Grameen Bank

Topics: Microfinance, Bank, Muhammad Yunus Pages: 2 (478 words) Published: May 27, 2009
In the mid-1970s, Professor Muhammad Yunus (Yunus), then Head of the Rural Economics Program at the University of Chittagong, observed that banks did not extend their credit schemes to the rural poor as they were not considered creditworthy. In this situation, the rural poor were forced to approach moneylenders who charged exorbitant rates of interest. In 1976, Yunus launched The Grameen Bank Project, on an experimental basis to study the framework of banking services for the rural poor. The objectives of the Grameen Bank Project were:

•Providing banking services to the rural poor
• Eliminating exploitation of the rural poor by moneylenders • Facilitating self-employment projects for unemployed rural people • Making women self-reliant by providing them opportunities through Grameen Bank • To reverse the vicious cycle of – low income, low saving & low investment, into a new cycle of “low income, credit, investment, more income, more credit, more investment, more income QUESTIONS FOR DISCUSSION:

1. According to analysts, Grameen Bank was successful because of its unique working model. Analyze the working model of Grameen Bank and discuss how it differs from the traditional commercial banking model?

2. Many analysts criticized Grameen Bank for its style of functioning. Analyze the drawbacks of the Grameen Bank model.

3. Microfinance has tremendous potential as an instrument for poverty reduction. Explain the role played by Grameen Bank in reducing poverty in Bangladesh. Do you suggest that the Grameen Bank model for poverty alleviation be emulated in other developing countries? Explain with reasons. THE GRAMEEN BANK MODEL

The Grameen Bank model was one of the most widely researched microfinance models all over world. The Bank had four tiers, the lowest level being branch office and the highest level being the head office (Refer Figure I). The branch office supervised all the ground activities of the bank such as organizing target...
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