ATSS’s

Institute of Industrial and

Computer Management and
Research Pradhikaran, Nigdi, Pune

Batch 2019-21

“GRAMEEN BANK WITH ITS HISTORY,

EVOLUTION AND CURRENT STATE.”

Prepared by : Neethu Johnychan

Roll no: 29
MBA II 4th semester
 INDEX

SRNO CONTEXT PGNO

1 INTRODUCTION 3-4

2 HISTORY 5-8
3 EVOLUTION 9

4 CURRENT STATE 10
5 CONCLUSION 10
 1. INTRODUCTION:

Grameen Bank (GB) has reversed conventional banking practice by removing the need for
collateral and created a banking system based on mutual trust, accountability, participation and
creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral.
At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the over all
development of socio-economic conditions of the poor who have been kept outside the banking
orbit on the ground that they are poor and hence not bankable. Professor Muhammad Yunus, the
founder of “Grameen Bank” reasoned that if financial resources can be made available to the poor
people on terms and conditions that are appropriate and reasonable, “these millions of small people
with their millions of small pursuits can add up to create the biggest development wonder.”
As of January, 2021, it has 9.38 million members, 97 percent of whom are women. With 2,568
branches, GB provides services in 81,678 villages, covering more than 93 percent of the total
villages in Bangladesh.
Grameen Bank’s positive impact on its poor and formerly poor borrowers has been documented in
many independent studies carried out by external agencies including the World Bank, the
International Food Research Policy Institute (IFPRI) and the Bangladesh Institute of Development
Studies (BIDS).
Grameen Bank is founded on the principle that loans are better than charity to interrupt poverty:
they offer people the opportunity to take initiatives in business or agriculture, which provide
earnings and enable them to pay off the debt.
The bank is founded on the belief that people have endless potential, and unleashing their creativity
and initiative helps them end poverty. Grameen has offered credit to classes of people formerly
underserved: the poor, women, illiterate, and unemployed people. Access to credit is based on
reasonable terms, such as the group lending system and weekly-instalment payments, with reasonably
long terms of loans, enabling the poor to build on their existing skills to earn better income in each
cycle of loans.
Grameen's objective has been to promote financial independence among the poor. Yunus
encourages all borrowers to become savers, so that their local capital can be converted into new
loans to others. Since 1995, Grameen has funded 90 percent of its loans with interest income and
deposits collected, aligning the interests of its new borrowers and depositor-shareholders. Grameen
converts deposits made in villages into loans for the more needy in the villages (Yunus and Jolis
1998).
 2. HISTORY:

Muhammad Yunus was inspired during the Bangladesh famine of 1974 to make a small loan of
US$27 to a group of 42 families as start-up money so that they could make items for sale, without
the burdens of high interest under predatory lending. Yunus believed that making such loans
available to a larger population could stimulate businesses and reduce the widespread rural poverty
in Bangladesh.

Nobel Laureate Muhammad Yunus, the bank's founder

Yunus developed the principles of the Grameen Bank from his research and experience. Grameen
Bank is Bengali for "Rural" or "Village" Bank. He began to expand microcredit as a research
project together with the Rural Economics Project at Bangladesh's University of Chittagong to test
his
method for providing credit and ban king services to the rural poor. In 1976, the village of Jobra and
other villages near the University of Chittagong became the first areas eligible for service
from Grameen Bank. Proving successful, the Bank project, with support from Bangladesh
Bank, was extended in 1979 to the Tangail District (to the north of the capital, Dhaka). The
e
bank's success continued and its services were ext nded to other districts of Bangladesh.
By ordinance of the Bangladesh Government dated 2 October 1983, the project was authorised and
established as an independent bank. Bankers Ron Grzywinski and Mary Houghton of ShoreBank, a
community development bank in Chicago, helped Yunus with the official incorporation of the
bank under a grant from the Ford Foundation. The bank's repayment rate suffered from the
economic disruption following the 1998 flood in Bangladesh, but it recovered in the subsequent
years. By the a S
beginning of 2005, the bank had lo ned over US$4.7 billion and by the end of 2008, $7.6 billion to
U the poor.
In 2011, the Bangladesh Government forced Yunus to resign from Grameen Bank, saying that at
age 72, he was years beyond the legal limit for the position.
As of 2017, the Bank had about 2,600 branches and nine million borrowers, with a repayment rate
of 99.6%. 97% of the borrowers were women. The Bank has been active in 97% of the villages of
Bangladesh. Its success has d similar projects in more than 64 countries around the
inspire including a World Bank o world, finance Grameen-type schemes.
initiative t
Grameen Bank is now expanding into wealthy countries as well. As of 2017, Grameen America
had 19 branches in eleven US cities. Its nearly 100,000 borrowers were all women
AWARDS:
 1994, Grameen Bank received the Independence Day Award in 1994, which is the
highest government award.
 13 October 2006, the Nobel Committee awarded Grameen Bank and its founder, Muhammad
Yunus, the 2006 Nobel Peace Prize "for their efforts to create economic and social development
from below." The award announcement also mentions that:
From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank,
developed micro-credit into an ever more important instrument in the struggle against poverty.
Grameen Bank has been a source f ideas and models for the many institutions in the field of
o credit that have sprung up hmicro- e world.
around t
On 10 December 2006, Mosammat Taslima Begum, who used her first 16-euro (20-dollar) loan from
the bank in 1992 to buy a goat and subsequently became a successful entrepreneur and one of the
elected board members of the bank, accepted the Nobel Prize on behalf of Grameen Bank's investors
and borrowers at the prize awarding ceremony held at Oslo City Hall.
Grameen Bank is the only business corporation to have won a Nobel Prize. Professor Ole Danbolt
Mjøs, Chairman of the Norwegian Nobel Committee, in his speech said that, by giving the prize to
Grameen Bank and Muhammad Yunus, the Norwegian Nobel Committee wanted to encourage
attention on achievements of the Muslim world, on the women's perspective, and on the fight
against poverty.
Citizens of Bangladesh celebrated the prize. Some critics said that the award affirms neoliberalism.
 3. EVOLUTION

Grameen Bank (Bengali: 2ামীণ বাংক) is a microfinance organisation and community

development bank founded in Bangladesh. It makes small loans (known as microcredit or
"grameencredit") to the impoverished without requiring collateral.
Grameen Bank originated in 1976, in the work of Professor Muhammad Yunus at University of
Chittagong, who launched a research project to study how to design a credit delivery system to
provide banking services to the rural poor. In October 1983 the Grameen Bank was authorised by
national legislation to operate as an independent bank.
The bank grew significantly between 2003 and 2007. As of January 2011, the total borrowers of
the bank number 8.4 million, and 97% of those are women. In 1998 the Bank's "Low-cost Housing
Program" won a World Habitat Award. In 2006, the bank and its founder, Muhammad Yunus,
were jointly awarded the Nobel Peace Prize.

The Grameen Bank has grown into over two dozen enterprises of the Grameen Family of
Enterprises. These organisations include Grameen Trust, Grameen Fund, Grameen Communications,
Grameen Shakti (Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education),
Grameen Motsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development),
Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear
Limited,
and Grameen Uddog (owner of the brand Grameen Check).
On 11 July 2005 the Grameen Mutual Fund One (GMFO), approved by the Securities and Exchange
Commission of Bangladesh, was listed as an initial public offering. One of the first mutual funds of
its kind, GMFO will allow the more than four million Grameen bank members, as well as non-
members, to buy into Bangladesh's capital markets. The Bank and its constituents are together worth
over US$7.4 billion.
The Grameen Foundation was developed to share the Grameen philosophy and expand the benefits
of microfinance for the world's poorest people. Grameen Foundation, which has an A-rating from
[Charity Watch], provides microloans in the USA (the only developed country where this is done),
and supports microfinance institutions worldwide with loan guarantees, training, and technology
transfer. As of 2008, Grameen Foundation supports microfinance institutions in the following
regions:

 Asia-Pacific: Bangladesh, China, East

Timor, Indonesia, India, Lebanon, Pakistan, Philippines, Saudi Arabia, Yemen
 Americas: Bolivia, Dominican Republic, El Salvador, Haiti, Honduras, Mexico, Peru,
United States
 Africa: Cameroon, Egypt, Ethiopia, Ghana, Morocco, Nigeria, Rwanda, Tunisia, Uganda
From 2005, Grameen Bank worked on Mifos X, an open source technology framework for
core banking solutions. Since 2011, Grameen Bank released this technology under the
stewardship of Mifos Initiative, a US Non Profit organisation.
 4. CURRENT STATE.

The Grameen Bank has grown into over two dozen enterprises of the Grameen Family of Enterprises.

J&K Bank Q1 results: Net profit falls 66% to Rs 7.30 crore: J&K Grameen Bank is an associate
of J&K Bank. The bank said that an interest amount to Rs 39.74 lakh for the period from November
3, 2019 to May 4, 2020 on Tier-II perpetual bonds to the tune of Rs 11.67 crore issued to J&K
Grameen Bank has not been booked as income. This is due to the CRAR (Capital to Risk-Weighted
Assets Ratio) of the associate bank falling below the minimum regulatory requirement prescribed by
NABARD/ RBI.

Financial systems designed in wrong way, Covid-19 has revealed weaknesses: Muhammad
Yunus SAID, “COVID has given us a chance to reflect on how big, bold decisions can be taken. It
has given us a window of thinking and we have a choice, whether we go to that terrible world
which is going to destroy itself anyway or we go someplace else and build a new world where
there will be no global warming, no wealth concentration, no unemployment," the pioneer of micro
credit financing. Financial systems are designed in wrong ways. COVID has revealed the
weaknesses now. Poor people are all over but the economy does not recognize them. If we can
finance them they will move up the ladder. We are engaged with the formal sector. Why can't we
build an autonomous economy?. How did we do that in Grameen Bank? People were shocked. I
said we believe in their capacity. They believe in us. There is no collateral. Grameen Bank is the
only bank in the world which is lawyer free. A bank built on trust where millions of dollars are
given and come back with interest. This is the chance I said, Corona has given us a chance to
reflect...In normal situations you will not pay attention to all these things. We are so busy making
money.”

Reverse migration may open fresh business opportunities to micro lenders: Muhammad
"
Yunus SAID, Building the rural economy is the essence of microfinance. Rural economy should
not be left as appendix of urban economy but have a identity of its own. It;'s a shame that people
are forced migrate outside in search of jobs and livelihood," the 2006 Nobel Peace Prize winner
said, in a webinar on “Financial Inclusion in a post Covid Era. We have to rethink, redesign.
Coronavirus has given us a great opportunity to reinvent.
 5. CONCLUSION.

The conclusions that are drawn from this evaluation are that Grameen Bank is not a panacea for
poverty alleviation and improving women's lives, that it has increased the income of borrowers,
has led to improvements in specific aspects of their lives, and that it has potential if used in
conjunction with other progressive social and economic policies to contribute to long-term,
sustainable, progressive social change.