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Grameen Bank - Alternative Microfinance Approaches

Written by: Grameen Foundation

Article Overview: Grameen Bank operates on the premise that the poor remain poor not because they do not have the skills or do not work hard, but because the institutions created around them keep them poor.

Grameen Bank - Alternative Microfinance Approaches

Grameen Bank operates on the premise that the poor remain poor not because they do not
have the skills or do not work hard, but because the institutions created around them keep them
poor. By challenging the conventional belief that the poor are not bankable, Grameen Bank has
been able to serve over seven million borrowers since its creation in 1976 by Dr. Muhammad
Yunus through many creative programs such as its Housing and Education programs, Village
Phone Program, and Pension Fund and Other Savings Program. Dr. Yunus once again
challenged common belief in 2003 when he started a new program, the Struggling Members
Program (popularly known as the “Beggars Program”), to serve individuals who are currently at
the lowest rung of the poverty ladder, proving that microfinance can be adapted and combined
with other essential services to help improve the livelihood of individuals struggling with
poverty.
Grameen leveraged the basic microfinance model and coupled it with creative solutions to
fit the needs of the clients of its Struggling Members Program. First, the nature and size of the
loan are different than generic microfinance loans. A typical loan to a beggar member is $9
(collateral and interest free) and the repayment schedule is also more flexible where installments
can be paid according to her convenience and earning capability — but not with money she receives from begging. Second, some rules and regulations that apply to the regular members
were modified to accommodate these clients, such as eliminating the need to form solidarity
groups and the obligation to attend weekly meetings. Grameen goes beyond providing the loans
to help their clients achieve a life free from begging. It supports its members by making
arrangements with local shops to provide items for them to sell such as bread, candy, and toys
and will guarantee payments to these shops in case of defaults. In addition, the bank provides its
members with other financial and non-financial products such as insurance schemes and blankets,
mosquito nets and umbrellas on credit to be repaid as interest free loans. Although there is no
compulsion for the struggling members to give up begging, many do and move on to becoming
business people. As of December 2006, the number of people covered by the program total
87,329. Of this number, 6,206 beggars have already given up begging and 3,042 have graduated
to become regular members of the Grameen Bank – a truly amazing accomplishment.16

Microfinance: A Platform for Social Change
by Marge Magner
March 2007
Grameen Foundation

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Article Tags: beggar, beggars, borrowers, collateral, conventional belief, creative programs, creative solutions, dr muhammad yunus, education programs, essential services, installments, ladder, livelihood, muhammad yunus, pension fund, poverty, premise, repayment schedule, solidarity groups, typical loan



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