Grameen Bank Microfinance for the first time offered loans to the poorest of poor people of Bangladesh challenging the conventional banking system. The poor people whom the conventional banking system refused for not being credit worthy, got credit from Grameen Bank without any collateral.
The Grameen Bank Microfinance established a new concept of banking which was not based on legal contracts but on mutual trust. Grameen Bank Microfinance refers to the credit system that is run by the Grameen Bank. Grameen Bank of Bangladesh is founded by Prof.
Muhammad Yunus and the bank emphasizes on accountability and mutual trust rather than emphasizing on the need of collateral for issuing a loan. This Grameen Bank offers loans to the poorest population of Bangladesh without any collateral, on reasonable terms and conditions.
Grameen Bank for the first time offered credit to the thousands of poor people of rural Bangladesh who were earlier not entertained by the conventional banking system. For his innovative and noble concept of Grameen Bank Microfinance, founder and MD of Grameen Bank, Prof. Muhammad Yunus won the Nobel Peace Prize for the year 2006.
At present, the Grameen Bank has almost 7.41 million customers and the network of the bank covers more than 96% villages of Bangladesh.
To get into the depth of the creative concept of Grameen Bank Microfinance, we need to know about the features of Grameen Microfinance.
The Main Features of Grameen Bank Microfinance are discussed below:
Grameen Bank Microfinance promoted credit as an cost effective instrument for alleviating poverty. It offered credit to the poorest of the poor and established credit as human right.
The most prominent feature of Grameen Bank Microfinance is that the credit system does not force the borrowers to enter into any legal contract. The system does not emphasize on securing collateral, rather it is based on mutual trust.
Grameen Bank Microfinance aims at generating self employment among the poor through providing loans and targets overall social and economic development of the poor people of rural Bangladesh.
Grameen Bank Microfinance works in its own methodology. To receive credit from the Grameen Bank, the borrower is required to join a group of borrowers.
According to Grameen Bank Microfinance System, credits can be obtained on a sequential basis, but a borrower can get a new loan only after he repays the previous one. The loans provided by Grameen Bank Microfinance are required to be paid back in weekly or bi-weekly installments.
Last Updated on : 30th July 2013