, one problem with GB approach is that basically it ends up giving the poor access to capitalism and materialism.

B. Debt to death?

One thing for instance that disturbed me when interviewing borrowers is that most of them have been with GB for decades, receiving loans one after another, and they do not intend to stop doing so. They take a loan, and another one, and another one, until they get out of poverty, but still, they keep taking a loan, and another one, and another one. When I asked why, the answer was always to develop/expand business. So a lot of borrowers remain borrowers until the end, even if they now make enough profits to be self-reliant. There are also many borrowers leaving the bank, and that is good.

35

It is also important to point out that being rich is also a trial: will you be grateful to Allah or become arrogant? Will you earn and spend money according to His teachings? Will you help others or forget the needy? Etc. It is a big trial as well.

But GB, in its approach, does not seem to encourage that. When you fight against poverty it should be the case: you want people to leave your services, since it would mean that they dont need you, i.e. they are financially stable now. I do not say that one should not expand his business, but not by spending his life into debtsand interest. Because if some argue that interest are ok since it benefits the poor, once the latter is no more poor - even when following this argument (which as shown before is not correct) - now there is no more excuse: you only deal with interest for more money.

C. Beggars, alone

We have already described the Struggling member program of GB, which consists in giving loans without interest to beggars. This is very similar to the Islamic concept of Qard Hassan. I met two of them: both were 70 or more. It is really a good program, but I cannot help wondering how in the world a 70-old grandma can be begging while living in a villageIn a city where nobody really cares about others I can (unfortunately) understand, but here we are in a village, where most of people know each other. And not only that, but a village where there are dozens of GB members, who got out of poverty, have several houses and enjoy comfortable incomes. They are also to follow the 16 Decisions, the fourteenth being:
We shall always be ready to help each other. If anyone is in difficulty, we shall help.

So how come they leave this grandma begging? And when she needs money, even a small loan, why does she go to the bank instead of going to neighbors? If she does, would they accept? Those are questions that should not even be asked in a traditional Muslim village, since in Islam (and other traditional cultures as well) taking care of the senior is a duty for the community, especially neighbors. I do not say GB is liable for that, and actually they are trying to change that by launching this program, but why their members are not helping others? I am just worried to see poor people being taken out of povertybut into capitalism. Because capitalism is not only an economic system, it is also an ideological one. It brings principles that are very dangerous, as it is noticed every day in the West. Just open the newspaper and read what is happening in our modern society. Maybe it wont take long before we see in villages what we see in big Western cities, where your neighbor can die without everyone noticing, where actually it did happen (in France) that 15,000 old people died during a hot summer. And they were not beggarsbut they were alone. Books can be and have been written about capitalism and its dangers, far better than I, so I will stop here. I just wanted to point out the fact that GB basically empowers poor people to become capitalists. No good news. D. Education

This brings us to a very important point: giving money is not enough. GB understood it and thats why they came up with the 16 Decisions.

Therefore every Islamic microfinance program should be joined by an education program. And actually the priority is education about Islam, not giving money. Because if you die without money but with sincere faith and good deeds, it is better, infinitely better, than dying with money but having forgotten your duty towards the One who created you. However, in Islam there is no opposition per se between having money and being pious. Islamic microfinance should join Islamic education36. Otherwise you will see people getting out of poverty, but not for worshipping their God better. Worshipping Allah is the most important thing in our lives, and we have to remind each other (poor or rich) about that. E. That being said

Nevertheless, it would be very, very unfair to say that GB promotes materialism without any human values. Actually, all GB is about helping others, not only on the financial side. GB has indeed started several subsidiary companies to provide the poorest with basic services in health, education, energy, technology, etc. Also it is to be noticed that GB does not provide loans for consumption purposes. However, despite this strong social focus, it does promote, maybe not consciously, a lifestyle where God is not taken into account, and (what is related) a lifestyle that leads to materialism.

IV-

Women empowerment

A. Who defines?

Women empowerment is a recurrent theme and major concern at Grameen Bank. The first question to be asked is: who defines what women empowerment is? Lets start with a short story: During the 56th Grameen International Dialogue Program, about 20 people from the world come to Bangladesh for a training program on the Grameen model. One student from the United States, after coming back from a 5-day trip on the field, told us that his group met with a GB member. Her husband was here and he answers all questions. The American student said that they asked to talk with the woman alone. Then, he says that since she was the Telephone-Lady of the village, they went to her shop, they gave some money to the woman to see how she run her business, but the husband took the money and did the job. So the group said that no, they wanted the woman to take it. Our American student conclusion about women empowerment was like: Certainly it is already a very good step for Bangladesh compared with 30 years ago, but it has to go faster.
36

And we will see in Part III that some institutions have not waited for me to implement that.

How arrogant that was! Basically what the American is saying is: maybe it is good for you backward people, but you have to make efforts to become faster like us, your model. What this story tells us is that the Western lifestyle of women is the standard, the objective to reach. And countries where women are not seen as having the same lifestyle are late or backward. But who decided that it should be like this? Who decided that the Western way is the way to be followed by the rest of the world? The reasoning would be that the West is developed, modern and free, so if you want to be developed, modern and free you have to follow the Western way, to adopt its values and put its model as your goal. This is very arrogant, and is called eurocentrism. The European man is seen as the center of the world, all other peoples are backward until they follow him. It is indisputable that the West is more developed than the rest of the worldif we consider development as being scientific development. But it does not mean that it should be followed in every aspect of its civilization. Even in the West, more and more intellectuals, thinkers, economists and academic people are putting the Western lifestyle into question. It is a civilization based on capitalism, which has meant exploitation of others, inequality, a complex of superiority vis--vis other peoples, greed and a minority benefiting of the system on the back of the majority. Lets be clear, I am not saying people living in the West are bad, it would be a very unfair statement. I am not even saying that nothing is good in the West, surely it would be wrong. I am saying that the Western civilization, even it has its good sides, has established a model that is dangerous and even destructive at several levels for humanity, and history is unfortunately here to confirm. So you prefer communism?! some people will reply. The assumption here is that there are only two lifestyles, communism and capitalism. And because communism is dead, then we have to choose capitalism. As Muhammad Yunus says, during a lecture he delivered at Glasgow University:
No one is calling for it [capitalism] to be abandoned in favor of some other system, such as socialism, because everybody is convinced that, with all its faults, capitalism is the best 37 economic system known to humanity.

No, not everybody is convinced that capitalism is the best economic system known to humanity. Several Western intellectuals dont think so, and Muslims should not think so either. Why Muslims? Because they have an alternative system that both in theory and historically in practice has been and still is (and will remain) the best economic system known to humanity. Not because it comes from Muslims, but because its principles, values and framework comes from the only absolute source, God.

37

Yunus, Muhammad (Dec. 1 2008), Social Business for a New Global Economic Architecture, Adam Smith Lecture at Glasgow University, Grameen Bank publication.

The strength of the Islamic system is that it is based on two types of reforms: an individual and a community one. When faith enters a human heart, the person will then live according to the message he believes in, trying to copy the model of the Prophet (peace and blessings be upon him), the best man who has ever lived on this earth (and his life is enough to proof this statement). Once the person is reformed, Allah gave us rules and principles for the well-being of the society. These rules will be respected and followed by the believers since they are convinced that it is for their good, in this life and the next. Of course, we have weaknesses and we might make mistakes, but the system in place will be here to correct it. This system will be one for the well-being of the whole society, and not only a powerful minority. If you are not convinced, I recommend you to read the life in Madina during Prophets time, as well as the life of the next four Muslim Leaders (Caliphs) after him. One of them started a war against those who did not want to give the obligatory Zakt for the needy: a war against those who dont want to help the poor! The point of this paragraph is to say that the standard for Muslims is Islam. Period. Therefore, if women empowerment means following the Western civilization and its vision of women role, then we should be against it, for the good of women first, and - because women are the backbone of society - for the good of humankind. Now, if it means giving women their rights, then yes we will promote it, but it would be according to what Islam considers right. Actually Muslims did not wait for the West to give women rights. The Quran and the Prophet (peace and blessing upon him) gave them rights in the 7th century, while the West waited for the 18th century (or even later) to recognize the same rights, like the right to inherit for instance. When one is over 1000 years late, it should be enough for him to stop being arrogant and telling the world that they are backward B. Women vs. Men

Now the question is: after all, is GB concept of women empowerment different from Islamic values? The first issue with GB (and the Western concept, because the former follows the latter) is that the fight for women is often seen as against men. It is understandable, since if women are oppressed, it is by men.38 But in Islam the approach is different. Because it comes from God, women rights should be fought by the whole society, men and women alike. Therefore in a true Islamic society, there is not really feminists, ecologiststhe whole society fight for Islamic values, in all fields, whether it is about giving rights to women, children, animals or the environment. Muslims should fight for Islamic values, not for men power. Therefore in the Muslim approach, it should not be we give money to the wife so that she has some power and is more respected by her husband but we educate the husband (if needed) to teach him what the Quran and the Prophet (peace and blessings upon him) say about women. We educate the society altogether, instead of giving power to one part over another. By the way, the fact that a
38

One Manager of GB also pointed out that mothers-in-law can be very oppressive as well.

woman is more respected by her husband because she has money is not a thing to celebrate: money should not be the criteria for respect, especially in a couple. C. We are different

We often hear that women and men are equal. It has been so many times repeated that it is as if nobody dares to put it into question. If equality means equality in Justice, reward or punishment (whether in this world or the next), then yes, men and women are equal (or should be). But otherwise, women are not men and men are not women:

() And the male is not like the female (). (S.3, v.36)

I admit it is not a discovery. We all know that men and women are different, from a natural, psychological and emotional point of view. So if we are different, why should we have the same role? This is the very problem of Western view on women: it basically asks a woman to be a man. A Muslim woman wrote a very relevant article, just after a woman led a prayer in America. It targets Muslims, but will be beneficial to all regarding our discussion. Here it is:
On March 18, 2005 Amina Wadud led the first female-led Jumuah (Friday) prayer. On that day women took a huge step towards being more like men. But, did we come closer to actualizing our God-given liberation? I don't think so. What we so often forget is that God has honored the woman by giving her value in relation to God - not in relation to men. But as western feminism erases God from the scene, there is no standard left - but men. As a result the western feminist is forced to find her value in relation to a man. And in so doing she has accepted a faulty assumption. She has accepted that man is the standard, and thus a woman can never be a full human being until she becomes just like a man - the standard. When a man cut his hair short, she wanted to cut her hair short. When a man joined the army, she wanted to join the army. She wanted these things for no other reason than because the "standard" had it. What she didn't recognize was that God dignifies both men and women in their distinctiveness - not their sameness. And on March 18, Muslim women made the very same mistake. For 1400 years there has been a consensus of the scholars that men are to lead prayer. As a Muslim woman, why does this matter? The one who leads prayer is not spiritually superior in any way. Something is not better just because a man does it. And leading prayer is not better, just because it's leading.

Had it been the role of women or had it been more divine, why wouldn't the Prophet have asked Ayesha or Khadija, or Fatima - the greatest women of all time - to lead? These women were promised heaven - and yet they never lead prayer. But now for the first time in 1400 years, we look at a man leading prayer and we think, "That's not fair." We think so although God has given no special privilege to the one who leads. The imam is no higher in the eyes of God than the one who prays behind. On the other hand, only a woman can be a mother. And God has given special privilege to a mother. The Prophet taught us that heaven lies at the feet of mothers. But no matter what a man does he can never be a mother. So why is that not unfair? When asked who is most deserving of our kind treatment? The Prophet replied 'your mother' three times before saying 'your father' only once. Isn't that sexist? No matter what a man does he will never be able to have the status of a mother. And yet even when God honors us with something uniquely feminine, we are too busy trying to find our worth in reference to men, to value it - or even notice. We too have accepted men as the standard; so anything uniquely feminine is, by definition, inferior. Being sensitive is an insult, becoming a mother - a degradation. In the battle between stoic rationality (considered masculine) and selfless compassion (considered feminine), rationality reigns supreme. As soon as we accept that everything a man has and does is better, all that follows is just a knee jerk reaction: if men have it - we want it too. If men pray in the front rows, we assume this is better, so we want to pray in the front rows too. If men lead prayer, we assume the imam is closer to God, so we want to lead prayer too. Somewhere along the line we've accepted the notion that having a position of worldly leadership is some indication of one's position with God. A Muslim woman does not need to degrade herself in this way. She has God as a standard. She has God to give her value; she doesn't need a man. In fact, in our crusade to follow men, we, as women, never even stopped to examine the possibility that what we have is better for us. In some cases we even gave up what was higher only to be like men. Fifty years ago, society told us that men were superior because they left the home to work in factories. We were mothers. And yet, we were told that it was women's liberation to abandon the raising of another human being in order to work on a machine. We accepted that working in a factory was superior to raising the foundation of society - just because a man did it. Then after working, we were expected to be superhuman - the perfect mother, the perfect wife, the perfect homemaker - and have the perfect career. And while there is nothing wrong, by definition, with a woman having a career, we soon came to realize what we had sacrificed by blindly mimicking men. We watched as our children became strangers and soon recognized the privilege we'd given up. And so only now - given the choice - women in the West are choosing to stay home to raise their children. According to the United States Department of Agriculture, only 31 percent of mothers with babies, and 18 percent of mothers with two or more children, are working fulltime. And of those working mothers, a survey conducted by Parenting Magazine in 2000, found that 93% of them say they would rather be home with their kids, but are compelled to work due to 'financial obligations'. These 'obligations' are imposed on women by the gender sameness of the modern West, and removed from women by the gender distinctiveness of

Islam. It took women in the West almost a century of experimentation to realize a privilege given to Muslim women 1400 years ago. Given my privilege as a woman, I only degrade myself by trying to be something I'm not - and in all honesty - don't want to be: a man. As women, we will never reach true liberation until we stop trying to mimic men, and value the beauty in our own God-given distinctiveness. If given a choice between stoic justice and compassion, I choose compassion. And if given a 39 choice between worldly leadership and heaven at my feet - I choose heaven.

What is wrong in GB model is that generally speaking, it encourages the Western version of women empowerment, the very same that more and more women in the West are reluctant to follow, because they prefer to be mother rather than professionals. As said in the article: It took women in the West almost a century of experimentation to realize a privilege given to Muslim women 1400 years ago. How much time will be wasted to first, make Bangladeshi women follow the West, and second, realize that they should have followed Islam instead? One of the main duties of men is to take care of his family from the financial point of view. Now if you give the money power to the women, you are basically turning upside down the Islamic view of family structure. And for what reasons? Because the West did so? It is natural for a man to feel that he is the one responsible of the family. No wonder then than 31% of loans given to women are used by their husbands40, or that when foreigners come (like our American student) the man feels the need to show that he is in control of the family. D. Less babies, ?

When I first read the 16 Decision, I found it was very gooduntil I arrived at the sixth one: We shall keep our families small. For me, policies that aim at encouraging people to have fewer kids are ideological. But let me share with you the answer I received when asking Rabiya. Rabiya is the oldest (in terms of membership) member of her center: she joined at the beginning, 16 years ago. Thank to GB, she significantly improved her situation. She is the centre leader of the village. She has several businesses she and her husband are running. She is also working at the family planning center. Her role at the center is to create more awareness about birth control, sexual education and healthcare. She tells me that it worked: the number of kids per women has really decreased since it started. I ask her if she thinks it is a good thing, she says yes and when I ask why, she goes:
Less babies, more assets.
39

Mogahed, Yasmin (March 2005), Woman's Reflection on Leading Prayer, http://usa.mediamonitors.net/content/view/full/13883/ 40 th This comes from a study mentioned by Muhammad Yunus during the 56 Grameen International Dialogue, 25 July 5 August, Dhaka, Bangladesh.

I smiled, but I was crying inside. I asked the translator twice if he translated wellSo this is what is promoted among our sisters, less human, more money. Thank you family planning This is why I said earlier that the 16 Decisions can bring ideological values. This is a very materialistic conception of life, and is not what Islam promotes. It is not forbidden, for certain reasons (sickness of the mother, will to have some time between births) to control birth from an Islamic point of view. But if it is done so that we can enjoy more assets, then it is very egoistic and materialistic, and egoism and materialism are not Islamic values, but capitalistic ones. One argument that I have heard many times is that Bangladesh is an overpopulated country, so families should be smaller. I didnt have strong arguments against it, even if I was not convinced at all. This extract from article gives an answer:
Is it not strange that poor nations are complaining of overpopulation as a serious threat to development, while rich nations are complaining of under-population, also as a threat to development? The EU is concerned about its demographic future because of an ageing population and overall population decline, yet it advocates birth control, abortion, selective pregnancy, postponement of child bearing, same-sex marriages, and less children per family. In other words, the "civilized" world believes that deliberately decreasing birth rates is a pretext to affluence and happiness, when actually, demographic decline means eventual economic decline. This formula is obviously faulty, so how could it be sold to other world nations as a ticket to development? On the other hand, Muslims are not a world power today despite their wealth of human and material resources. Do you think that is due to their large numbers, or a direct result of the mismanagement of their resources? If 1.5 billion humans had faith, manners, natural resources, and the required know-how to use 41 all that for the common good, would they be considered "human surplus"?

Islam promotes large families. The Prophet (peace and blessings upon him) encouraged us to have large families, so that he will be proud of [our] number on the Day of Judgment.42 The objective for a Muslim couple is to have the largest possible family, not for the sake of it, but to educate them according to Islam, so that they will be Muslims engaged for Islam, i.e. for the good, benefiting all mankind. Indeed Muslims that are sincere and know their religion fight against all kinds of injustice, which will result in a better world, for all, Muslims or not. Therefore the more kids I educate in Islam, the better the world.

41

El-Nadi, Sahar (2009), Having Many Children : A Muslim Take, http://www.readingislam.com/servlet/Satellite?cid=1246346212459&pagename=IslamOnline-EnglishAAbout_Islam%2FAskAboutIslamE%2FAskAboutIslamE 42 Hadeeth narrated by Abu Dawud and An-Nassai.

Birth control is not forbidden, providing that we keep in mind this objective, and that we dont do it in an invalid way, like abortion, or for an invalid objective, like fear of poverty. Allah says in the Quran:

Say: "Come, I will rehearse what Allah has (really) prohibited you from": join not anything as equal with him; be good to your parents; kill not your Children on a plea of want - we provide sustenance for you and for them -; come not nigh to shameful deeds, whether open or secret; take not life, which Allah hath made sacred, except by way of justice and law: Thus doth He command you, that ye may learn wisdom. (S.6, v.151)

Kill not your Children for fear of want: we shall provide sustenance for them As well As for you. Verily the killing of them is a great sin. (S.17, v.31)

The first verse prohibits killing children because we are in a situation of poverty (thus fearing more poverty), the second prohibits killing them because we fear to fall into poverty after they are born: neither being poor nor fearing to become it is an excuse to kill children. Based on these verses, it is forbidden in Islam to use contraceptive means if it is because of fear of poverty. A Muslim relies on Allah, he knows that Allah takes care of him and his family. Muslims should make efforts, work hard, but results come from Allah, and He will take care of children if the intention of parents is to educate them in Islam. If He will. It is indeed very sad to see that we Muslims have been affected by this materialistic conception of life. A lot of us dont want to have many children, because it is too much work, it is expensive, it is difficult today Our parents or grandparent generations often did not know a lot about religion, but they relied on Allah more than we do (and they had more children). When Rabiya told me that at the beginning religious leaders were against, but now they accepted it, I felt all the more sad Family planning centers are established all over the world by Western organizations to spread women empowerment, the power to become materialistic and follow the Western view on women role.

Take Rabiya family planning center: where does the money come from? I asked. Answer: from the USA And GB has a strategy to spread it into traditional villages. A Manager of the bank told us:
If you talk of birth control to a group, it wont work. You have to find potential women, talk to her one-to-one. If she is convinced, she will convince others.

I was so sad to hear this from a Muslim sister. It sounded like a missionary strategy to take women away from their traditions. If those traditions are bad, I agree, but having children is not bad, whereas promoting birth control with all the ideological values we talked about is bad. And when women are convinced, GB also sits together with their husbands to involve them. And it unfortunately seems to work. What is all the more confusing is that Muhammad Yunus himself criticizes the import of Western views. In his book Banker to the Poor, he says:
I believe there is a strong element of scare-tactics in population policies promoted by the West and by international development agencies. We in the Third World countries, often blindly 43 echo these views and raise even more fear at home.

M. Yunus goes on saying that family policies divert attention from the problem of poverty. If you improve the socio-economic conditions of poor people (especially women), birth rate will fall. He mentioned UN studies on this subject which showed that as women gain equality, the birth rate falls. Therefore it is not as confusing as it seemed: what M. Yunus criticizes is not the fact that birth rate falls, but the Western approach consisting in frightening people instead of empowering poor women. And GB approach works:
() adoption rate of family-planning practices among Grameen families is twice the national 44 rate of Bangladesh.

E. Shyness is good

We already said that at the beginning, men from GB used to speak to women behind a veil, but stepby-step, it improved. Why it is a good thing that now there is free mixing in villages? The same Manager who told us the strategy to introduce birth control said:
Before, a man would not speak face-to-face to a woman. There was a veil between them. It was a sign of shyness.

So why GB wants to fight shyness? Shyness is good, especially between men and women. It is good to behave and dress modestly, men or women. But the West does not think so, so we change it.

43 44

Yunus, Muhammad (1999), Banker to the Poor, Aurum, pp.230-231. Ibid.

In Islam, it is not forbidden for men and women to speak together if needs be. But it is better to avoid mixing just for the sake of it, especially in areas where customs (which are given importance in Islam) are against it. Before they would speak behind a veil, today men can go to borrowers houses even if the husband is not hereShould we celebrate this? I dont think so. Mixing, if not within Islamic ethical guidelines, can foster some serious problems, from which the West is suffering. As for modesty, the Prophet (peace and blessings upon him) said:
Every religion has a character, and the character of Islam is modesty.
45

Therefore we should encourage modesty, not fight it. Modesty is something almost considered as ridiculous in our modern time. But Muslims should not leave it for the lifestyle where women when not asked to be men are basically asked to be what men want them to be. It is very obvious in the way women dress. Today, being considered sexy is good. Why is it good? Because men like to see sexy women. Actually I was literally taught in a marketing class that men are driven by their sexual desires. This is why naked women are now used to sell products. You tell a woman to be naked (or very lightly dresses) and to dance around a car in order to increase sells. You tell a woman to take her dress out and eat yoghurt, just to sell the yoghurt. The body of a woman used to sell a product: this is very sad. Fortunately more and more people are talking against this merchandization of women.

F. Do you want the status quo?

No doubt that the lives of a lot of women in rural areas in Bangladesh (and all over the world) are miserable. Their rights are denied, they are mistreated, tortured, beaten. No wonder then that when they see GB coming and giving them a little confidence, they are very grateful. I advocate neither GB approach, nor the status quo. What I advocate is that we follow the true empowerment of women, the empowerment that will respect her dignity, that will respect her womanhood, that will be in accordance with her nature, and this will be done only by following Islam. All over the Muslim world, a lot of injustice has been done against women, it is not to be denied. The problem is not Islam, the problem is that we left Islamic teachings. If Muslim men knew and applied Islam, if Muslim women knew their religion, and if they knew what other lifestyles are really about, they will understand that the only way to follow should be Islam. For instance, the strong argument for giving money to women instead of men is that women invest for the family; their first priority is their children. So money given to a woman will have more impact on society than money given to a man. This means that men waste money, or use it for their personal benefits rather than for the family. If this is the case, then the solution is to solve the problem, i.e.
45

Hadith narrated by Abu Dawud.

educate men and make them realize that from an Islamic point of view, man is responsible of the family, and a true man is not the one who uses money for personal benefit but the one who puts his wifes and childrens needs before his. This is what Islam teaches us. But avoiding the problem of men behavior by moving the responsibility of the family to the woman does not seem to be the best way to go, it does not solve the problem. So what needs to be done is education. Educate men and women about Islam, about its beautiful teachings, so that we dont lose time and tears in following man-made systems, just to realize decades later that it was not the right way to go. It takes time to see how disastrous for the society it is to change the traditional family structure. We dont really see the danger immediately, but after generations we realize that we ended up with a very individualistic society, where families are destroyed, and people suffering, psychologically. Highest rates of divorces, depression and suicides are not those of traditional societies, but those of the developed, modern and free societies. I am not judging GB members, it would be very arrogant to judge those women. But I am sad, sincerely, to see that while we have the solution to our problems, we dont learn it (because we are not taught it) and thus we adopt other cultures and values, for the worst. I pray that Allah make all Muslims realize that Islam is the only way to be saved, in this life and in the Hereafter. Ameen.

G. Some clarifications

In this chapter, I was talking about general cases: married women who have a husband working. It goes without saying that microcredit programs targeting destitute women (single mothers, widows, wives with disabled husbands) should be encouraged. Because here they are not given money challenging their husbands power, but they are given money because they need it to survive, since they dont have any male support for the time being. Also there is nothing wrong with the wife working to help the family if needed. If the husbands earnings are not enough to feed the family, of course it is not bad if the wife works to help him. But the problem comes when we encourage women to work when there is no need, just because there is the conception that working is better than staying at home. Second, I am not judging any women, in the West or not, I am not saying that working women are bad (who I am to judge others?). And several Muslim scholars actually say that some jobs should be taken by women in Muslim societies, like doctors for women for instance. What I am saying though is that we should not blindly follow the West and import its ideological concepts regarding women (and men) roles, we have everything we need in Islam for that. Third, when discussing with GB staff saying that I was worried about the Westernization, they would always strongly oppose it. They are attached to their culture, which is a good thing. But when I talk about westernization, I dont mean that Bangladeshis will change their clothes or food, it is not about external things (not now): it is about ideas and concepts. The obvious example is about having small

families. This way of thinking has been introduced in Bengali villages, it goes against religion and tradition, but it has been accepted, and now is even advocated by Bangladeshis themselves.

The last point I want to make here is that, of course, taking care of the family financially speaking is not the only responsibility of the man. Bringing money is not his only duty. He has to play an active part in children education as well, even if he will be less at home than the mother.

CONCLUSION OF PART II
Again, my goal is not to be harsh or to judge anybody (I have enough to do with myself). When visiting villages, when interacting with GB staff, I was very sad, deeply sad. Most employees are very nice, most of them Muslims (and proud to be), sincere and devoted people. But they are involved in something that is against their religion. They are working for and receiving money from an institution which is based on something that, as we said, is very serious. They are disobeying Allah, maybe (surely) not on purpose. Thats why I was sad. I was also sad to see the good traditional values being attacked, in the name of modernism, the same that has had very sad consequences elsewhere. So if it was harsh, does not consider it as coming from arrogance, rather from sadness, the sadness of a Muslim seeing his beloved brothers and sisters doing something that leads to Hell. May Allah forgive them. May Allah forgive me. May Allah forgive us all. But we have to go beyond criticism, and develop an alternative. We need an alternative. As said before, a desperate person who does not have any alternative will be very likely to go to GB, knowing or not that it is not Islamic. You can sit and say: thats bad. But you dont have solved the problem. Or you can say: thats bad, and we have better: here it is. And this is what is needed, so that our brothers and sisters come out of this sinful system. We have to offer this alternative, to improve lives of people on this earth without compromising our Hereafter. Because this compromise does not make sense. We can take good from other models, but we have to develop our own, based on our principles. We can copy others and just change what needs be. Or we can be more creative and come up with a new, innovative model, inspired by our sources. It reminds me of a khutbah (Friday prayer speech) where the imam was saying that historically, prohibitions pushed Muslims to be creative. He gave the example of drawing: as it is forbidden to draw human pictures, Muslims developed the art of Islamic calligraphy. Prohibition led to creativity. He was saying that Muslim economists and financial professionals should do the same: be creative to develop new systems and models. In the next part (the final one), we will take about this alternative.

PART III

DEVELOPING AN ALTERNATIVE

I-

Case study: the Rural Development Scheme

Lets start this part with a case study: the Rural Development Scheme (RDS) of the Islami Bank of Bangladesh Limited (IBB). This bank was the first Islamic bank, i.e. following Shariah principles, to be established in South East Asia, in March 1983. In 1995, it started a microcredit program for rural areas, the RDS. It is very similar to the Grameen model: group formation, center meetings, etc. One difference with Grameen model though is that installments are not necessarily on a weekly basis. For instance for agriculture businesses, where it takes several weeks to get a return on investment, the bank offers more time to pay back. This is not the case with GB, where you have to pay back every week, even if money comes from another source than your business. As for the differences with GB related to the Islamic approach, there are of two kinds: operational and educational. From operations point of view, the main difference is of course that no interest is charged. To make profits, RDS uses Islamic financial concepts. The most used is Murabaha, whereby the bank buys the good for a client and then sells it in installments, plus a margin which constitutes the profit. The bank is the owner of the good (thus bearing the risks) until the good is completely sold. Musharaka (partnership where both the bank and the client invests money; profits (or losses) of the clients business are then shared according to an agreed rate) is also quite used. Other Shariah compliant tools are used, namely Mudaraba, Bai-Muajjal, Hire-Purchase Shirkatul Melk or Leasing, Bai-Salam46. If many scholars allow those principles, it is agreed that the best ones (to which Islamic banks are encouraged to move towards) are Musharaka and Mudaraba. This is due to the fact that with these two, there is a real and complete partnership between the bank (investor) and the client (entrepreneur). If the latter succeeds, the bank succeeds as well. If he fails, both fail. One problem for the implementation of those two (especially in rural areas) is monitoring. With a fixed amount (interest-based, or Murabaha contract) you know exactly what will be the disbursements for every month until the end of the repayment. In a Mudaraba contract, since it depends on profits and losses, you have to find a way to monitor those profits and losses. Of course here trust plays an important role, and maybe in ancient time it was the only tool taken into account. But today it seems necessary to have control tools. This takes time, energy and (therefore) money. Mudaraba and Musharaka are also riskier than Murabaha or other contracts. These two reasons are the main ones for which these two promoted models are not very used. As for education, RDS puts a lot of emphasis on Islamic education. It uses weekly center meetings to educate women about Islam. Quran is read by all of them, the meaning of verses are explained. The
46

Please refer to Appendix 4 for definitions.

Field Manager (equivalent of Grameen Center Manager) also does some speeches about Islam, like the relationships with and rights of the neighbor in Islam, etc. This is very positive. When I visited RDS Head Office, I was very happy to learn this. I was reassured to see that an alternative model, where Islamic education is put at the center, did exist. Like the 16 Decisions of GB, RDS has also designed 18 commandments for its members. The latter memorize and utter loudly these commandments at the Centre Meeting to implement those in their practical lives. The decisions are memorized after becoming a member and before investment. It is considered as pre condition of RDS investment. Here are these commandments:
We shall 1. seek help of Allah, the Almighty, in all conditions of life, speak truth and lead honest life, 2. order others for good deeds and prohibit them from bad deeds, 3. be law abiding, not do illegal work and not allow others to do the same, 4. not remain dependent on others rather stand on our own feet, 5. bring prosperity to our family Insha Allah, 6. grow vegetables at the surroundings of our house, eat plenty of them and enhance income by selling the surplus, 7. during the plantation season, plant as many seedlings as possible, 8. not remain illiterate, establish night school if necessary, 9. arrange education for the children, 10. help each other, try to rescue any member of the Centre from danger if any, 11. give preference to others, compete in good deeds and encourage others in it, 12. build and use sanitary latrine, if not possible, build latrine digging hole, 13. drink water from tube-well, otherwise drink boiled water, 14. keep our children and environment clean, 15. take care of health, take balanced food so far, 16. not take or give any dowry at our sons and daughters wedding, tell others that it creates a social problem, 17. follow discipline, unity, courage and hard work in all walks of our lives, 18. keep words (Wadah) with others, not embezzle the deposit (Amanah) and never tell a lie.

As for giving loans to women, the Vice-President explained to me that men dont have time to come every week, they are busy working outside the village. Thats why RDS members are mainly women. He told me that loans are used for the family though, even if the woman is legally responsible. RDS also provides specific support: Tk. 1,000 given to the family in case of death for burial costs, Establishment of elementary religious school in villages, Mass Education program to teach members how to read, Libraries, Cassette clubs for entertainment, Health and medicare programs, Etc.

The Vice-President I met was a manager at the Grameen Bank before. He moved to the Islami Bank because what the point in living this life and then going to Hell? Agreed.

I would like to point out here that several other alternatives following Islamic principles were set up, mainly using Murabaha system, for instance: Hodeidah program in Yemen47, The concept of Sanduq in Syria48, The Mali-North Program of the German cooperation49.

For more information about these projects, please refer to the respective articles mentioned in the footnotes.

II-

Key elements of the alternative model

In this part, we will try to give the key elements an Islamic microfinance model should have. It is not restricted to a model for Bangladesh, rather for any Muslim (or not) countries.

A. For the sake of Allah

47

Al-ZamZami, Ahmed and Lorna Grace (Sept. 2001), Islamic Banking Principles Applied to Microfinance - Case Study: Hodeidah Microfinance Programme, Yemen, UNCDF, Special Unit for Microfinance (SUM). 48 Imady, Omar and Hans Dieter Seibel (Sept.2003), Sanduq: A Microfinance innovation in Jabal al Hoss, Syria, Amman: NENARACA Newsletter. 49 Kohler, W., Small Loans according to the Koran, Microfinance Akzente special GTZ, mentioned by Segrado, Chiara (Aug. 2005), Islamic microfinance and socially responsible investments, Torino: University of Torino, MEDA Project, Microfinance at the University, p.16.

First, the staff organization should be clear about the why of what they are doing. They do it for pleasing Allah, by helping their brothers and sisters and improving the status of the Ummah. All the staff should be in the same mindset, doing it for Islam. Regular workshops, seminars and lectures might be organized (as it is in Islami Bank of Bangladesh) to remind each other of our duties towards the Creator and Its creatures. Also developing brotherhood between staff is a very important element. Relationships should not be only professional, we are not (only) colleagues, we are brothers. We should never forget this. Brotherhood and sisterhood is not only for staff between themselves, but between staff and borrowers as well. It should be more than a mere company-client relationship. A GB Manager told me that we [employees] become their [borrowers] friends, we should become what we are: their brothers.

B. Musharaka/Mudaraba

It goes without saying that the first element of an alternative microfinance model is that it respects the Shariah principles. Several financial concepts have been developed by Islamic banks to try avoiding interest and being profitable in todays world. As said before, the two most preferred and to be spread are Musharaka and Mudaraba. Even if its concrete implementation may rise some issues (as seen for monitoring), we should find a solution. Monitoring For the monitoring issue, a study can be done beforehand to have an idea of how much profits should be earned, based on the current average profits businessmen get. For instance, a borrower wants money to buy a cow and then sell milk. The bank can check how much someone who is currently doing this business is earning. However, it can be very timeconsuming if you have to do this for every activity borrowers are interested in. Another solution is to use the group system. Other members can check out on a daily basis how much profit has been realized and the Group Chairman will write it down in presence of all members. But here also, the member can just lie to other members about the profits he made. We should also, and GB does it, get some information about the potential borrower from his environment, neighbors, village leadersto see what his reputation is like. The perfect solution would be to put one person behind every borrower during the whole day, witnessing sales, costs, profits and/or lossesBut it is not realistic, and it does not seem to be what the Islamic mindset is about. It is based on trust. It does not mean to be nave, but at one time or another, you cannot avoid trusting the borrower, even if you put some kind of monitoring to discourage temptations to lie. Actually, before starting GB, M. Yunus set up a plan called Three-Share Farming Experiment. Landlords would give their lands, farmers their labor and M. Yunus the money. Profits would be divided in three parts for each party. It was successful, but M. Yunus did not get all the money he

should have. He finally gave up the idea when he realized that it was not the poorest that benefited from this. One point to consider is that poor people dont like to be poor. They want to get out of poverty and they have the ability to do so, if we trust them. It is not in their interest to lie, and then lose not only reputation (among villagers and among other banks, if a black list is done) but also the possibility to get higher loans afterwards (even if an Islamic model should avoid the debt to death effect we talked about in the first part). Risk Mudaraba and Musharaka are risky, riskier than fixed-income return. But first, we can reduce risk if investors are numerous, and second - after all - Islamic finance is also about taking risks. From an Islamic perspective, value comes from two things, work and risk. Therefore risk should not be something to avoid, even if it can be reduced. When people invest in Shariah-compliant project and say: I dont want to lose money, it does not make sense. Because the very fact that it is Shariahcompliant means that you may lose money. If you can get your money back plus profits without any risk taken at all, then it is not called profits, it is called interest. The bank is to be rigorous, and the borrower to make his best to succeed in his business, but after that, we rely on Allah for the results. If it works and we make big profits, alhamdulillah50. If not, alhamdulillah as well. It is very important to promote and develop those two financial concepts on the field, since they are what Islamic finance is really about: partnership. Both parties have an interest in seeing the business succeed.

C. Islamic education

We have already talked about the importance of an Islamic education program going hand-to-hand with providing money. It is actually the first goal of any Islamic program: calling people to worship their Creator. And around this objective, actions will be taken in every field: social, economic, sport, cultureThose are means, secondary actions to support the primary and ultimate goal of our lives.

D. Muslim women

We have already discussed this topic. Now, in an Islamic program, what should be the position of the institution on women role?

50

Alhamdulillah means literally Praise to God , it is used by Muslim to thank God. Muslims thank God every time, during trials and during success, since everything comes from Him, and because it comes from Him, there is a good in it, even if we dont realize it. It is not fatalism (since Muslims make efforts to have the results they want), it is trust in Allah (we know He gives the result, and He wants our good).

Below is a list of important elements (even if not exhaustive) to be taken into consideration regarding women:

Islamic education should give primary importance to the topic of women so that both men and women learn their religion and what Islam says about women. Men and women should know their respective duties and rights. For instance money of the wife belongs to the wife, nobody except her has any right on it. Education programs such as learning how to write, read, etc. should be available for women. Financial responsibility is for man. This role should not be challenged in any way (like giving the economic power (burden?) to the woman). Therefore it would be better if men are responsible for the loan, even if due to their working conditions the wives are to come to the center meeting to give the repayment (but it would be of men responsibility to repay). In this case, roles are taken into account, without putting too many constraints on men working. Women should be given the opportunity to give their feedback on how the community life can be improved. Women should be reminded that their first responsibility is their families, and that running a Muslim family is one of the most beautiful things offered to a Muslim woman. People should be aware of the danger of following other ideological models regarding womens role. Criticisms should not be based on rumors, facts are enough Traditions opposite to Islam should be fought, like the tradition consisting in the womans family giving dowry to the mans (it is the husband who must give something to the woman).

E. Develop sectors needed for the country

Promoting sectors needed for the country should be taken into consideration. It will not only help individuals to get out of poverty (which is already sufficient) but it will also contribute to development of the country. Agriculture, for instance, has been neglected in many Muslim countries, who gave priority to industrial investments, importing technologiesIt did not work. And now we see Muslim countries having big potential but being dependent on imports for feeding their populations. Priority should be given to rural areas and agriculture. It will also, bit-by-bit, stop the rural exodus which is causing so many problems (overpopulated cities, unemployment). Small and medium sized enterprises should also be targeted.

Microcredit programs would promote specific sectors according to needs of the countries they are operating in.

F. A community fund

Islam strongly insists on the importance of the jamaa, the group or community. The Prophet (peace and blessings upon him) has encouraged Muslims to stay with the group, help each other (taaun), consult people (shura) and develop the feeling of belonging to one community of faith (ummah). Most Islamic organizations, financial or not, have developed welfare programs for community needs, building schools, hospitals, libraries, orphanages, giving food to the needy Microfinance organizations should also promote this spirit of solidarity. RDS is a good example. As stated before, they have several programs to improve the socio-economic conditions of the community, beyond merely giving money. GB does the same, even if Islam is not a preoccupation. RDS and GB approaches are different: RDS welfare programs are mainly charity programs, whereas GB has developed social businesses, i.e. autonomous businesses which do not aim at making profits, but at solving the social problem. Another approach is to develop a community fund, whereby all borrowers give one part of their income to a fund that will be used for the village (for example). This fund will be used to fund the school, create a library, rebuild houses destroyed by natural disasters Utilization of funds will be decided by contributors or by a group of people selected to run the fund. In this way, and with the community fund increasing, villagers will develop self-sufficiency concerning their collective needs. They will be autonomous.

III-

The Positive Circle

We discussed about what an Islamic microfinance model should be. We can copy others and put Islam at the center, like RDS, or try to develop our own way. Following this, and before concluding this book, I would like to describe a new creative model. It can be inserted under microfinance, but it actually goes beyond that. It is an alternative system: it does not need any bank, and combines cooperation, social responsibility, brotherhood, Musharaka and/or Mudaraba, therefore partnership.

It is a complete, autonomous microeconomic system. It is called the Positive Circle. This model has been developed by Marwan Muhammad51. It can be developed in rural as well as in urban areas, in the West or the East, with middle-class or very poor entrepreneurs. The Positive Circle model, drawn in Figure 2, consists in 10 points. We put some figures to make it more concrete: 1) A group of people (for instance 10 to 15 to start with) gather a part of their savings (lets say $ 50,000 in total). The amount is the investment portfolio for the network. 2) Some members of the groups are chosen to manage the fund. We can for example choose: a lawyer, a tax accountant and a financial expert. 3) The portfolio is divided in 10 shares of $ 5,000 each (or 5 of $ 10,000, according to what the group decides). 4) The shares are invested in different projects: chemistrys, a restaurant, a delivery company, an after-school tuition association, a gym Each project has a different risk/profitability profile: the chemistrys for instance makes more money in winter than in summer, whereas the restaurant uses its terrace and makes more profits in summer. The delivery company has regular clients and thus has a lower investment risk profile. Finally, the association providing tuition services does not make any profit, but has a positive social impact. Allocation of shares is done taking these differences of risk/profitability between projects into account, so that the losses of some projects are compensated by the profits of others. 5) Each share is invested in a project, according to a certain kind of partnership: We choose for example to give a loan at 0% to the tuition association, for one year, on a Qard format (interest-free loan). We invest in the restaurant by taking shares in the capital of the company for one year, either on a Musharaka basis (both investors and the entrepreneur put money), or on a Mudaraba basis (the investors brings money and the entrepreneur his work and expertise). On this format, we will share profits or losses according to the financial result of the restaurant during the year.

Therefore we are in a real spirit of partnership and economic solidarity. The interest (no pun) of the network goes hand-by-hand with the entrepreneurs, and the network members are also here to help and give their opinions to entrepreneurs during hard times: skills of the group (marketing, sales, IT, accounting, mathematics, law) are always available to give advice. 6) At the end of the year, a review of the projects in which the network took part is done:

51

Muhammad, Marwan (2006), Banque islamique: de la propagande la ralit (3/3), www.quantislam.com/knowledge.

Project A: Invested share at the beginning of the year: $ 5,000, Share value at the end of the year: $ 5 500, Result: $ 500 profit.

Project B: Invested share at the beginning of the year: $ 5,000, Share value at the end of the year: $ 4 700, Result: $ 300 loss. Project Z: Invested share at the beginning of the year: $ 5,000 Share value at the end of the year: $ 5,000, Result: $ 0.

By adding all profits and losses of each project, we end up with a portfolio of a total value of, for instance, $ 54,000, and every member of the initial investment group receives a share in profits according to what he invested (if I invested $ 5,000, i.e. 10% of the total investment, I will receive a $ 400 dividend, i.e. 10% of the total profit). 7) Zakt can also be incorporated in the Positive Circle model and given to associations for which Zakt is applicable or directly to the people entitled to receive it. 8) In our case study, entrepreneurs benefiting from the investment fund help each other throughout the Positive Circle without even noticing it: the profits of the chemistrys have for instance compensated the losses of the restaurant, etc. Besides, the entrepreneurs who benefited from the Positive Circle this year could become investors next year, thus contributing positively to the system. 9) It is therefore a real virtuous circle that is set up: Investors are given responsibility regarding the use of their money, and they orientate it on purpose towards helping those with whom they live. All investors and entrepreneurs will prefer companies and associations taking part in the Positive Circle (the restaurant manager goes to the chemistrys, students of the association of benefiting from tuition services also go to the gym, the chemistrys uses the delivery company, etc.) Once the initial phase is overcome, the network can grow, thus enlarging the Positive Circle, which can be an example and support for networks in other regions, even beyond Muslims

10) The establishment of a fair economic system, which respects the environment, does not leave anyone aside the road and takes part in social development, makes quiet the capitalistic model that

we are said is the only reliable, the only possible one. To succeed in fostering such an initiative, with the help of God and according to Muslim ethics, is to prove, definitely and irrevocably, that the economic system in which we are tried to be locked is really what we thought of it: an imposture established to make a small group prosperous on the back of the rest of the world. By establishing this innovative model, we replace in a positive way the role of savings and investment given to the bank today, and we put microfinance at a higher level. And as said at the beginning, this model can be applicable for every class of society, included the poor who wants to start business but lack capital.

Gym
Restaurant

Delivery company

FUND
School support Zakat al maal

chemistry's

Figure 2. Example of a Positive Circle.

CONCLUSION
We are on this earth to worship our Creator. We live, we die, then we will be judged on what we did. The consequence of this Judgment is the most important thing for any human being. It will decide his eternal life. It is not a joke, it is not a tale for stupid people, it is not superstition. It is the truth, revealed by Allah through His prophets, the last of which is Muhammad, peace and blessing be upon him. Therefore as Muslims we should always try to orientate our lives to follow the Prophet and please Allah. This encompasses our whole life: in the mosque, at school, at the office andin the bank. Anywhere we have to follow His commands, if we want to be successful in this life and the next. This book is nothing but a try to make people realize that microcredit as it is practiced by GB and other microfinance institutions following the same model is not a good way to go, because it is a way which goes against Islam. It would have been very egoistic and unfair from me if I just kept all these remarks for myself. And I sincerely hope this book will be helpful, God willing. I dont want to see interest and wrong values being spread among my brothers and sisters (and others) all over the world. We have the skills to develop alternatives that not only will be Shariahcompliant but that will be Shariah-promoting, promoting the Islamic values, the only that can really save Muslims from the bad conditions they are in now. Once Muslims come back to these values, and use their creativity for applying them in todays world, then the world will be a better place to live in. Now if we want to develop by copying others when they disobey Allah, we will only waste time (and tears) to realize in decades that we were wrong. We Muslims can be followers. Or we can, from our principles, play what should be our role in every field: the leaders of humanity.

And Allah knows best.

APPENDICES

APPENDIX 1 | GB KEY INFORMATION 52 (amount are in US $)

Up until February 2009: Year of Establishment as an independent bank Number of borrowers Women percentage Total branches Total staff Total villages covered Total amount of loan disbursement since inception Total amount of loan repaid Current amount of outstanding loans Total disbursement from March 08 to Feb 09 Monthly average loan disbursement over the past 12 months Projected disbursement for 2009 Projected end of year outstanding loan amount Recovery rate Percentage of deposits coming from banks borrowers Deposits = Deposits + GB own resources = Amount of total deposits For 2007: Total Revenue Total expenditure Total profits Dividend to shareholders

1983 (Grameen project started in 1976) 7.75 million 97% 2,54553 23,997 83,967 7.78 billion 6.91 billion 682.35 million 951.48 million 79.29 million 1,091 billion 90.92 97.93% 54% 139% of outstanding loans 152% of outstanding loans 948.10 million 155.05 million 153.49 million 1.56 million 20%

52 53

Yunus, Muhammad (Feb.2009), Grameen Bank at a glance, Grameen Bank. The updated number as until today is 2,557 branches.

APPENDIX 2 | SALARY POLICY

GB follows government standard regarding salaries. Employees prefer it since, even if salaries are lower than in the private sector, benefits are better, like the Tk. 2,5 million they receive when leaving the bank. As we saw, there are role designations (Center Manager, Branch Manager), but the salary follows the official bank designations. The different steps are acquired according to years of experience. On average there are 3 years between each step. Salaries can vary even within the same bank designation, since sometimes salaries increase in increment every year. Here are the details:

Center Manager
6,000 Tk.

Senior Center Manager

7,500 Tk.

Senior Center Manager (Selection Grade)

9,000 Tk.

Officer
10,500 - 12,000 Tk.

Senior Officer
13,000 - 15,000 Tk.

Senior Officer (Selection Grade)

13 000 - 15 000 Tk.

Principal Officer
21 000 - 25 000 Tk.

Senior Principal Officer

30 000 Tk.

Assistant General Manager (A.G.M.)

35 000 Tk.

Deputy General Manager

35 000 - 40 000 Tk.

General Manager
42 000 Tk.

Managing Director
45 000 Tk. Branch Manager is from Officer to Senior Officer (Selection Grade). Program Officer is at the Principal Officer level. Area Manager is at the Senior Principal Officer level. Zonal Manager is from Assistant General Manager to General Manager. You can find the different bank designations working at the Head Office, which means that not every Manager working at the Head Office has a higher position than Zonal Managers.

APPENDIX 3 | GRAMEEN COMPANIES

1. 2. 3. 4. 5. 6. 7. 8. 9.

Grameen Communications, Grameen Trust, Grameen Fund, Grameen Fisheries, Grameen Telecom, Grameen Cybernet Ltd., Grameen Shakti (Green energy), Grameen Phone Ltd., Grameen Education,

10. Grameen Information Highways Ltd., 11. Grameen Bitek (Electronic) Ltd., 12. Grameen Kalyan (Healthcare programs), 13. Grameen Uddog (Entreprise), 14. Grameen Shammogree (Products), 15. Grameen Capital Management Ltd., 16. Grameen Health Care Trust, 17. Grameen Health Care Service Ltd., 18. Grameen Knitwear, 19. Grameen Solutions Ltd., 20. Grameen Byabosa Bikash (Business Promotion and Services), 21. Grameen Danone Food Ltd., 22. Grameen Veolia Water Ltd.

APPENDIX 4 | SOME ISLAMIC FINANCE CONCEPTS

Here are the definitions of Shariah-compliant modes of financing used by RDS (apart from Murabaha, Musharaka and Mudaraba explained in the book):

Bai-Muajjal Under this mode, the bank sells the good to the client under deferred payment basis. Payment will be made in installments or lump sum at a predetermined future date.

Hire-Purchase Shirkatul Melk (HPSM) or Leasing Under HPSM, the bank supplies equipments on rental basis. Bank is the owner of the good but the client will be allowed to possess it for a certain period. The client will contribute minimum 10% of the cost price of the equipment as cash security, the rest being invested by the bank towards payment of the purchase price to the supplier. Under leasing system, the bank pays 100% of the price, the client deposits down-payment of two installments prior to availing the investments kept as cash securities and refunded after threat the expiry lease term.

Bai-Salam Here the bank makes advanced purchase contract with the client and make payment against purchase of product, which is under process of production. Price, quality, quantity, time, place and mode of delivery are to be known before making investment. Profit is to be negotiated and will be determined time to time by the bank.

REFERENCES
Al-ZamZami, Ahmed and Lorna Grace (Sept. 2001), Islamic Banking Principles Applied to Microfinance - Case Study: Hodeidah Microfinance Programme, Yemen, UNCDF, Special Unit for Microfinance (SUM). Grameen Trust (March 2009), Grameen Trust at a Glance, leaflet. El-Nadi, Sahar (2009), Having Many Children: A Muslim Take, http://www.readingislam.com/servlet/Satellite?cid=1246346212459&pagename=IslamOnlineEnglish-AAbout_Islam%2FAskAboutIslamE%2FAskAboutIslamE Hassan, M. Kabir and Dewan A.H. Alamgir (Aug. 2000), Microfinancial Services and Poverty Alleviation in Bangladesh: A comparative Analysis of Secular and Islamic NGOs, and Comments by Abdulhasan M. Sadeq, published by Iqbal, Munawar, (Aug. 2000), Islamic Economic Institutions and the Elimination of Poverty, The Islamic Foundation. Imady, Omar and Hans Dieter Seibel (Sept.2003), Sanduq: A Microfinance innovation in Jabal al Hoss, Syria, Amman: NENARACA Newsletter. Islamic Bank Bangladesh Limited (Oct. 2006), Rural Development Scheme, Public Relations Department publication. Islamic Bank Bangladesh Limited (2008), Annual Report 2007, Public Relations Department. Islamic Bank Bangladesh Limited (April 2009), Islami Bank - 26 Years of Progress, Public Relations Department publication. Khan, Abdul Hai and Md. Abdul Wahab (Jan. 2003), Introduction to Grameen II, Grameen Bank publication. Kohler, W., Small Loans according to the Koran, Microfinance Akzente special GTZ, mentioned by Segrado, Chiara (Aug. 2005), Islamic microfinance and socially responsible investments, Torino: University of Torino, MEDA Project, Microfinance at the University. Mogahed, Yasmin (March 2005), Woman's http://usa.mediamonitors.net/content/view/full/13883/. Reflection on Leading Prayer,

Muhammad, Marwan (2006), Banque islamique: de la propagande la ralit (3/3), www.quantislam.com/knowledge. Yunus, Muhammad (1999), Banker to the Poor, Aurum. Yunus, Muhammad (Feb. 2006), Microcredit: Banking With the Poor Without Collateral, Dhaka: SAARCFIANCE Governors Symposium on Microcredit, Grameen Bank publication. Yunus, Muhammad (Dec. 2006), We Can Put Poverty into Museums, Oslo: Nobel Lecture presented at the Nobel Peace Prize Ceremony, Grameen Bank publication. Yunus, Muhammad (Dec. 2008), Social Business for a New Global Economic Architecture, Glasgow: Adam Smith Lecture at Glasgow University, Grameen Bank publication.

Yunus, Muhammad (Dec. 2008), A Poverty Free World When? How?, Oxford: Romanes Lecture at Sheldonian Theatre, University of Oxford, Grameen Bank publication. Yunus, Muhammad (Feb. 2009), Grameen Bank at a Glance, Grameen Bank publication.