Grameen Bank Case Study

History

Nobel Prize winning organization and a community development microfinance organization, Grameen Bank was founded in Bangladesh. It provides the facility of giving small loans without collaterals to the “Grameen” i.e. the village or rural population.

Rural population often has under utilized skills and given right incentives they can make money, this is the main concept behind the Micro-credit loans. To create a healthy pressure to ensure repayment of loans and other financial affairs with discipline, a group based approach is used, which mitigates the risk and helps improve credit standing as a group.

More than 95% of its borrowers have been women owing to the policy that is tailor made to support the under-served populace of the nation.

Muhammad Yunus at University of Chittagong. He had begun a project in order to research how a credit delivery system can be designed to address the banking needs of the rural poor in Bangladesh. His experiment succeeded and based on the research, National legislation authorized Grameen Bank as an independent bank in October 1983.

In 2006, the bank and its originator, Muhammad Yunus, were mutually honored the Nobel Peace Prize. Bank 's "Low-cost Housing Program" won a World Habitat Award in 1998. Yunus was forced to resign from Grameen Bank when he turned 72, government cited legal reasons for the same.

Yunus went in the field with his students and got inspired to make a small loan of about 27 dollars to a group of 42 families in a village during the Bangladesh famine of 1974. This money was supposed to be start-up money so they could make items for sale without large interest rates from local moneylenders which kept them under poverty.

He hypothesised that providing this facility to the masses of Bangladesh could be the panacea for curing the rural poverty by stimulating