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60-632: After Prof. Muhammad Yunus and the Grameen Bank received the Nobel Peace Prize in October 2006, a personal office for Prof. Yunus under the name of ‘Yunus Secretariat’ was formed. From the very beginning on, the Yunus Secretariat was mainly aiming at promoting Prof. Yunus’ philosophy of social business and served as a one-stop resource centre for anyone interested in social business. In July 2008, it

120-533: A credit delivery system to provide banking services to the rural poor. In October 1983 the Grameen Bank was authorized by national legislation to operate as an independent bank. The bank grew significantly between 2003 and 2007. As of January 2022, the total borrowers of the bank number nearly 9.5 million, and 96.81% of those are women. In 1998 the Bank's "Low-cost Housing Program" won a World Habitat Award . In 2006,

180-669: A day, a sanitary toilet, a rainproof house, clean drinking water, and the ability to repay a 300 taka -a-week (around US$ 4) loan. The bank is also engaged in social business and entrepreneurship fields. In 2009, the Grameen Creative Lab collaborated with the Yunus Centre to create the Global Social Business Summit. The meeting has become the main platform for social businesses worldwide to foster discussions, actions and collaborations to develop effective solutions to

240-438: A defaulting member. But, in practice the group members often contribute the defaulted amount with an intention to collect the money from the defaulted member at a later time. Such behaviour is encouraged because Grameen does not extend further credit to a group in which a member defaults. No legal instrument (i.e. no written contract) is made between Grameen Bank and its borrowers; the system works based on trust. To supplement

300-476: A marginalised segment of society (Yunus and Jolis 1998), who share betterment of income with their children, unlike many men. Yunus claims that in 2004, women still have difficulty getting loans; they comprise less than 1 percent of borrowers from commercial banks (Yunus 2004). The interest rates charged by microfinance institutions including Grameen Bank is high compared to that of traditional banks; Grameen's interest (reducing balance basis) on its main credit product

360-401: A minimum capital adequacy, to systematically classify loans and to implement modern computerised systems, including those that handle accounting. It forced the central bank to free up interest rates, revise financial laws and increase supervision in the credit market. The government also developed the capital market, which was also performing poorly. The FSRP became defunct in 1996. Afterwards,

420-554: A monopoly over the issue of currency and banknotes (except for the one, two and five taka notes and coins, which are the responsibility of the Ministry of Finance of the Government of Bangladesh). The major functional areas include: The bank's highest official is the governor. His seat is in Motijheel , Dhaka. The governor chairs the board of directors. The executive staff, also headed by

480-590: A national commercial bank and the University of Chittagong , extending microcredit to test his method for providing credit and banking services to the rural poor. In 1976, the village of Jobra became the first to be served by the project. Over the next two years, the project expanded to other villages in the area. The project, with support from the Bangladesh Bank , was extended in 1979 to the Tangail District (to

540-609: A new program, different from its traditional group-based lending, exclusively targeted to the beggars in Bangladesh. This program is focused on distributing small loans to beggars. In 1984, Grameen applied to the Central Bank for help setting up a housing loan program for its borrowers. Their application was rejected on the grounds that the US$ 125 suggested loan could not possibly build a suitable living structure. So Grameen instead proposed

600-430: A point of intervening everywhere, it did not set up a proper regulatory system to diagnose such problems and correct them. Hence, banking concepts like profitability and liquidity were alien to bank managers, and capital adequacy took a backseat. In 1982, the first reform program was initiated, wherein the government denationalised two of the six nationalised commercial banks and permitted private local banks to compete in

660-400: A pro-socialist agenda. In 1972, the government decided to nationalise all banks to channel funds to the public sector and to prioritise credit to those sectors that sought to reconstruct the war-torn country – mainly industry and agriculture. However, government control of the wrong sectors prevented these banks from functioning well. This was compounded by the fact that loans were handed out to

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720-471: Is a microfinance specialized community development bank founded in Bangladesh . It provides small loans (known as microcredit or "grameencredit") to the impoverished without requiring collateral . Grameen Bank is a statutory public authority. It is originated in 1976, in the work of Muhammad Yunus , a professor at the University of Chittagong , who launched a research project to study how to design

780-516: Is about 20%. Grameen has diversified the types of loans it makes. It supports hand-powered wells and loans to support the enterprises of Grameen members' immediate relatives. It has found that seasonal agricultural loans and lease-to-own agreements for equipment and livestock help the poor establish better agriculture. The bank has set a new goal: to make each of its branch locations free of poverty, as defined by benchmarks such as having adequate food and access to clean water and latrines. Grameen Bank

840-408: Is especially committed for making Bangladesh free of poverty by 2030. Disseminating the ideas and philosophy of Prof. Yunus on social business and microfinance . Acting as the primary source of information on social businesses worldwide and providing consulting services to start-ups. Its New Entrepreneur Project funded 385 projects in 2014. Created in 2009 by Yunus Centre and Grameen Creative Lab,

900-504: Is for the trainee to "appreciate the unexplored potential of the destitute" and to discover new ways to solve problems that arise within the Grameen branch. After completing the 6-month period, trainees return to Dhaka headquarters for review and critique before appointment to a bank branch. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in

960-578: Is known for its system of solidarity lending . The bank incorporates a set of values embodied in Bangladesh by the Sixteen Decisions (updated to Eighteen Decisions in 2023). At every branch of Grameen Bank, the borrowers recite these Decisions and vow to follow them. As a result of the Eighteen Decisions, Grameen borrowers are encouraged to adopt positive social habits. One such habit includes educating children by sending them to school. Since

1020-682: Is the central bank of Bangladesh and is a member of the Asian Clearing Union . It is fully owned by the Government of Bangladesh . The bank is active in developing green banking . and financial inclusion policy and is an important member of the Alliance for Financial Inclusion. Bangladesh Financial Intelligence Unit (BFIU), a department of Bangladesh Bank, is a member FIU of the Egmont Group of Financial Intelligence Units . Bangladesh Bank

1080-403: Is the first central bank in the world to introduce a dedicated hotline (16236) for people to complain about any banking-related problem. Moreover, the organization is the first central bank in the world to issue a "Green Banking Policy". To acknowledge this contribution, then-governor Dr. Atiur Rahman was given the title 'Green Governor' at the 2012 United Nations Climate Change Conference , which

1140-713: The Bangladesh Bank Building in Motijheel, which has two general managers. The executive staff is responsible for daily affairs and includes the governor and four deputy governors. Under the governors, there are executive directors and an economic advisor. The directors of the departments come under the executive directors and are not part of the executive staff. The four deputy governors are: Nurun Nahar, Dr. Md. Habibur Rahman, Md. Zakir Hossain Chowdhury and Dr. Md. Kabir Ahmed . The general supervision and direction of

1200-468: The Ford Foundation . The bank's repayment rate suffered from economic disruption following the 1998 flood in Bangladesh, but it recovered in subsequent years. By the beginning of 2005, the bank had loaned over US$ 4.7 billion and by the end of 2008, $ 7.6 billion to the poor. In 2011, the Bangladesh government forced Yunus to resign from Grameen Bank, saying that at age 72, he was years beyond

1260-799: The Muslim world , on the women's perspective, and on the fight against poverty. Citizens of Bangladesh celebrated the prize. Some critics said that the award affirms neoliberalism . The Grameen Bank has grown into over two dozen enterprises of the Grameen Family of Enterprises. These organisations include Grameen Trust , Grameen Fund , Grameen Communications , Grameen Shakti (Grameen Energy), Grameen Telecom , Grameen Shikkha (Grameen Education), Grameen Motsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone , Grameen Software Limited , Grameen CyberNet Limited , Grameen Knitwear Limited , and Grameen Uddog (owner of

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1320-402: The 43,681 villages covered in 2003. By the end of 2021, the bank's coverage expanded to 81,678 villages out of the country's total 87,223, for a national coverage rate of around 94%. As of the end of 2021, cumulative loan disbursements since inception reached in excess of 2.5 trillion taka (US$ 33.767 billion), and the bank claims a loan recovery rate of around 95%. David Roodman has critiqued

1380-477: The Bank's affairs and business are entrusted to a Board of Directors. This Board can exercise all powers and perform all acts on behalf of the Bank. Composition of the Board: Bangladesh Bank publishes a range of periodical publications, research papers and reports that contain monetary and banking developments, economic reviews and various other statistical data. These include: Since its conception,

1440-713: The Financial Sector Reform Programme (FSRP) were formed in 1990, upon contracts with the World Bank . These programs sought to remove government distortions and lessen the financial repression . Policies made use of the McKinnon-Shaw hypothesis, which stated that removing distortions augments efficiency in the credit market and increases competition. They involved banks providing loans on a commercial basis, enhancing bank efficiency and limiting government control to monetary policy only. The FSRP forced banks to have

1500-679: The Global Social Business Summit has become the main platform for social businesses worldwide to encourage discussions, actions and collaborations in order to find effective solutions to crucial problems plaguing the world. Developing curricula for classes on social business. Amongst other, current partnerships exist with Harvard University , HEC (Paris), the Asian Institute of Technology (Bangkok), Bocconi University (Milan) McGill University (Montreal), Glasgow University , University of Florence and University of Salford . Grameen Bank Grameen Bank ( Bengali : গ্রামীণ ব্যাংক )

1560-418: The Government of Bangladesh formed a Bank Reform Committee (BRC), whose recommendations were largely unaddressed by the then-government. Currently, it has ten offices located in Motijheel, Sadarghat, Chittagong, Khulna, Bogra, Rajshahi, Sylhet, Barisal, Rangpur and Mymensingh in Bangladesh; total manpower stands at 5807 (officials 3981, subordinate staff 1826) as of 31 March 2015. Bangladesh Bank performs all

1620-401: The Grameen Bank were linked to exploitation and pressures on poor families to sell their belongings, leading in extreme cases to humiliation and ultimately suicides. The Mises Institute 's Jeffrey Tucker suggests that microcredit banks depend on subsidies to operate, thus acting as another example of welfare. Yunus believes that he is working against the subsidised economy, giving borrowers

1680-536: The Grameen housing program received the Aga Khan International Award for Architecture. Grameen Bank is owned by the borrowers of the bank, most of whom are poor women. Initially, of the total equity of the bank, the government owned 60% in 1983. This then dropped over time to a single-digit percentage by the early 2010s. However, by the mid-2010s, this number increased again to 25%. The bank grew significantly between 2003 and 2007. As of January 2022,

1740-500: The Minister of International Development. Yunus denies that this is tax evasion: There is no question of tax evasion here. The Government has provided organisations with opportunities; we have made use of these opportunities with [the] aim of benefitting our shareholders who are the rural poor women of Bangladesh. David Roodman and Jonathan Morduch question the statistical validity of studies of microcredit's effects on poverty, noting

1800-553: The Nobel Prize on behalf of Grameen Bank's investors and borrowers at the prize awarding ceremony held at Oslo City Hall. Grameen Bank is the only business corporation to have won a Nobel Prize. Professor Ole Danbolt Mjøs, Chairman of the Norwegian Nobel Committee, in his speech said that, by giving the prize to Grameen Bank and Muhammad Yunus, the Norwegian Nobel Committee wanted to encourage attention on achievements of

1860-534: The accounting practices that Grameen used to determine this rate. The global number of potential micro-borrowers is estimated to be 1 billion, with a total loan demand of $ 250 billion. The present microfinance model served 100 million people with $ 25 billion of loans as of the late 2000s. The Grameen Bank staff often work in difficult conditions. Employees receive 6 months of on-the-job training while shadowing qualified and experienced individuals from various branches of Grameen. The goal of this training

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1920-461: The bank and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize . The bank's success has inspired similar projects in more than 64 countries around the world, including a World Bank initiative to finance Grameen-type lending systems. Muhammad Yunus was inspired during the Bangladesh famine of 1974 to make a small personal loan of US$ 27 to a group of 42 families as start-up money so that they could make items for sale, without

1980-541: The bank embraced the Sixteen Decisions, almost all Grameen borrowers have their school-age children enrolled in regular classes. This in turn helps bring about social change, and educate the next generation. Solidarity lending is a cornerstone of microcredit, and the system was used in more than 43 countries as of 1988 . Repayment responsibility rests solely on the individual borrower. No formal joint liability exists, i.e. group members are not obliged to pay on behalf of

2040-552: The bank's founder, met personally with the Central Bank governor to plead for their application. When asked if he thought the borrowers would repay the loans, he replied, "Yes, they will. They do. Unlike the rich, the poor cannot risk not repaying. This is the only chance they have." Grameen was then allowed to add housing loans to their range of services. As of 1999, Grameen made housing loans totalling $ 190 million to build over 560,000 homes with near-perfect repayment. By 1989, their average housing loan had grown to $ 300. That year,

2100-454: The banking sector. In 1986, a National Commission on Money, Banking and Credit was appointed to deal with the problems of the banking sector and several steps were taken for the recovery targets of the nationalised commercial banks and development financial institutions (as well as prohibiting defaulters from getting new loans). Still, the efficiency of the banking sector could not be improved. The Financial Sector Adjustment Credit (FSAC) and

2160-587: The brand Grameen Check ). On 11 July 2005 the Grameen Mutual Fund One (GMFO), approved by the Securities and Exchange Commission of Bangladesh, was listed as an initial public offering . One of the first mutual funds of its kind, GMFO will allow the more than four million Grameen bank members, as well as non-members, to buy into Bangladesh's capital markets. The Bank and its constituents are together worth over US$ 7.4 billion. The Grameen Foundation

2220-401: The burdens of high interest under predatory lending . Yunus believed that making such loans available to a larger population could stimulate businesses and reduce the widespread rural poverty in Bangladesh. Yunus developed the principles of the Grameen Bank from his research and experience. Grameen Bank is Bengali for "Rural" or "Village" Bank. He began a research project, together with

2280-611: The complexity of the situations involved. Yoolim Lee and Ruth David discuss how microfinance and the Grameen model in South India have in recent years been distorted by venture capitalism and profit-makers. In some cases, poor rural families have suffered debt spirals, harassment by microfinance debt collectors, and in some cases suicide. Peter Singer claims that microcredit has a limited ability to transform lives, and that other interventions are more effective. Bangladesh Bank Bangladesh Bank ( Bengali : বাংলাদেশ ব্যাংক )

2340-426: The following regions: From 2005, Grameen Bank worked on Mifos X, an open source technology framework for core banking solutions. Since 2011, Grameen Bank released this technology under the stewardship of Mifos Initiative , a US Non Profit organisation. Some analysts have suggested that microcredit can bring communities into debt from which they cannot escape. Researchers have noted instances when microloans from

2400-466: The functions that a central bank in any country is expected to perform. Such functions include maintaining price stability through economic and monetary policy measures, managing the country's foreign exchange and gold reserve, and regulating the banking sector of the country. Like all other central banks, Bangladesh Bank is both the government's banker and the banker's bank, a "lender of last resort". Bangladesh Bank, like most other central banks, exercises

2460-528: The government to make rules for any aspect of the running of the bank. Grameen Bank is founded on the principle that loans are better than charity to interrupt poverty: they offer people the opportunity to take initiatives in business or agriculture, which provide earnings and enable them to pay off the debt. The bank is founded on the belief that people have endless potential, and unleashing their creativity and initiative helps them end poverty. Grameen has offered credit to classes of people formerly underserved:

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2520-430: The governor, is responsible for the bank's day-to-day affairs. Bangladesh Bank also has a number of departments under it, namely Debt Management, Law, and so on, each headed by one or more general managers. The Bank has 10 physical branches: Mymensingh, Motijheel, Sadarghat , Barisal , Khulna , Sylhet , Bogra , Rajshahi , Rangpur and Chittagong ; each is headed by an executive director. Headquarters are located in

2580-446: The idea of "shelter loans". They were again rejected, this time on the grounds that their borrowers could not afford non-income generating loans. Grameen changed tactics and applied a third time, this time to make "factory loans", the explanation being that borrowers worked from home, so the home was also a factory that made it possible for borrowers to earn income. Grameen was rejected for a third time. After this third rejection, Yunus,

2640-606: The interests of its new borrowers and depositor-shareholders. Grameen converts deposits made in villages into loans for the more needy in the villages (Yunus and Jolis 1998). It targets the poorest of the poor, with a particular emphasis on women, who receive upwards of 95 percent of the bank's loans. Women traditionally had less access to financial alternatives of ordinary credit lines and incomes. They were seen to have an inequitable share of power in household decision making. Yunus and others have found that lending to women generates considerable secondary effects, including empowerment of

2700-415: The legal limit for the position. Grameen Bank soon began expanding into wealthy countries. As of 2017, Grameen America had 19 branches in eleven US cities and its nearly 100,000 borrowers were all women. "The bank has gained its funding from different sources, and the main contributors have shifted over time." In the initial years, donor agencies used to provide the bulk of capital at low rates. By

2760-575: The lending, Grameen Bank requires the borrowing members to save very small amounts regularly in a number of funds, designated for emergency, the group, etc. These savings help serve as an insurance against contingencies. In a country in which few women may take out loans from large commercial banks, Grameen has focused on women borrowers; around 97% of its members are women. While a World Bank study has concluded that women's access to microcredit empowers them through greater access to resources and control over decision making, some other economists argue that

2820-489: The mid-1990s, the bank started to get most of its funding from the central bank of Bangladesh. More recently, Grameen has started bond sales as a source of finance. The bonds are implicitly subsidised, as they are guaranteed by the Government of Bangladesh, and still they are sold above the bank rate. In 2013, Bangladesh parliament passed 'Grameen Bank Act' which replaces the Grameen Bank Ordinance, 1983, authorising

2880-457: The most pressing problems plaguing the world. The bank has diversified among different applications of microcredit. In the Village Phone program, women entrepreneurs can start businesses to provide wireless payphone service in rural areas. This program earned the bank the 2004 Petersburg Prize worth EUR 100,000, for its contribution of Technology to Development. In the press release announcing

2940-457: The north of the capital, Dhaka ). The project's services expanded to other districts of Bangladesh over the next few years. Through an ordinance of the Bangladesh government dated 2 October 1983, the project was converted into the Grameen Bank. Bankers Ron Grzywinski and Mary Houghton of ShoreBank , a community development bank in Chicago, helped Yunus incorporate the bank under a grant from

3000-453: The opportunity to create businesses. Some of Tucker's criticism is based on his interpretation of Grameen's "16 decisions", seen as indoctrination, without considering what they mean in the context of poor, illiterate peasants. The Norwegian documentary Caught in Micro Debt claims that Grameen evaded taxes. The Spanish documentary Microcredit also suggested this. The accusation is based on

3060-609: The poor, women, illiterate, and unemployed people. Access to credit is based on reasonable terms, such as the group lending system and weekly-instalment payments, with reasonably long terms of loans, enabling the poor to build on their existing skills to earn better income in each cycle of loans. Grameen's objective has been to promote financial independence among the poor. Yunus encourages all borrowers to become savers, so that their local capital can be converted into new loans to others. Since 1995, Grameen has funded 90 percent of its loans with interest income and deposits collected, aligning

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3120-662: The prize, the Development Gateway Foundation noted that through this program: ... Grameen has created a new class of women entrepreneurs who have raised themselves from poverty. Moreover, it has improved the livelihoods of farmers and others who are provided access to critical market information and lifeline communications previously unattainable in some 28,000 villages of Bangladesh. More than 55,000 phones are currently in operation, with more than 80 million people benefiting from access to market information, news from relatives, and more. In 2003, Grameen Bank started

3180-416: The public sector without commercial considerations; banks had poor capital lease, provided poor customer service and lacked all market-based monetary instruments. Because loans were given out without commercial considerations (and also took a long time to call a non-performing loan ), recovery under the erstwhile judicial system was so expensive that loan recovery was abysmally poor. While the government made

3240-537: The relationship between microcredit and women-empowerment is less straightforward. In other areas, Grameen has had very high payback rates—over 98 percent. However, according to The Wall Street Journal , in 2001 a fifth of the bank's loans were more than a year overdue. Grameen says that more than half of its borrowers in Bangladesh (close to 50 million) have risen out of acute poverty thanks to their loan, as measured by such standards as having all children of school age in school, all household members eating three meals

3300-406: The struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world. On 10 December 2006, Mosammat Taslima Begum, who used her first 16 euro (US$ 20) loan from the bank in 1992 to buy a goat and subsequently became a successful entrepreneur and one of the elected board members of the bank, accepted

3360-403: The total borrowers of the bank number nearly 9.5 million, and 96.81% of those are women. The number of borrowers has more than tripled since 2003, when the bank had 3.12 million members. Similar growth can be observed in the number of villages covered. As of October 2007, the Bank had a staff of more than 24,703 employees; its 2,468 branches provided services to 80,257 villages, up from

3420-525: The unauthorised transfer of approximately US$ 100 million, donated by the Norwegian Agency for Development Cooperation (Norad), from one Grameen entity to another in 1996, before the expiry of the Grameen Bank's tax exemption. However, Norad published a statement in December 2010 clearing Yunus and the Bank of any wrongdoing on this point, following a comprehensive review of Norad's support commissioned by

3480-485: Was developed to share the Grameen philosophy and expand the benefits of microfinance for the world's poorest people. Grameen Foundation, which has an A-rating from [Charity Watch], provides microloans in the USA (the only developed country where this is done), and supports microfinance institutions worldwide with loan guarantees, training, and technology transfer. As of 2008, Grameen Foundation supports microfinance institutions in

3540-825: Was held at the Qatar National Convention Centre in Doha . On 7 April 1972, after the Bangladesh Liberation War and the eventual independence of Bangladesh, the Government of Bangladesh passed the Bangladesh Bank Order , (P.O. No. 127 of 1972), reorganising the Dhaka branch of the State Bank of Pakistan as Bangladesh Bank, the country's central bank and apex regulatory body for the country's monetary and financial system. The 1972 Mujib government pursued

3600-542: Was renamed the Yunus Centre and continues to develop new social businesses, provide technical help to social business start-ups and liaise with anybody interested in the topic. They also publish a quarterly newsletter on new developments in the field of social business. Yunus Centre is working to promote the United Nations Millennium Development Goals in Bangladesh and all around the world and

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