iScrapbook

One of the most interesting case studies I did when I was in college was to review the operations of Grameen Bank of Bangladesh. I was most impressed with the sacrifices and commitment of the bank founder, Muhammad Yunus to establish microcredit financing for the very poor. Muhummad Yunus in his pursuit to help the poorest of the poor in Bangladesh, observed that very small loans can make a very big difference in the lives of the very poor. He gave up his lucrative job as Professor of Economics in Chittagong University to pursue his vision.

Based on his observations and believes, in 1976, he gave out his first installment loans of $27 from his own pocket to 42 women in a village who made a net profit of $0.02. The amount was so small that we, the students, were even amazed with with results. By end of 1976, he managed to secure a bank loan to lend to the poor. By end of 1982, there were 28,000 members. In 1983, the Grameen Bank was officially formed to give loans to poor Bangladeshis.

Muhammad Yunus designed innovative means to ensure repayment by getting borrowers to form ‘solidarity group’. These borrowers will act as co-guarantors and will help one another to overcome challenges to repay the loan. He gave out most of the loan to women whom he believed would be more devoted to the families and would repay the loan.

In 2003, Muhammad Yunus and Grameen Bank won the Nobel Peace Prize for their effort to create economic and social development for the poor.

I did this case study in 1988. At that time, to even think of winning a Nobel Prize was definitely beyond the dream of anyone including Muhammad Yunus. Today, we know the results. He simply did it. His strategies have proven to work and many countries around the world are starting to establish microcredit facilities for the poor.