GRAMEEN BANK

BANK FOR THE POOR

DIVYAASINY R RAJAGHANTHAM
EQD190009
14 NOV 2019
OUTLINE

• History of Grameen Bank

• Objectives
• How Does It Function?
• What Has It Achieved?
 HISTORY OF THE BANK
THE FOUNDER
• Founder: Muhammad Yunus
- Born on 28 June 1940 in the village of Bathua,
Chittagong.
- Obtained his PhD in Economics from Vanderbilt
University
- Social entrepreneur
“It’s not people who aren’t credit-
worthy. It’s banks that aren’t
- Inspired by Bangladesh famine of 1974 people worthy.”
MICROFINANCE & ENTREPRENEURSHIP

Poverty Microfinance Entrepreneurship

• The poor are credit constrained; resort to high-interest informal loans

• Microfinance breaks the debt cycle
• Small loans to entrepreneurs to grow their business
HISTORY OF THE BANK
TIMELINE

1976 A research project by University of Chittagong

1983 Authorised to operate as an independent bank

2006 Both the founder and the bank were jointly awarded
the Nobel Peace Prize 2006
OBJECTIVE OF THE BANK

• Provide credit to the poor

Low
- Break the vicious cycle income
Low
income

- Encourages borrowers to save

High Credit
- Poverty alleviation investment Injection

Low Low
investment savings
High
• Women empowerment savings
HOW DOES IT FUNCTION?
ADMINISTRATIVE STRUCTURE
Head office
5-10 area offices/
Zonal offices
• Expanded in a decentralized zonal office

fashion Area offices 10-15 branches/

area office
• High level of autonomy to field
Branches
offices 50-60 centres/
branch

Centers 6-8 groups/ center

Groups in villages 5 members/ group

HOW DOES IT FUNCTION?
SOLIDARITY LENDING

• 5 members in a group
• Solidarity lending – credit discipline through group responsibility
• Reduces cost of screening, monitoring and enforcement
• Not the same as group lending; no joint liability
HOW DOES IT FUNCTION?
A COMPARISON
GRAMEEN BANK
Aims to bring economic and
social change
Based on trust
Flexible repayment scheme
Mostly located in rural areas
Solidarity lending
CONVENTIONAL BANK
Aims to make profit
Based on collateral
Rigid repayment scheme
Mostly located in urban areas
Individual lending
WHAT HAS IT ACHIEVED?

As of September 2019,

2,568 branches in 9.23 million 99% loan 96.8% of whom

81,678 villages members recovery rate are women
SOCIAL IMPACTS

• Microcredit to the poor

• Women empowerment
• Encourages members to practice the “16 Decisions”
• Housing Loans
• Scholarships
• Introduced social programmes: Struggling Members Program & Village
Phone Program
RELATED VENTURES
Grameen Family of Enterprises
Grameen Communication Grameen Shakti
(renewable energy)

Grameen Danone Foods

Grameen Fisheries

Grameen Byabosa Bikash

Grameen Shikkha
CONCLUSION

• Grameen Bank is a unique microfinance institution established in

Bangladesh.
• Provides more than just credit services; promotes social development
• Microfinance is effective in overcoming credit market failure of the
poor.
• Overall, a bank established by a social entrepreneur to help millions of
other poor entrepreneurs.
REFERENCES

• Retrieved from http://www.grameenbank.com/.

• Newman, A., Schwarz, S., & Ahlstrom, D. (2017). Microfinance and
entrepreneurship: An introduction. International Small Business
Journal, 35(7), 787-792.
• Khandker, S. R., Khalily, M. B., & Khan, Z. H. (1994). Is Grameen Bank
Sustainable?. World Bank, Human Resources Development and
Operations Policy.