Grameen Bank - the mother of Grameen Social Business

Need:

The poor need fair access to finance to empower them to help themselves. Since conventional banking makes lending decisions based on a borrower's existing assets (collateral), those who have nothing get nothing. 50 percent of the population of Bangladesh lives on less than USD 1 per day. If they needed money, they traditionally had to turn to local money lenders who charged extremely high interest rates and frequently entrapped the borrowers in a spiral of debt.

Grameen Social Business solution:

In 1976, Prof. Yunus lent USD 27 to 42 people - focusing on the poorest of the poor. This led to the innovation of micro finance and the foundation of the Grameen Bank in 1983. This Bank lent money without collateral, at very small amounts and at comparatively low interest rates almost exclusively to poor women. Why women? Grameen discovered that women are more reliable in paying back and that they use the loans more wisely than men. The Grameen Bank is the first social business. Interestingly, it gives the poor not only access to capital, but allows them to be the owners of the bank and thereby benefit from any dividend payments. Additionally education is a central part of Grameen Bank. Scholarships are awarded every year to the highest performing children of Grameen borrowers.

Outlook:

With its 2,500 branches, Grameen Bank reaches out to almost 85,000 villages in Bangladesh. Grameen Bank impacts lives of more than 40 million people by giving credits to almost 8 million people. The loan recovery rate is higher than 98 percent. 100 percent of loans are financed from the Bank's deposits, making it entirely independent of external support. Grameen Bank's impact is comprehensive and sustainable. 60 percent of the borrowers find their way out of poverty. The even more significant effect of the Bank's activities are on the next generation - it achieves 100 percent literacy in the second generation borrowers (Bangladesh average is 47 percent).

In 2006, Grameen Bank and its founder Prof. Yunus won the Nobel Peace Prize "for their efforts to create economic and social development from below".

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