Grameen Bank Lifts its Borrowers out of Poverty

A Community-Owned Bank of Bangladesh takes a radically different approach to banking with great success.

Grameen Bank does what most conventional banks fail to do: provide credit to the poorest people without any collateral. The underlying vision of Muhammed Yunus – founder, managing director, and Nobel laureate –  was to lend to people based on their potential, rather than material possessions. Grameen Bank has followed through on that vision by adopting innovative strategies:

  • Borrowers own 95% of the total equity of the bank
  • 97% of its borrowers are women
  • Loans are 100% financed from its deposits
  • Interest rates are low
  • Those with nothing are more likely to get loans than those with more
  • Branches are located throughout rural Bangladesh
  • If a borrower is having difficulty paying back a loan, the Bank works with the borrower to set up a new payment plan rather than foreclose or report them to a credit agency

Overall, Grameen Bank is a successful model that has deviated from conventional banking policies, providing more that 7 billion U.S. dollars to borrowers and lifting more that 65% of them above the poverty line.