Grameen Bank - Social innovation to fight poverty

I remembered I had read the story of Mr Muhammad Yunus, the Nobel Peace Prize winner for 2006.

This man brought about a total change in Bangladesh's banking industry but setting up Grameen Bank, a bank that provide small amount of money (microcredit) to poor villagers to help them startup small businesses. No longer was there a need for collateral and security when the villagers borrow money to help them sustain a living. The banking model that Grameen Bank had setup was based on trust, community and accountability.

In effect, it revolutionized the way banks were being seen as just a pure profit making entity. Yunus "changed the rules of the game" by making a great social impact in the lives of these villages by this innovative approach of lending. It has proven to be good weapon against the vicious cycle of poverty that had perpetuated the poorest villagers in Bangladesh.

In the year 2007, Grameen provided loans to 7.21 million people of which 97% are women. What is interesting is that Grameen has been profitable other than some years; maintaining an excellent loan recovery rate of 98.61% while at the same time achieving its social aims of helping the poor.

Clearly a success story by Yunus to eradicate poverty in Bangladesh and perhaps in the future to the rest of the developing world. For more information on how they lend the credit and their 16 decisions model.

BTW, Yunus recently was also named the top 30 entrepreneurs of all time too by Business Week alongside Bill Gates, Henry Ford and other well-known people.