Grameen Bank supports the microcredit scheme invented by Nobel prize winning Bangladeshi economist Professor Muhammad Yunus. Grameen bank began almost 34 years ago, when Professor Yunus started lending to enterprising women (initially only US $27), enabling them to develop their own businesses. Today, the model has been replicated in over 100 countries, with the simple (and very effective) principle that the "poor need credit, not aid". Staff at Grameen bank work closely with their clients, working alongside support groups to offer advice and money to such clients (many of whom often do not have any bank account at all). According to an article by Sigrid Rausing, "... the sums lent are carefully considered: the right amount is empowering; too little, or, interestingly, too much, is thought to be damaging". The bank uses four aspects as part of its client relationship strategy: (i) the loan; (ii) the savings account -- though banks such as Citibank; (iii) five days of financial literacy training; (iv) partnership with credit scoring organisations such as Experian.
Interestingly, Grameen Bank has now opened a branch in Queens, New York. Although initially intended for developing countries, it has now found that, "... 36.5 million Americans live below the poverty line, and 28 million have no bank accounts. Many of these are immigrants. They rely on payday loans or cheque cashiers, and short term loans (some legal, some not) -- with annual average interest rates of 300 to 400 percent", according to Sigrid Rausing's article. The New York office is led by Mr Chattree (formerly of Insead and JP Morgan), who sees Grameen opening six more branches in the US over the coming years -- reaching up to 20,000 people. Perhaps, this kind of community oriented banking is what is really needed in the Western world, with the current collapse of major banking institutions. Perhaps, the over US $700B that has been used to bail out major Wall Street concerns, should also be used to fund institutions such as Grameen bank, which provides a much more sustainable and democratic model of supporting people to help themselves, and communities to become more self reliant. Interestingly, such grass roots banking seems not only ethical but also safe -- as payback rate on loans for Grameen is almost 99 percent (now compare that with high street banks in the UK and equivalent US concerns).
image from http://37days.typepad.com
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