Banker to the Poor

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Posted by: thor on Jan 22, 2007

Muhammad Yunus leads a movement that has lifted millions from poverty. Here he describes how he created microcredit - collateral-free lending and savings - and other business services to the poorest citizens, particularly women. Yunus lays out the path to this extraordinary vision and success: from his youth as the son of a small jeweler in East Pakistan to his later years leading Grameen and driving global social change.

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Muhammad Yunus is the founder of Grameen Bank.
Grameen loans money for self-employment to over 4 million poor women in Bangladesh.
You cannot get a dollar without a dollar in your hand.
The poor people, nobody gives the first dollar to catch the next dollar.
Dr. Yunus designed Grameen to serve people who have no collateral.
Five borrowers form a group and guarantee each others' loans.
The repayment rate is greater than 98 percent.
More than half of Grameen's members have moved their families out of poverty.
We have demonstrated beyond anybody's doubt that it works,
and it's sustainable and it can work in all kinds of cultural
and economic situations.
Grameen Bank has become a model for hundreds of micro-finance programs
around the world, serving tens of millions of the world's poorest citizens.
In this program, Dr. Yunus shares the experience and insights gained in his struggle
to build the world's leading poor peoples' bank.
Childhood
I was born in the middle of the Second World War.
My father was a school dropout. He went up to about 8th grade in school.
So he was a small jeweler.
We lived behind the shop that he was running, it's a little one-room place
in a low-income neighborhood.
My mother didn't go to school as much as my father did,
she went up to 4th grade.
But she always enjoyed reading books and reciting poems.
So my actual education was with her.
But gradually I took lot of interest in whatever I was studying at school.
When the final exam for the primary school came, there was a public examination.
And I was surprised when the result came out
that I stood first in the whole municipality.
Among the things of early years that
I think had the most impression on me was the independence movement.
And then came the real independence day in 1947.
When India and Pakistan were created and two different countries emerged.
It was a very exciting experience for all of us.
In 7th grade, I joined the Boy Scouts.
And then I was chosen to join the Pakistan Boy Scouts Jamboree in Karachi in 1952.
So that was a very exciting experience for all the kids,
as there were about two hundred plus kids from East Pakistan
going to West Pakistan by train from here.
At 10th grade you matriculate and that's end of your high school period.
So I appeared in the matriculation exam in 1955.
I was 15 at that time.
And again I got an opportunity to join another jamboree,
the Global Jamboree, to be held in Niagara on the Lake in Canada.
So these kids for us coming from this tiny lane
in one little room house going to Canada was a very exciting experience.
And in New York we were received by the mayor,
all this little kids from Pakistan. We were 27 in all.
So this is a big exposure. And then we moved the same way, came to New York,
took the ship back again to Plymouth in England.
So we bought three microbuses, Volkswagen microbuses.
And all the kids, kids who were a little bit more senior than myself,
they took the responsibility of driving these vehicles,
and we drove through Europe, all the way to Pakistan.
College and University
In the meantime, I got the news:
I was on the top of the list of all the candidates who matriculated in the East Pakistan at that time.
And then went to college, but I missed out several months of college because I was away.
But the college was so intensive for me because it was only a year and half that I spent there.
Our college is just 11th and 12th class.
So that period became very important for me.
All the friendships I made and the activities I joined, the cultural activities and literature activities.
I was editor of the newspaper, and editor of the magazine.
I would say one of the best periods of my life...
Then I came to Dhaka to start my university time.
I spent four years in Dhaka.
Finishing my honors in economics and then Masters Degree in economics in 1961.
But I would say my university days were pretty dull,
because I decided not to participate in politics.
I should study rather than getting involved in politics.
I was really happy that I finished the university.
I was hoping that this period would be over and I'll be doing something.
Always I thought I'll be a teacher.
I did a little bit of research work as a research fellow at the university.
Then I got the job of becoming a teacher and I took that job and went to Chittagong.
My posting was in Chittagong College where I passed a few years back,
so some of my friends are still there as students, while I came there as teacher.
While I was teaching there, at the same time,
I was thinking about starting some business.
And myself, and my older brother
were thinking what kind of industrial enterprise we can set up.
One of the things that attracted us was the packaging.
And that idea came when I was visiting West Pakistan and I saw a packaging plant there.
A beautiful Swedish/Pakistani joint venture packaging plant.
Thought we could have a small packaging plant in Chittagong.
I had no idea how to set up a plant,
but, just as we went around step by step.
We did that and...
that became the first packaging plant in East Pakistan.
The United States
Then in the meantime I saw an advertisement in the newspaper,
that Fulbright scholarships would be given by USA
and they were asking for applications. So I applied.
I thought, why not? Let me get a PhD degree.
So I got selected and that took me to USA in 1965.
The Fulbright authority chose Vanderbilt University as the place where I should go.
One thing in general I can say which I enjoyed very much
was quote unquote freedom, lets say.
Like you are free, you can talk, you can exchange whatever way you feel,
you are not afraid of anybody.
So that part I liked.
And the same time the paradox of all this, also something that made me very sad.
In Vanderbilt that was the first year of integration, racial integration.
Because it was a segregated university until 1964.
So here a nation which is supposed to be the leader in many many things,
but not allowing a black person to enter the same restaurant or enter the same school.
I couldn't believe that.
Then the Vietnam War, this is the peak of the Vietnam movement,
anti-Vietnam War movement.
And the killing of Martin Luther King.
Killing of Bobby Kennedy and all that seen right on the television screen.
But within that period the most exciting thing that happened was a particular professor that I was very lucky to be with.
Professor Georgescu-Rogan, he was a very unusual kind of person.
First of all, not only he is a great scholar.
He is mathematician, he is a philosopher, economist...
He was a great teacher.
As you listen to him you almost feel like you are in a concert.
You're enjoying a performance of a great artist.
But, he gave me one thing, to look at the reality.
Because the reality is the supreme. Theory is only imitating the reality
Sometimes we got the wrong kind of messages that as if theory is the thing
and that we have to build the reality into the theory.
That idea completely didn't go with him at all.
So if something didn't match with the theory, debunk the theory.
Throw the theory, build it new so that it explains what's happening here.
That part impressed me, instead of looking at the theory, I was looking at the reality.
Return to Bangladesh
During my stay in USA, the liberation war broke out in Bangladesh.
Suddenly the Pakistani army started attacking civilians in East Pakistan,
and East Pakistan rebelled and declared itself independent.
And immediately after I listened to the news on the radio,
we several people, Bangladeshis who lived in, we were six of us in Nashville,
we gathered together and declared ourselves citizens of new country Bangladesh.
Within minutes, we did that.
I joined the movement and I became the secretary of the group.
And went to Washington to participate in the demonstration,
to stop the military aid to Pakistan. Which aid was being used against the civilians of East Pakistan.
So this became a full time work for me.
At that time this word was very popular word in the early 70s and late 60s: teach ins.
At the end of 1971, Bangladesh became independent country finally in 16th of December.
The next question that came to my mind, What do I do?
I decided that immediately I should go back.
It was a very difficult country at that time because all the roads are gone,
bridges are gone so, you practically start from anew.
Many villages were burned down by the Pakistani army.
Many professors were killed by the Pakistani army.
So I was looking for a teaching job and I got the job in Chittagong University and went there.
And started with a full vigor to build up the departments in the new university, a new department.
Immediately I thought the students should become familiar with the reality of their life.
Because our students are usually textbook oriented students.
This is how educational environment of Bangladesh is.
So I thought no we should make a departure, we should let them understand what the reality around them.
And how reality and theory has to work together
So since the university is located right among the villages,
I asked them to, got them involved in doing some survey and understanding how people lived there
what kind of people live there, what are their problems and so on.
So it was a very exciting thing for me because it was a discovery for me too, I never did that myself as a student.
And then came 1974...
In '74 we had a terrible famine in Bangladesh and you can see the famine everywhere.
You come on the streets, people are dying of hunger and in the beginning you see one, you see two...
and maybe this is an exception, maybe something is wrong. But gradually numbers kept increasing.
But nobody says it publicly that there's a famine in the country.
So I went to the vice chancellor, head of the president of the university where I teach.
He was a very respected person, he was a writer.
As a writer; he was a very known person in all of Bangladesh.
I asked him to sign this statement saying that the situation of the country is bad.
People are dying of hunger and nobody's paying any attention to it. And all of us in the university,
all the teachers in the university, we went around signed a statement and put it in the newspaper.
For the first time the newspaper announced in a big way there's a famine in the country.
And people are dying and we need to get actions moving.
And I was very feeling terrible, besides doing the statements and so on, What else can one do?
It's useless to go on teaching economics the way it is.
All those beautiful theories, elegant theories, look beautiful inside but it has nothing to do with the reality outside.
As a human being as an individual person, I can go out and touch another human being
as they live. And see if I can make myself useful to another human being.
So I went around seeing such opportunities where they exist to make myself useful to another person even for a day.
And I was very lucky; I saw lots of such things happening and I could make myself relevant, make myself useful.
And one thing right away came which is the production of food.
Country was not growing enough food to feed the people.
And that led to me to irrigation and dry season.
Cultivation in the neighborhood university - why land should remain empty, fallow?
While the university is setting right next to it.
If the wisdom, if the university symbolized the wisdom of the accumulated knowledge
of the whole world, that's what the university is supposed to be.
Why shouldn't that wisdom spill over to the neighbor's field?
The Women Of Jobra
So the cultivation and that led to the irrigation,
became very successful program and lots of food being produced,
in a season where no food was produced before.
So I was very happy but at the same time I saw how people,
poor people didn't benefit from it.
The landowners, the cultivators, they benefited from this extra rice,
but not the poor. So this became one of the concern that I couldn't address.
And as I go around my daily round I saw one woman,
extremely poor sitting in front of a little broken down hut,
making bamboo stools, beautiful bamboo stools.
So I said let's go and talk to her, so we went there and she was very shy she ran away.
And finally we got into talking and asking how much money she makes.
So she told me that she makes only 2 cents a day.
I couldn't believe why she makes 2 cents a day for making that.
And I said, why can't you sell it to a higher price?
She said I can't sell it to anybody because I have to sell it to this person.
And I said why? - Because I borrowed money from him.
Why did you borrow? - Because I didn't have the bamboo which goes into this bamboo stools.
- So in order to buy the bamboo I needed the money.
So I have to borrow from the trader.
And he lent me the money, with the condition that I must sell my bamboo stools
to him only, and he decides the price, I have no control over the price.
Can you get more price if you sell it outside?
- Of course, I can get more price if I sell outside! But I can't because I am promise bound to sell it to him,
at the price that he gives me.
And otherwise he will not give me the money and I can't do anything.
So I realized that by borrowing money,
she has become a slave laborer to that person.
The next day I decided to go around and see if there are more people like her.
When my list was complete I had 42 names on that list.
And the total money they borrowed was 27 dollars.
And I was shocked. This I never realized that could happen anywhere...
People are suffering not for millions of dollars or billions of dollars, for few pennies
and there's nothing anybody has done to get rid of this situation.
So my first feeling is, Why don't I give this money to the people here?
To repay the moneylenders so that they can become free, which is very simple thing to do.
For 27 dollars you free 42 people right away.
So I did exactly that.
Asked them to give me back whenever they have money to pay back.
Then something happened.
The excitement it created in those people hooked me on...
They thought this was kind of a miracle that happened.
Because they couldn't think anybody could come up and do such a thing.
So they looked up to me as if I had done a great thing.
I said all I did is a few dollars worth of money that's all.
Then another thought came to my mind. The thought is a very simple one,
if you can make so many people so happy with such a small amount of money,
Why shouldn't you do more of it?
Dealing with Banks
I toyed around several alternatives; finally I decided.
Maybe I should link them with the local bank.
Bank is the one who should be lending money this is their business; this is their job.
So we go to the branch manager, or the bank manager who is located in the campus.
Proposed to him that he lend money to the poor people in the village.
He fell from the sky.
He couldn't believe I even said that. He said no it can't be done.
It can't be done. I said, Why not?
Because he said, poor people are not credit worthy.
What does credit worthy means?
Credit worthy means he will not be able to pay back.
I said how do you know did you lend them at all? He said no, I never lend them.
How do you know? He said everybody knows that.
Because they are poor no matter how much money you give
they will eat and the money will be over, they can't pay you back.
I went to higher officials and ended up in the city downtown, I talked to them.
They said the same thing.
So every time I go and see somebody they tell me the same thing.
And it went on for months, I couldn't find a door to open.
Then I learned something from them. And I used it.
Why don't you accept me as a guarantor? I become your guarantor, I sign all your documents
risk is on me, not on you. You give the money.
I thought this is such a straightforward proposal they will immediately go for it, they didn't.
In all there were more than six months. Finally, I was accepted as the guarantor.
And it worked; I was very excited that it worked.
But the bank manager doesn't change his mind.
He said it may work in one village, but if you do it in two villages it will never work.
I said Ok let me do it in two villages. So I did it in two villages; it worked.
He said well, one village and two villages are the same thing, maybe you should do it in five villages.
So I did it in five villages and it worked, but he doesn't change his mind.
After I have done this several rounds, and I realize that if I do the whole world he is not going to change his mind.
Maybe I should forget about him, so I thought maybe I should have a separate bank...
Doing exactly what I'm doing.
And that idea started haunting me, that why don't I have a bank for the poor people?
The Birth of Grameen Bank
I was invited to a conference in Dhaka in 1978.
And one banker challenged me in the conference, if you're so sure it can be done,
Why don't you do it over a whole district?
Not just few villages in our university campus. In the university campus you have some advantages,
your professors, your teachers are making sure that everybody pays back.
I immediately said, of course I'll do it! If you promise that after I do it over a district successfully
you will take it up and do it nationwide.
They agreed but they chose the district Tangail.
I didn't know anything about Tangail, I had never visited Tangail in my life.
And then Tangail, I found out after I arrived in Tangail in 1979,
that there's a whole armed guerrillas working within Tangail.
This is a remnants coming from the radical movements from the liberation war.
Going to the villages and killing village leaders,
and bringing radical communism and so on, that's what they believed in.
But gradually what we started seeing, they were fighting among themselves.
And some of them wanted to find jobs with us.
So we recruited many of these and only condition we put:
you're welcome to come and work with us, but you must leave the guns.
You cannot bring your rifles and ammunitions with you.
So young people left that and started joining us.
So Tangail is becoming more and more now a reasonable place to work.
And it is working beautifully and we are very happy.
But the bankers were not changing their minds.
So they after two years they raised this question.
But Tangail is a small district maybe your presence made all the difference.
Then I said if my presence made all the difference,
Why don't we take remote districts, far away from Tangail?
Reluctantly they agreed, and it worked too.
But I see no way banks are going to support that.
This is the time then I raised the question maybe I should become a separate bank.
So we went for institutionalization; that for me was very important thing.
If we didn't become an institution and remain spread out
with different projects ,with different banks, probably it will soon forgotten, removed, finished.
Anyway, it took me another two years and finally lucky of me and some strange coincidences.
We got it done, the government approved that.
And I was insisting that not only I need the permission, I need a separate law.
Because my understanding of the situation was if we are created under the existing banking law,
sooner or later whatever I am doing will gradually become the same old bank.
Because a law is a mold which will mold it in the same image of the existing bank.
But lucky of me, the government accepted that.
I drafted the law in collaboration with the lawyers in the country and gave it a shape,
and government adopted it as a law.
And then we became a bank in 1983, in October.
So this is how Grameen Bank was born.
The Sixteen Decisions
While we were in Tangail early on in 1980 one of the things we did was,
sit down with the borrowers and discuss for hours what is the problem
how we can solve the problem, or they can solve their own problems and so on.
Because we are people not familiar with their life.
So we spent a lot of time sitting down,
hours after hours talking to them, visiting their homes.
And then we got some money to hold workshops from UNICEF.
So we used that money to bring these women to sit for five days together,
exchange information with each other.
And then we opened the subject - what they would like to do now that they are having money.
And what are their priorities, what they would like to happen.
And then gradually we got into lot of ideas.
Then we wrote it down and said ok, this what you said.
Carry this because they cannot read and write; we wrote it down and passed it on to them.
And each year more decisions were put in until 1984 when we had 16 Decisions.
Of the 16 Decisions, the decisions are like,
that we shall grow vegetables all year round, and eat plenty of it, and sell the surplus.
The emphasis was always on eating because we were going through at that time,
night blindness among the children, and it was a common disease all over Bangladesh.
Children will lose eyesights and we found out, we were told by the doctors
that this is because of vitamin A deficiency.
And one way to have vitamin A is to eat vegetables, the kids were not eating vegetables.
So this became a big program in Grameen Bank.
We shall send our children to school and make sure they are staying in school.
We shall have pit latrines to begin with and use it.
And then gradually we will have a sanitary latrine in the house.
We should not live in dilapidated houses,
we should repair the houses, and as soon as possible,
we'll have a new decent house built.
So it goes on and on and on, on 16 Decisions.
And they became instant success, everyone wanted to have copies of 16 Decision.
At that time we had no idea it would become so popular with borrowers,
and now 16 decision became integral part of Grameen Bank system.
Housing Loans
Most of the poor peoples' houses particularly in Tangail
when we began, were made of jute sticks.
Jute stick is a very brittle fragile stick, cheapest material you can get.
Imagine the monsoon rain, it's all mud inside.
Imagine the winter, the cold.
So one of the things right away came, Why don't we give housing loans?
and that came through the 16 Decisions.
And we are, we didn't think that we could do it ourselves.
Then luckily we saw in the newspaper an ad - Central Bank announcing
that they will give refinance any bank who wants to lend money to the rural areas for housing.
They didn't have us in mind, they were thinking about the well-to-do families
in rural areas who want to build their houses and commercial banks can give loan.
And we applied for a very small amount of money, $50 or something
for a housing loan, and they rejected us.
This is not a house, with $50 whatever you build
it cannot be called a house.
So it doesn't satisfy the definition of a house.
So I said - Why are you worried about definition?
We want to have something for poor people to live under.
We turn around immediately, we applied again calling it a shelter loan.
Oh no no, why should we give you a shelter loan?
You should be giving what you do giving income. Shelter loan is a consumption loan.
Then we quickly changed the application.
And gave another - said we want to give a loan for a factory loan.
And what is a factory? A factory is because our borrowers are women, they work at home so their home is their factory.
They immediately rejected, they thought we were just pulling their legs.
And all three applications are rejected. We don't have the money to give.
So I decided to go to the, to see the governor of the Central Bank.
I said look we need only small amounts of money, that is all.
Even your one big conference spends much more money than what we are asking for,
and then you have lots of research money.
Why don't you just take it as research? Maybe it's working and maybe it doesn't work.
Something clicked in his mind. He said ok I'll give you some money.
So we borrowed from the Central Bank with the blessing from the governor of the Central Bank.
And it started the housing loan program and it worked.
Immediately became the hottest item, because it's such an important thing.
We require the woman or the borrowers,
when they ask for a housing loan that they must show that the land is owned by them.
But woman, most of our borrowers are women, they don't have the title to the land because they live in their husband's house.
So we said one way, if you are looking for a housing loan, if you want to build a house,
convince your husband to hand over the title to you.
In the beginning everybody said husbands didn't want to do that.
But the desperation was so much. Some of the husbands said ok, why not?
And that cured one of the problems that we have in Bangladesh particularly, divorce.
Husband divorce their wives very quickly and it's every easy to divorce.
So wife has to pack up and go home, go to her parents home.
‘cause she doesn't belong to this home anymore'.
So after this house is built, husband doesn't say that as quickly.
Because if he divorces his wife, he is the one who is to leave the house because the house belongs to the wife.
Today we have over 600,000 houses built with Grameen Bank money, with Grameen Bank loan,
and all these houses are owned by the women who built this house.
Grameen Staff Members
Well, for any work, you need a team.
If you're playing a game you need a team, to go in business you need a team.
So you have to build a team, that's very important.
And I talked to my colleagues, my staff in Grameen Bank
and explained Grameen Bank is you.
What you do is called Grameen Bank. It's not what I do is called Grameen Bank,
I shuffle papers in head office, write letters and so on.
But you do the work.
Whatever you interact with the borrowers, that's the Grameen Bank.
So if you are doing the right thing, Grameen Bank is right.
If you are doing the wrong thing, Grameen Bank is wrong.
As simple as that.
We selected them out of almost like a random selection rather than a very involved selection.
Because we feel that the people, the staff, can be created inside.
We rather prefer people having no experience,
particularly we insist that you shouldn't have any experience with the conventional banks.
So we do our own molding, and the molding comes through the work itself.
They like the job because they see how it works for the poor people.
They see how life changes because of their work.
And sounds relevant to their own life.
Like for example, one of the things again, 16 Decisions,
that we shall send our children to school, make sure they stay in school.
Through them they see their own brothers and sisters back home.
And when the students, these kids get scholarships,
they enjoy as if their brothers and sisters were getting scholarships or student loans.
This is something that is part of their dream too.
The Flowering of Democracy
Grameen Bank runs with a system of groups of 5 people together.
Elect their chairperson, elect their secretary,
so there is the first time they get exposure, how to occupy kind of a public office.
When election time came, national election, next political election in the country.
I encouraged them to go and vote because votes are important, your views should be heard.
But in the beginning they were really reluctant, what is the use, they are all thugs, they are all crooks.
Why should we go and waste our time voting for them.
So we explained to them that if we don't vote, then the worst of the crooks will get elected.
So we have a choice. We can at least find the least of the crooks, the least of the thugs,
and that immediately they understood. Yes, that we can do.
And they got really energized. From then on, they are participating in the election process.
But we didn't realize that that will spill over to something else.
Once they got into the voting, they realized how much political power they have,
because all the candidates started coming, campaigning for themselves.
sit waiting in their central meetings, to give a chance to speak for five minutes.
Even the top leaders, because they are big voting blocs.
When the local election time started coming, they became candidates themselves.
And their explanation is why should we go and look for the least of the crooks?
We are good people, why don't we become candidates?
So in the '97 election, there was a tremendous amount of support for the Grameen members
getting elected by other Grameen members. We started out a few hundred elected positions,
five years back, and then 2000 and then last year there was local level election
and the total number of elected officials in the local bodies was 12,000.
Out of that, 3,000 plus was from Grameen borrowers.
Grameen Phone
Along the way what we did in 1995 we came up with another idea.
while we do the Grameen Bank, I became a strong advocate of Information Technology
coming to the poor people. I said if we can bring micro-credit, which is the Grameen program,
and Information Technology to the poor people, then it will be faster to get out of poverty,
and we got an opportunity. Government was inviting applications for licenses for mobile telephone companies,
we applied, and after a long procedural battle, finally we got the license.
And we created Grameen Phone.
The idea is to bring mobile phone into the rural areas of Bangladesh.
And then give mobile phone in the hands of the poor women, with the financing from Grameen Bank,
so that she can start selling the service of the telephone, and become the telephone lady of the village.
And anybody who needs to call anywhere, they can come to her, and pay her,
and use her phone, and she makes the money and villages have a telecommunications system going.
Today there are more than 100,000 telephone ladies all over Bangladesh.
You can go almost anywhere in Bangladesh, call anywhere in the world, because there is a telephone lady,
who has a telephone you can use and she makes money and you get connected.
Grameen Two
Bits and pieces came, different kinds of amendments in our system, tiny bits and pieces altogether,
so at one point we realized we had lots of those bits and pieces, something worked, something didn't work.
We thought maybe we should pull them all together. And things we wanted to do before and never did it,
because we were afraid this would drop the whole system.
Let's go bold, and put them all together, try it in one go in a massive way.
And that we put them together and called it Grameen Two
the same system but more generalized. Grameen system, in the beginning, we were worried
if we make it complicated, people would not understand, they do not read and write and so on, to make it very simple.
So all of our loans were for one year. And it is all paid in equal installments over a period of one year, 52 weeks.
So that's how we work. Now we realized people were mature, so we changed that.
We said loans could be for any period, it could be shorter than a year, it could be longer than a year,
it could be several years, it could be several months, and made the installment, for example, also variable.
Instead of having the same amount every week, we said it could be more, it could be less and so on.
But for individual persons, already there are many members who have spent 10 years
or more with Grameen Bank, are capable of handling bigger size of money,
so in Grameen Two we have another stream working where you can borrow larger amounts.
The largest loan will be over $10,000, one single loan. And we add a few more savings products.
Like pension fund, so we give this attractive proposal, and that if you put some money
along the way each week, a small amount over a period of 10 years, whatever money you have put in
over a period of 10 years, you get almost double that money.
This was a very attractive proposition for them to accumulate money.
So this is, in total, what is known as Grameen Two.
Grameen Bank .. today ... has come a long way. Member wise, we have just crossed the 4 million mark.
The reason it can happen so fast, unlike Grameen One, is because our insistence in Grameen Two,
the money should come from the same locality, so don't look at us as a supplier of your money.
Today almost all branches are profitable because they focus on their money
and don't have to borrow and pay interest on their borrowed money to head office.
They take the local deposits, pay the interest on their deposits, and lend it out to the borrowers, and make money.
So expansion became very simple. We don't want to bring the money to Dhaka, the head office,
because we could only invest the money in Dhaka City.
And we are always opposed to mobilizing savings in the rural areas,
passing it on to the metropolitan areas, and again the metropolitan area making use of that money.
I said this is drying up the rural area. So I said we are not interested in the money coming to the city,
but you find opportunities to make the investment right there. So that's why more branches are being opened.
For the first time in Grameen Bank, the amount of deposit has exceeded the amount of loan outstanding.
The Beggars' Program
There is a debate going on, for sometime, the debate is, microcredit is a wonderful idea,
but it works only for the top layer of the poor people. it doesn't work for the middle level,
it doesn't work for the bottom level.. Bottom level and middle level, they need charity, they need handout,
they need other kinds of intervention, not credit, because they don't have the ability to use the money
loan money for their businesses and so on, they don't have the ideas and skills and so on and so forth.
We have been saying that look, we are always addressing the bottom people, that's how Grameen Bank was born.
Our first loan was $27 to 42 people. These are not rich people in that village who took less than a dollar apiece.
So it started with that idea. So this year we started a beggar's program, we call it struggling members program.
would you carry some merchandise with you? Some cookies, some toys, some ribbons
some bangles, some candies, that the children may be interested to buy, or a housewife
may be interested to buy? So you have both options open, and you don't have to stop begging.
And then, pay us back. And this is interest free, and take your time, there is no time limit.
You are not forced to follow the Grameen Bank rules, we told our staff that for beggar members,
So you follow their rules, how they want to do it. The only rules we gave them is the money has to be paid back.
In the beginning we thought we would have maybe 3,000 or 4,000 beggars in the program during the year.
But we started seeing a big number coming in. And we ended the year
by exceeding 26,000 beggars in the program.
Key Advice
The advice is very simple - look at the issue first, what is it that you are addressing.
Unless you are clear about the issue itself, you cannot design anything that .....
you may be a very warm hearted person, you are very kind, you want to do good things.
just being able to think about good things doesn't make you doing good things.
Because you need to translate into an action, action that works. So you have to define your work
very clearly, and then design something that matches that thing. And, learn by doing.
The first cut you have in your program is not the ultimate, this is just to get you going.
And then you notice which is working, just like you build a machine.
The first airplane that was built is not the airplane that Boeing builds today, it's different.
But the principle has been set, that is the important thing. Our basic features, even today,
are still the same thing that we did in Jobra. The basic features never change. We added pieces,
we defined things, but basic 5 member group was done in Jobra, weekly meeting was done in Jobra,
loan for income generation done in Jobra, and savings done in Jobra...center meetings done in Jobra.
so these are the essentials of Grameen system wherever you go in the world.
And this is first important thing. And continue to be stubborn about it, because if you get swayed
by who says what, whether it can be done, whether it works here, but it may not work in Bangladesh,
because this is another country, or it works in Bangladesh, but it won't work anywhere, don't get swayed by those things
because people are always waiting there to say no to you. So stay stubborn if you believe in what you are doing.
People who are saying things that you can use and improve, not the negative wholesale dismissal.
don't think about it, because you are the ultimate designer of the whole thing.

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