Grameen Bank

Grameen Bank a specialised bank established on October 1983 as a body corporate under the Grameen Bank Ordinance 1983 for extending credit exclusively to the landless men and women of rural areas of the country. The Bangla word grameen means rural and the bank emerged out of a rural banking project that began in 1976 at Jobra village of Hathazari upazila of Chittagong district. The project was an experiment initiated by Dr Muhammad Yunus, a former professor of Economics at the University of Chittagong. The principal objective of the Grameen Project (GP) was to develop an organisational structure, which can provide collateral free credit to the landless people in a reasonably dependable form. The project also explored the potentiality of the poor to generate productive self-employment with marginal financial support at reasonable terms and conditions.

Encouraging results of the experiment inspired Professor Yunus to expand the project in more villages of Tangail and Chittagong districts in November 1979 and he was extended funding support from the BANGLADESH BANK for the purpose. In 1982, it was further expanded to Dhaka, Rangpur and Patuakhali districts with the financial assistance from the International Fund for Agricultural Development (IFAD). By that time the project took the shape of a new type of banking for the poor and the banking units of the project were nationalised commercial banks. In September 1983, the government decided to transform the project into a specialised credit institution under the name Grameen Bank with an authorised capital of Tk 100 million divided into ordinary shares of Tk 100 each. The paid-up capital of the bank was Tk 30 million, of which 40% was subscribed by its borrowers themselves and the rest by the government and government-owned financial institutions. Grameen Bank is mainly owned by bank borrowers and most of them are poor women. Of the total equity of the bank, 94% are owned by borrowers and the remaining 6% are owned by the Government of Bangladesh.

According to the bank's updated report, the bank has disbursed loans worth Tk. 2.33 trillion till 2020, several times higher than all other banks in the country. The bank's debt recovery rate is 94.7 per cent. Grameen Bank has a membership of 9.2 million as of 2020 and Tk. 12.2 billion of home loans have been disbursed among these members. In addition, the bank has disbursed Tk. 0.18 billion interest free loan among 83,213 struggling members (beggars) and they are getting benefitted through the fund. As of December 2020, the bank had disbursed Tk. 12.2 billion housing loans among 765,434 members. Total 54,465 students have received Tk. 3.9 billion interest free loan. At the same time, Tk. 500 million was distributed among 2,462 new entrepreneurs.

The main functions of Grameen Bank are to provide collateral-free credit facilities in cash of on kind to landless persons for various types of income-generation and livelihood activities. The Bank also accepts money on deposit, borrows money (against its assets as the security, or otherwise) for the purpose of its business excluding business in foreign exchange transactions. It invests in government securities, provides professional counsel to landless persons regarding investment in small business and cottage industries, and carries out survey and research.

Grameen Bank has over two dozen initiatives/institutions of Grameen Family of Enterprises. These companies include Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti, Grameen Telecom, Rural Education (Rural Education), Grameen Fisheries, Grameen Business Development (Rural Business Development), Grameen Phone, Grameen Software Limited, Grameen Cybernet Limited, Grameen Nitware Limited, and Grameen Udyog (Grameen Check). On July 11, 2005, Rural Mutual Fund One (GMFO), approved by the Securities and Exchange Commission of Bangladesh, was listed as a preliminary public offer. One of the first such mutual funds, GMFO will allow more than 40 million members of Grameen Bank as well as non-members to buy in Bangladesh's capital market. Banks and affiliates have an estimated consolidated value of more than USD 7.4 billion.

The bank runs its credit program with the philosophy that credit for self-employment is a fundamental human right. It takes credit to the doorsteps of the principal works as a powerful instrument in ensuring access of the poor to credit for providing them a chance to improve their economic condition. Through small loans Grameen Bank enables the landless, rural women to start their own businesses and thereby gain reasonable economic independence, self-sufficiency, self-respect and self-empowerment. Credit delivery mechanism and the mode of repayment of the loans have become a model in Poverty alleviation efforts in Bangladesh, other developing countries, and in some developed countries such as the USA, Canada, Germany and France. For the contribution of poverty reduction through micro-credit Professor Muhammad Yunus and Grameen Bank jointly was awarded the Nobel Peace Prize 2006.

Grameen Bank gives loans to individuals through group. The member-borrower alone is responsible for his/her loan although there exists informal inter-locking responsibility among the members of a group. The bank has a sixteen-point guideline for implementation of its credit delivery and the social development program. All members of the Grameen groups are to know and follow this guideline, which teaches them to follow and advance the principles of discipline, unity, courage and hard work. It instructs the Grameen beneficiaries to bring their own houses to avoid living in dilapidated houses, grow, eat and sell vegetables all the year round, plant trees, keep the families small, minimize expenditure and save environment pollution free, build and use pit-latrines, drink tube-well water or boiled water, give up the practice of child marriage, avoid taking and paying dowry, refrain from doing any injustice on any one, undertake collective and bigger investments, follow the rule of mutual help, restore discipline in case of breach or violation by the fellow members, introduce physical exercise at all centers, and take part in all social activities collectively. The broad activities for which Grameen Bank provides credit facilities from its own fund are processing and manufacturing, Agriculture and forestry, service sector enterprises, trading, peddling (pulling rickshaws and rickshaw vans), shop keeping, etc. There are innumerable types of different activities under each of these broad categories for which the bank extends credit financing. The bank accumulates savings of its member-borrowers and from non-members.

Grameen Bank has 9.44 million members as of October 2021, 97% of whom are women. The bank is providing its credit facility to 81,678 villages across the country. This is more than 93% of the total villages in the entire Bangladesh. To improve the financial and social status of the families associated with the bank, they continue to support those families with scholarships. In order to spread literacy, they launched a scholarship programme under which Grameen Bank provides financial assistance to children of its members. Payment of school dues, purchase of books and stationery at school level. The number of awardees in this category in 2019 was about 26,000 children. A total of 357,379 children have benefited from the scheme till 2019. The cost of Grameen Bank under the programme is Tk. 616.12 million. Realizing the importance of shelter for Grameen Bank members, Grameen Bank launched the Housing Loan Scheme in 1984. The maximum loan limit for construction of a simple tin-operated house is Tk. 60,000. The interest rate is 8 percent per annum, payable within five years. As of 2019, Tk. 955.44 million has been paid for construction of 20,894 houses. It has reached 755,885 in total number of houses constructed through housing loans. As a life insurance facility, every year, the families of deceased borrowers of Grameen Bank are paid between Tk. 14 to Tk. 16 million and monthly Tk. 1500 is paid to each family. A total of 204,713 borrowers have died by 2019. Grameen Bank has collectively paid a total of Tk. 356.03 million to its families. Families do not have to pay any premium for this life insurance. Grameen Bank has provided loans to over 2 million borrowers till 2019 for telecommunication facility and purchase of mobile phones.

In addition to changing the financial condition of the members, it has also provided a beautiful communication network and easy income-making path for the people of the rural areas. Currently, palliphone operations are being carried out in a new way through Flexiload. Grameen Bank has launched the 'Naveen Udyami Loan' programme to create their own employment for students who have completed their academic lives or are studying under the Higher Education Loan Programme. The bank has been offering scholarships in a total of five sectors, including primary to higher secondary and cultural activities, to increase the interest of the member's children in education. As of December 2020, 64.8 billion rupees have been distributed among 311,131 students.

Grameen Bank is praised for success in its mission of alleviating poverty. Its success is attributed to employment creation and income generation through its extensive credit programs for the landless rural poor of both genders. The special features of the institution are its high loan recovery rate, organisation of its members into groups exercising peer pressure in loan repayment and proper utilisation of the loans, close supervision by the bank’s field staff, organised advisory services to the clients, and empowerment of the poor, especially the poor rural women by involving them in self-employment and income-generating activities. The main sources of funds of Grameen Bank are share capital, general and other reserves, certain special funds maintained by the bank, deposits and other fund balances of members and borrowings from banks and other foreign sources.

A 12-member board of directors, including a chairman appointed by the government, is in charge of overall management of Grameen Bank. Nine out of 11 directors except the chairman were elected members by the bank's borrower shareholders. [Abul Kalam Azad]

References Grameen Bank, 2019. Annual report, 2019. Retrieved on 09 December 2021 from; Newsbangla24.2021. How is GB performing? 02 January 2021. Retrieved on 09 December 2021 from; Wikipedia, 2021. Grameen Bank. Retrieved on 09 December 2021 fromগ্রামীণ_ব্যাংক; Jugantor, 2021. Grameen Bank’s credit crossed Tk. 2 trillion. The daily jugantor, 15 March, 2021. Retrieved on 09; December 2021 fromগ্রামীণ-ব্যাংকের-ঋণ-দুই-লাখ-কোটি-টাকা-ছাড়াল