Banker to the Poor: Micro-Lending and the Battle Against World Poverty

Great book. Good price.

Great

Ever tried to get a loan of 100 rupees from any bank? Chances are you will be laughed at and security will show you the door. Md Yunus, founder of Grameen Bank and winner of Nobel Peace Prize in 2006. Made micro credit a reality and empowered several poor lead a dignified life.Banker to the Poor is his autobiography.Post liberation, Bangladesh was a shattered country with extreme poverty. Yunus resigned his job in USA and went to Bangladesh in 1972 with lot of idealism and hope. He had a brief disappointing stint as a bureaucrat in the planning commission. He then joined Chittagong University as a professor in economics.One day Yunus was strolling through Jobra village located adjacent to University campus. He saw a woman weaving beautiful bamboo stools. Her name is Sofia. She was 21 years old with three children. She was under the clutches of middlemen and earns just two cents per bamboo stool.Yunus assigned a group of his students to go round Jobra village and make a list of similarly exploited poor workers. Within a week the students came up with the list. There are 42 such poor people. Their total need is 856 taka which is less than 27 US dollars.Yunus could not believe what he heard. He immediately took out $27 and asked his students to distribute it to the 42 needy people. He assured them that they can repay at their convenience.That night Yunus pondered over his action. Honestly it was an emotional outburst and not a solution to lakhs of such poor people in Bangladesh.The bottom 20% of the poor and mostly rural women must have access to credit to lift them out of destitution and exploitation. Will banks be able to help?When Yunus requested Janta bank which is a big government bank in Bangladesh to sanction loans of 2 to 3 dollars to poor women they laughed at him. How can they sanction loan to people who are illiterate, cannot provide collateral, the loan amount so small that it will not even cover their processing costs. The bank also listed out several common perceptions about the poor. They are lazy, they cannot save, their husbands snatch away all their earnings and they have no proper address to contact. In a nutshell they are not credit worthy.Yunus is not a person to give up. He will stand surety for the loan. His students will do the paperwork. He need not worry about the whereabouts of women borrowers. His students will come to the bank for depositing the repayment amounts.The bank reluctantly agreed subject to a ceiling of 300 dollars.A system of providing micro credit to the poor was thus established in 1976. It was a small but significant achievement. Yunus proved that common perceptions about poor are wrong. There were no defaults. However the bank refused to relax their rules and paper work. Consequently there were delays in sanctioning loans. Yunus was also burdened with signing thousands of surety bonds.Bangladesh Agricultural Bank came to his rescue. The bank agreed to open its branch in Jobra village. It will be called Experimental Grameen Branch of the Agricultural Bank. Three students of Yunus were appointed by the bank to work in this branch. Under guidance from Yunus, these students dedicated themselves to the service of the poor and started giving micro credit to rural women. Success at the Jobra branch became national news.What started as an experiment became an established mechanism. During the period 1979 to 1983 Yunus consolidated the credit delivery mechanism and popularized it among rural women. In 1983 Grameen bank became a separate corporate entity and established branches across the country. In 1990 it achieved full independence.In the Grameen microcredit scheme, the bank will not lend to you until you're part of a group of 5 borrowers who are not family members. This group is trained in the rules of the bank for seven days and then they should pass a test. Initially two out of the group are given a loan. Once these two repay the installments regularly, other members of the group are sanctioned loan. If you fail to repay the loan, the entire group suffers because they won't receive future loans. This social pressure is in part responsible for the high level of repayment.Grameen loans are not interest free. However, borrowers are required to deposit 5% of their loans into a group fund which is disbursed as interest free loan. Loans are sanctioned for one year term. Installments are paid weekly to bank workers who come to the village of the borrower. Repayment equals 2% of the loan amount per week for 50 weeks. Loan amounts are insured. This is a security against untimely death of a borrower.Bank managers are hired straight from college and are tasked to set up a new bank in a village and run that bank.Who are the beneficiaries of Grameen Bank? As already mentioned, they are mostly rural poor women engaged in paddy husking, bamboo works, weaving, pottery, cultivation, making puffed rice, fishing nets, sweet meats, to name a few.Grameen bank extended its functional areas to fishing, telecom, textiles etc. Grameen bank concept was also replicated in several countries including India and USALife story of Ammajan Amina, one of the first borrowers of Grameen, illustrates what microcredit can do to a street beggar.Of Ammajan’s six children, four died of hunger or disease. Her husband after spending all the money on his medical treatment also died. Her in - laws expelled her and children from the house. She resorted to begging. With Grameen loans she started making bamboo baskets and remained a loyal member of Grameen Bank till her death. Now her daughter is a member of Grameen.While narrating the above in his book, Yunus concludes: “we have two million such life stories, one for each of our members.”I strongly recommend this truly inspirational book.

The author uses simple language and gives us a vibrant picture of Bangladesh during the famines and how from there the author who wanted to change the difficult ways, gave birth to the Grameen.However the delivery charge at amazon was exceptionally high. The condition in which I received the book was not very good . It had many dents on the cover with dogeared corners.

A very good book to have an insight on the real problems faced by the poor and the right solution for it.Grameen bank sector should be more seriously taken by countries having a huge population under poverty. Best of the book is it also tells you what you can do as your bit to help improve the situation of the poor. Micro financing is the best solution to eradicate poverty and make people self dependent.