Grameen Bank

Grameen Bank

The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans (known as microcredit or grameen credit) to the impoverished. The name Grameen is derived from the word gram which means "rural" or "village" in the Bengali language. The system of this bank is based on the idea that the poor have skills that are under-utilized. A group-based credit approach is applied within the group to ensure the strict discipline, ensuring repayment eventually and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services and runs several development-oriented businesses including fabric, telephone and energy companies. Another distinctive feature of the bank's credit program is that the overwhelming majority (98%) of its borrowers are women. The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, the Professor at University of Chittagong, launched a research project to examine the possibility of designing a credit delivery system. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. The Grameen Bank (literally, "Bank of the Villages", in Bengali) is the outgrowth of Yunus' ideas. Grameen believes that charity is not an answer to poverty. It helps individual's initiative to break through the cycle of poverty, whereas loans offer people the opportunity to take initiatives in business or agriculture, providing earnings and enabling them to pay off the debt. Grameen Bank received several prestigious awards including the highest civilian award in Bangladesh, the Independence Day Award, in 1994. However, the greatest recognition of the bank's achievements came on October 13, 2006, when the Nobel Committee awarded Grameen Bank and its founder, Muhammad Yunus. Analysts have suggested that microcredit can bring communities into debt from which they cannot escape. At last, it creates a help for rural people.