Grameen Bank as an Economic Stabilizer for the Rural Banking Sector in Bangladesh

History Of Grameen Bank

In 1976, Dr. Muhammad Yunus, a then university Professor of Economics, started a project by lending an amount of $27 to forty-two poor persons in a village named ‘Jobra’ near to his university. Yunus found that in order to survive, these people used to take loans from the local informal money lenders with difficult loan terms. He was not in favor of charity and thought that if these people get access to credit, they might ‘increase their profitability, or diversify their economic activities, in ways that would allow them to raise their incomes’ (Hulme, 2008) . Dr. Yunus paid the money from his own pocket as no bank was ready to provide these poor people with loans as they were perceived as not creditworthy (Yunus, 2004).

After several years, in 1983, this project was transformed into a formal bank called Grameen Bank. It was ‘established as a specialised bank with its own charter to work exclusively with the poor’ (Dowla, 2006). The huge success of Grameen Bank attracted the Governments and the NGOs of several countries around the world. This unique model was applied by many countries. Because of its huge success in the poverty alleviation in many countries of the world, Professor Yunus and his Grameen Bank jointly owned the Nobel Peace Prize in the year of 2006.