Release Date: September 27, 1996
The Wisdom Fund, P. O. Box 2723, Arlington, VA 22202
Website: http://www.twf.org -- Press Contact: Enver Masud

Compassionate Banker Spawns Credit For 100 Million Poor

WASHINGTON, DC, September 27 -- He refuses to accept that the poor are not creditworthy. He believes that credit is a human right. This compassionate banker has spawned a "microcredit" program which hopes to reach 100 million of the world's poorest by the year 2005.

While working for a bank in Bangladesh, Dr. Muhammad Yunus realized that the poorest who needed only $50 to $300 dollars to launch a small business, buy seeds, or build a home had no source of credit. By personally guaranteeing repayment, Dr. Yunus was able to persuade his bank to extend these small loans or "microcredits."

He was amazed at the results. The repayment rate for microcredits was better than for conventional loans. He was deeply moved by the changes in family lives brought about by a single sewing machine purchased to launch a new business, the tears rolling down the face of a poor woman as she entered her new $300 home, and many similar stories. But he was frustrated by his bank's reluctance to extend the program, and decided to open his own bank.

Today his Grameen Bank has a staff of 12000, and extends microcredits in 36,000 villages. How it operates breaks many banking conventions.

Instead of borrowers coming to the bank, the bank staff goes out to villages every week to extend loans and to collect payments. The Grameen Bank requires no lengthy forms, no collateral, just the signature of five women. It's focus on women is because experience has shown that women are most likely to be left out of poverty eradication programs, while they have shown themselves to be highly creative entrepreneurs and adept at saving.

The Grameen Bank's success received attention at the Earth Summit, the World Summit for Children, the Cairo conference on Population, and the Women's Conference in Beijing. During the Beijing Conference ABC World News Tonight named Dr. Yunus their Person of the Week.

The lessons learned by the Grameen Bank have been used in many countries, including the United States, to launch similar loan programs. James D. Wolfensohn, President World Bank, in a letter to the Chairs of the 90 largest banks and commercial financial institutions says ". . . microcredit programs have brought the vibrancy of the market economy to the poorest villages and people of the world. This business approach to the alleviation of poverty has allowed millions of individuals to work their way out of poverty with dignity."

The banking revolution spawned by Dr. Yunus continues to grow. A Declaration and Plan of Action to extend the program worldwide is expected to be finalized before the February 2 - 4, 1997 Global Microcredit Summit in Washington, D.C. Co-Chaired by Hillary Rodham Clinton, United States First Lady; Tsutomu Hata, former Prime Minister of Japan; and Her Majesty, Queen Sophia of Spain.

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Beth Duff-Brown, " Microcredit Bank Grows Out of a $27 Investment," Los Angeles Times, April 4, 2004

[The group is credited, for instance, with taking a technique developed by others -- using a solution of salt, sugar and water to stave off childhood death from intestinal illness -- and teaching it in virtually every household in Bangladesh.

BRAC now runs 34,000 one-room schools for Bangladeshi children, especially girls.--Justin Gillis, "Gates Award Goes to Bangladeshi Aid Group: Rural Organization BRAC Is Credited With Improving the Lives of Millions," Washington Post, June 3, 2004]

" Banker for the poor wins Nobel Peace Prize," Aftenposten, October 13, 2006

Alexander Cockburn, " A Nobel Peace Prize for Neoliberalism? The Myth of Microloans," CounterPunch, October 20, 2006

S. Amjad Hussain, "Bangladesh: Nepotism, Corruption, and Disregard for Rule of Law," The Blade, August 21, 2024