Bangladesh Grameen Bank – Pioneer in Microfinance
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BACKGROUND NOTE Contd...To start with, Yunus
took loans from commercial banks and extended the money to 42 needy women in
Jobra village in Chittagong district (Refer Exhibit III). The project spread
to surrounding villages between 1976 and 1979. However, bankers were
skeptical about the project and argued that it was initially successful
because Yunus implemented it around the university campus where he had a
good reputation. In order to convince bankers about the project's long-term
viability, Yunus took two years leave from the university and started
working in the Tangail district. The Bangladesh Central Bank provided
financial support for the Tangail project and Yunus was appointed as the
Project Director.
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The project was started in 1979. With the successful
implementation of the Grameen Bank project in the Tangail district, it
was extended to other districts in the country. By 1980, Grameen Bank
had disbursed $1.10 million as loans to the rural poor. In 1983, Grameen
Bank was given the status of an independent bank by a special ordinance
of the Bangladesh Government. Initially, government contributed around
60% of the bank's capital and bank members held the remaining 40%.
However, by 2003, government held only 7% and members held a 93% stake
in the bank. |
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Initially, Grameen Bank raised funds through bonds issued to
the commercial banks and it also borrowed from Central Bank at subsidized
interest rates. Grameen Bank also got funds from international agencies like the
World Bank and the Ford Foundation[6]. Foreign governments also provided funds for
the Grameen Bank at subsidized rates.
In the late 1980s, Grameen Bank diversified into a number of different fields.
It started leasing unutilized and underutilized fishing ponds and irrigation
pumps. At the same time, it also started training and extending support to
people from other developing countries to replicate the Grameen Bank model in
their countries.
When it was successful in leasing fishing ponds to the poor, Grameen Bank
started expanding its non-banking activities. The Grameen Fisheries Foundation
and the Grameen Krishi[7] Foundation were formed to oversee the leasing of
fisheries and irrigation pumps. In 1989, the Grameen Trust was formed to provide
training and support to people from other countries to start micro finance
programs. By the mid-1990s, Grameen Bank had expanded its activities to areas
such as venture capital, textile industry and Internet Service Provider (ISP).
All the non-banking ventures of Grameen bank were grouped under the Grameen
Family (Refer Table I).
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TABLE I GRAMEEN FAMILY
THE GRAMEEN BANK MODEL
FIGURE I GRAMEEN BANK'S ORGANIZATIONAL STRUCTURE
A SUCCESSFUL MODEL
TABLE II GROWTH OF BANGLADESH GRAMEEN BANK OVER THE YEARS
TESTING TIMES
QUESTIONS FOR DISCUSSION
EXHIBIT I ABOUT MICROFINANCE
EXHIBIT II WORLDWIDE REPLICATION OF GRAMEEN BANK
EXHIBIT III MAP OF BANGLADESH
EXHIBIT IV SIXTEEN DECISIONS OF GRAMEEN BANK
EXHIBIT V RELAXATIONS ANNOUNCED BY GRAMEEN BANK IN 1998
ADDITIONAL REFERENCES & READINGS
[6] The Ford Foundation was established in 1936. It supports activities that
help build common understanding, enhance excellence and enable people to
improve their lives.
[7] Agriculturist.
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