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A study on Grameen Bank of Bangladesh
Executive Summary
This report has covered microfinance and the Grameen bank of Bangladesh. It has provided an introduction of the Grameen bank, its history, operating structure. It has also told about Professor Muhammad Yunus, who was the founder of Grameen bank. The report has explained about the procedures that are followed by Grameen Bank, the lending criteria followed by the bank. It has also elaborated about the benefits and advantages of lending rules that are followed by Grameen Bank. It has highlighted that the lending rules of bank have led to an increase in savings which is good for the borrowers as well as the bank. The report has stated about the various economic and cultural impacts of the programmes carried out by the bank. The report has also heighted the success path of the Grameen bank as well as the challenges and limitations faced by it. The report has provided a conclusion at the end.
Contents
Executive Summary    2
Introduction    4
History    4
Brief Outline of structure at Grameen Bank    4
About the founder Muhammad Yunus    4
The procedures at Grameen Bank    5
Lending criteria    5
Benefits of lending rules followed by Grameen bank    6
Emphasis on savings    6
Impacts of the Grameen Bank’s programmes    6
Participation of women    6
Employment opportunities    7
Increase in income levels    7
Rise in productivity levels    7
Source of Housing    7
Success Path of Grameen Bank    7
Limitations    8
Conclusion    9
References    10
Introduction
The Grameen Bank of Bangladesh is a community development organization which was set up in Bangladesh in year 1976 by Prof. Muhammad Yunus (Amin and Uddin 2018). The Grameen Bank has replaced the traditional banking practices and has eliminated the requirement for collateral, which is a mandatory requirement in the traditional banking system. The new banking practice introduced by Grameen bank placed greater emphasis on mutual faith, participation, and creativity. This bank offers credit to the extremely poor people of Bangladesh without taking any collateral security from them. The bank has played a great role in reducing poverty amongst rural poor of Bangladesh and also in betterment of social and economic conditions of poor citizens (Wahid & Hsu 2000).
History
The bank first came into existence in the year 1976 when Mr. Muhammad Yunus who was a talented professor of economics at Chittagong University of Bangladesh, together with his colleagues decided to take the first step towards setting up of the bank. The main objective that they wanted to achieve through setting of this community development and micro finance bank was enable the poor people belonging to Chittagong region create new self employment opportunities for themselves by providing them the necessary amount of credit and guidance. The project was started with list of 42 persons from rural background, who were extremely poor and required credit at lower rates of interests as they were unable to pay high rates of interests charged by the money lenders (Wahid & Hsu 2000). The project faced many challenges in the beginning and Professor Yunus was only able to raise $200 in a time span of six months. However, the project eventually became quite successful when Professor Yunus was able to prove to the Government of Bangladesh that this project had actually helped to improve the economic condition of rural poor and create many self employment opportunities. His efforts proved fruitful and finally in year 1983, the Grameen Bank was registered formally as a financial institution (Wahid & Hsu 2000).
Brief Outline of structure at Grameen Bank
The Grameen Bank of Bangladesh has become the one most popular bank of Bangladesh which is involved in providing small loans to the rural poor. The bank has more than 9.6 million members out of which nearly 97 percent are women as per the statistics of the year 2019 (Grameen Bank 2019). It has total 2568 branches at present, and its services are rendered in 81,678 villages, this covers nearly 93 percent of the total villages of Bangladesh (Grameen Bank 2019). The projects of Grameen Bank are existing in 58 nations which include France, Norway, Netherlands, US and Canada (Wahid & Hsu 2000).
About the founder Muhammad Yunus
Mr. Muhammad Yunus was born in year 1940 in Chittagong region of Eastern Bengal in a family of goldsmiths. Professor Yunus was highly influenced by his mother, who had always supported poor people (Grameen Bank n.d.). As a result, professor Yunus was also inspired to something great which could bring reduction in poverty. The year 1974 was a left marked a new beginning for him as it was in this year only when he realized his big goal of improving the economic condition of the rural poor through providing them the required amount of credit and the necessary guidance and information which would be useful for those people (Grameen Bank n.d.). Professor Yunus had gone on a trip to a village along with his students where he interviewed a rural woman who was involved in making of bamboo stools (Grameen Bank n.d.). Upon interviewing this poor woman, Professor Yunus realized that these poor people had to pay interests at very high rates to the middlemen and as a result they were left with very low margins such that they would never be able to raise their incomes and get out of the circles of poverty...