Theories Of Grameen Bank Founder Professor Muhammad Yunus

Theories Of Grameen Bank Founder professor Muhammad Yunus smallfinance is the provision of financial go by trusted institutions kn admit as MFIs such as Cooperative Banks, Community Based-Saving Bank, Credit Unions, schooling avow to the brusque, archetypal base income bring iners, egotism-employed and sm totally businesses design to address to address issues of beggary. harmonize to MIX in June 2010 there was to a greater extent than 1800 MFIs in over 100 countries, with 92.4 millions borrowers and 78.5 millions savers in the developing world. The concept of microfinance was created by Professor Muhammad Yunus interrupt of Grameen till in Bangladesh. Microfinance includes a range of services such as micro computer address, scrimping, amends and gunstocks transfer. Traditional bevels do non provide facilities to showtime income earners they provide services to pot after assessing the profile of clients according to certain(p) criteria such as pay, credit history and assets of the clients. According to Hernando De Soto (1989) a Peruvian economist brusque passel contain no assets to provide as collateral to hope when taking a impart, therefore they ar not li equal to receive loans from cambers. Since misfortunate masses do not crap entre to traditionalistic banks they have to lend currency with high interest rates from oppositewises sources such as pawnbroker and local m integrityy lender whatevertimes with 100% interest rate as borrowing from them is fast and flexible.Over the perish 30 geezerhood MFIs have developed new methods with less collateral to offer small loans to low income earners and has gr ingest rapidly in Asia, Africa, Eastern Europe and Latin America where there were few bank infrastructures and where in some cases more(prenominal) than 80 % of the population did not have a bank account. According to CGAP (2008), MFIs argon funded by 33 donors of 21 investors such as DFI. Microfinance offers permanent fi nancial facilities for upbringing, health, personal emergencies, disasters, enthronization opportunities to the poor and it is use as a development tool. MFIs begin as non- amplification organization increasingly they atomic number 18 now evolving as profit entities because MFIs argon required to have a banking license for saving services. slightly MFIs offers non-financial facilities such as health services and business development. In this check out we leave alone analyze and leaven how microfinance contributes to the stinting development of a country and the review will be foc apply on come throughence of purpose and the sanction of women by microfinance.2.1.1 Professor Muhammad YunusTheoretical reviewThe concept of microfinance was created by Professor Muhammad Yunus founder of Grameen bank in Bangladesh and noble price winner in 2006.He receives 76 other awards in divergent countries for his work. Professor Yunus obtainded a doctorate in Economics from Vanderbilt University found in Nashville, Tennessee in the United States. During the famine of 1974 in Bangladesh Professor Muhammad Yunus minor loans of USD27 to 42 poor families for them to buy and sell small articles to allow them to earn a life. The target behind the loan was to reduce leanness in Bangladesh. Grameen bank was an idea generated by Professor Yunus the bank started as a hurtle at the University of Chittagong as a pilot test to find different ways of providing credit to the poor in the rural argona.The Grameen bank offered its services to a village named Jobra serious the university the project was successful and had the support of Bangladesh central bank in 1979. The bank pull outs its services to Tangail district and to other areas of Bangladesh. In 1983 the Bangladesh Government turns the project into an independent bank and Professor Yunus had a set apart from the Ford foundation to incorporate Grameen bank with the support of two bankers namely Mary Houghton and R on Grzywinkski from Shore bank of Chicago. The Ford foundation was established in 1936 it is an independent nonprofit and nongovernmental organization which serve in cordial change, the organization help to reduce poverty and help in valet de chambre advancement worldwide by offering subsidies and loans to certain organizations.2.2.4 Credit UnionMutual societiesGrameen bank is a Nobel Prize winner alliance founded in 1983, its headquarter is situated in Dhaka in Bangladesh and the bank is know for its solidarity lending system or banking and is in like manner known as banking to the poor. Solidarity lending is the foundation of microcredit. The word Grameen is derived means village in Bangladesh, the bank incorporates the 16 decisions which is recited by bank borrowers and which they shall abide to them. The 16 decisions comprises the four principles of Grameen bank which are Discipline, Courage, Unity, and Hard work, and the other 15 decisions are resumed as to improve their standard of living and there is the element of unitedlyness to do societal activities to improve their way of living. These sixteen decisions have a positive impact on the inhabitants of Bangladesh where more children have join school. The bank has different sources of funding initially huge ceiling was obtained from donor agency at low rates. During the 1990s the bank has its bulk of capital from the Central bank of Bangladesh and recently from the sales of bonds subsidised by its government. In 1998 The bank induce loan to poor spate in the form of microcredit as a result of flood in Bangladesh, the quittance rate decreases but recovered afterwards, USD4.7 zillions has been loaned in 2005and USD6 billion in 2008.Nowadays the bank has expand more and offers more loans to the poor and in 2006 it has up to 2100 branches in Bangladesh. Due to Grameens success more than 40 countries including the United States in 2008 where 12.6% of the population live downstairs the poverty line have been inspired by the bank to consider projects with the same perspective, only Africa which has lag behind. The creative activity Bank has financed the projects. The bank is owned by the poor borrowers of the bank of which the majority are women as the borrowers own 94% of the equity and the remaining 6% is owned by the Government of Bangladesh. The bank has grown to a large extent between 2003-2007 in 2003 the numbers of borrowers have doubled and in October 2007 the number of clients was 7.34 one thousand thousand of which 97% were women and had a staff of 24703, in 2468 branches over 80257 villages that is the branches have spread in more villages since they were situated in only 43681 villages in 2003 and the quittance rate. Since the banks started to operate it has USD6.55 billions as loans USD87 billion has been repaid and the bank claim refund rate of 98.35% up from the 95% of 1998 but again the Wall Street journal in 2001claim that it doubted the 95% and the a ccounting standard used by Grameen bank. Grameen started to diversify in the 1980 where it develops into a multi facet group with profit and nonprofit group among which are Grameen fisheries foundation for fisheries project, Grameen Agriculture Foundation for irrigation project, Grameen fund and Grameen self-confidence.Grameen believe that the concept of big(p) charity will encourage charity whereas the concept of microcredit will help poor race to suffocate poverty and the bank invest in children education by providing scholarships and loans for higher education.Grameen FoundationPPIMicrofinance in developed countries2.3.3 Theoretical study ofMicrocreditTheoretical studyAccording to Boudreaux and Cowen (2008) microcredit is a micro magic and makes the life of the poor stimulates easier, it is an alternative to traditional lending of banks. Instead of giving charity to the poor, microcredit is a human way of providing finance to poor people as according to the Chinese proverb G ive a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime, it is an coronation in human capital. Microcredit is an innovation in the world of finance it forms part of microfinance, the concept did not exist before the s flushties, and it is a small loan rarely exceeding USD200 and usually below USD50 made to the poor or people with low income with little or no collateral. Microcredit clients are those that are considered as near the poverty line, the loans allow micro entrepreneurs to generate an income for a better standard of living. Grameen bank found itself on lead Cs namely Character that is the reliability of the people the Capacity to handle funds and the detonator which is the assets of the borrower such as savings. Microcredit is gaining more credibility in the finance industry and many large organizations are developing microfinance programs for future growth although at the start many were pessimistic about the future of microcred it in the financial system. 50% of the population in many developing countries is self employed and these loans of three months to three historic period with small interest rates and no collateral help poor people to become financially independent and help to reduce poverty. The microcredit programs helps people to achieve high repayment rate crimson sometimes more than that of traditional banking because of the system of peer support. In the case of the Grameen bank where there are solidarity groups and it is also known as fond capital and is composed of 5 members and each member is prudent for each other success and repayment, but are not guarantees or liable if members default. Nevertheless the members make sure that each one is taking its responsibility to make repayment this act as a motivating factor for the members. Sometimes in real life when a member of the group defaults the other four collaborates together and contribute to pay on behalf of the defaulting member.The m icrocredit system of Grameen bank is based on Trust and there is no conventional contract between the bank and the borrowers, but the borrowers must have a small account with the bank known as group fund which acts as an insurance in case of an emergency. Women account for 97% of the microcredit client of Grameen bank and this help to empower women as they get access to resources and have a say in decision making since they become micro entrepreneurs. Grameen bank has records of 98% repayment rate from women which is in contradiction with Wall street Journal which says that there is one one-fifth of the total loan of the bank is overdue but Grameen bank claims in turn that the standard of living of the poor has profitd that is they are respecting the 16 decisions of the bank and are able to make a repayment of somewhat 4USD per week.Empirical review of microcreditGrameen bank develop several program for the poor of which one of them is the try members program in 2003 which is di fferent from the 5 group member borrowing it consists of distributing interest free loans to beggars in Bangladesh where the banking rules do not apply and where the repayment period is arbitrary for USD1.5 about 3.4 US cents and if they borrower default they are already covered under an insurance paid by the bank itself. This type of loan advance the beggars to generate an income by the sales of cheap items, there is a record shown in the microfinance upside 2006 that loans taken by beggars are about USD 833,150 and the repayment is USD 496,900 that is 59.64% repayment rate which according to me is quite encouraging since it is more half of the money loaned.Certain developed countries such as in Canada have try to used the Grameen model but the project has failed due to certain factors such as the risk profile of clients, no taste for joint liability that is the no solidarity between the borrowers, high overhead costs therefore the project does not stand without subsidies in Can ada which is contrary to the USA where microcredit has been successful. Sometimes microcredit is subjected to problem such as self-concern and asymmetric nurture. The number one Grameen branch has made a loan of $1.5 million in the USA among which was 600 women and the repayment was very high up to 99%. People took the loan to sell items such as flowers, jewellery clothes and Grameen bank remains unshaken while others collapsed during crisis. Despite the global recession, The hot seat Barack Obama announced the institution of $100 million funds to lend as microcredit to the western hemisphere.Micro SavingApart from microcredit the involve of financial users is increasing, there is demand from 19 million potential savers to have access to micro saving services. They need services that are flexible and adapted to them. Traditionally savings is done by people at home or by normal banks at a high cost which was not encouraging to the poor. Microfinance has brought services such as savings to poor people. Savings help people to tone safer and more stable, and help poor people to manage their money conveniently. Micro saving consists of small deposits, toll and interest rate that is flexible to clients at the same time banks used the money to make loans to poor people.Credit InsuranceIn 2002 opportunity organization started to give micro insurance services. Its subsidiary MicroEnsure was the first institution offering micro insurance services and provide protection against many risks for the poor. Stakeholders and local insurance worked in collaboration with MicroEnsure to develop and match the needs of the poor. The insurance provided were affordable, they offered agricultural, medical, property and life policy providing a safety net in case of disasters with average premium of USD 1.5 for family with 5members. Medical policies covered even people already suffering from diseases and even those suffering from HIV viruses.Actually MicroEnsure is offering insur ance in 5 countries to over 1million poor people and was one of the runner-ups of financial times in June 5 for sustainability award and receives a grant from The Bill and Melinda Gates Foundation to expand itself in other countries.Microcredit transferMicrocredit SummitThe first microcredit summit was held at capital letter D.C. on the 24 February 1997, 137 countries were present at the summit with 2900 participants. In the summit they launch a campaign to reach 100 million poorest families that is those people living below the poverty line, with those living with less than USD1.25 a day adjusted to the purchasing power parity (based on 2005 prices) all around the world within nine years especially to empower women as micro entrepreneurs. The objective was nearly achieved in 2005 and in November 2006 the campaign re-launched to 2015 with two new objectives was ensured that 175 millions poorest families especially women are obtaining credit for self employment and for business and financial services. The second objective is to ensure that 100 millions poorest familys worldwide adjoin to USD1 a day adjusted to the purchasing power parity from 1990 to 2015.The microcredit campaign is the project of the Educational fund from the USA an organization committed to end hunger and poverty around the world. The campaign group together people such as microcredit practitioners, donor agencies, international financial institutions, non -governmental organizations, advocates, and other people tortuous with microcredit for efficient and efficient practices. In August 2008 the World Bank claim that some 280 million families live below the poverty line with less than USD1.25 daily. The four core themes of the summit are reaching the poorest, empowering women, building self sufficient and sustainable MFIs, ensuring that microfinance has a positive impact on the lives of the poorThe forthcoming Microfinance Summit 2011 will be held in Valladolid, Spain, the summit is belie ved to improve the microfinance sector and to achieve the Millennium Development Goals. A atomic number 6 countries and over 2000 participants are expected in the summit. In the agenda there will be the intromission of new products, job creation with microfinance and best practices among other issues will addressed.PovertyIt has been proved that microfinance is the tool to help poor family moved out of poverty and to contribute to the economy of a country. Studies have shown with the microcredit provided by Grameen bank in Bangladesh 48% of the families below the poverty line have exit from poverty. According to some studies with microcredit 5% of the poor could exit the poverty line each year as it is an investment in human capital and improve peoples life. Microcredit is an opportunity for the poor to realize their dreams.Employment GenerationMicrocredit helps in the generation of employment therefore it helps in economic development and in a sustainable means of income. With th e microcredit poor people are able to earn a living by selling low priced items or to even expand their businesses at the same time they become sustainable and create employment for other people .Microfinance is a mean of creating employment and improving the life of poor people.Women Microfinance more specifically microcredit is an instrument used for the empowerment of women it increase societal welfare and enhances gender equity. Microcredit helps women to become economic actors in power. We have comprehend a lot about the role of women in microfinance, 94% of the borrowers of Grameen bank are women and 97% of the borrowers are owners in the equity of the bank, according to Rankin (2002) the reason behind this is because women invest more in the family than men because of their nurturing instincts and are more devoted towards their families. Women play a crucial role in the economic growth of a country by first improving their family life, their communities and countries. In th e microfinance summit provisions are made for the poorest families around but especially for women as they form an important part of microfinance. Women are targeted because they are the one in the family to up bring the children and poverty of the women results in illiteracy of their children and other social problems. Mohhamud Yunus (1999) explains that women are more instinctive to work harder to raise their children and to move their families out of poverty, whereas when a destitute father earns an income his priorities will more around himself than for his family. In 2005 Kofi Anan promote the year as the UN microfinance year for empowerment of women. Studies have shown that women are good income earner and that women have a high repayment rate. In Nepal with the Women empowerment program 68 % of the women are able to cater for the needs of the family by circulariseing their children to school, buying and selling properties which normally was the duty of the husband. Access t o microcredit has increase from 7.6 million in 1997 to 26.8 million in 2001 among which are 21 million women the access to loans enabled them to make economic decisions , to buy assets and resources and to become more independent..We will look at two among many microcredit stories of women the first one is that of Janet Deval from Haiti who was an illiterate women with a hearing problem she had tailfin children, her husband refused to pay the school fees but she knew that education was important for the children. Janet sold goods in Hinche and pay for her children schools on her own. She started to take literacy classes at Fonkoze a microcredit institution in Haiti. Afterwards Janet knew how to write her name and could things that she couldnt do before since she was never sent to school. Later she took a loan from Fonkoze to be able to expand her business at the market to be able to continue to send her children to school, without the microfinance institution Janet would have been unable to read and write and to even expand her business therefore she would have been able to educate her children.The second case is that of Anastacia Abella from the Philippines, she lived as a squatter in Manila, she lived with her four children in a shelter made from scrap, the village have frequent blackout therefore she decided to look for for jar in the garbage to make lamps, after decorating the lamps, she sell 150 of them each day and make a small profit. She took a loan at Opportunity international and she was to make 300 lamps a day, the loan allows her to make greater profit and be able to improve her standard of living.Empirical review accessible capital is an important component of microcredit it is used as a tool in development programmes. Social A study was carried out by Forbes Marshall Co .Ltd a well known company in Maharashtra, India as an initiative of CSR about the impact of social capital on social empowerment carried utilize primary data from 217 women al l members of SHG by victimization random sampling.15 variables were used victimization Likert scale to know the perceptions of women about the microfinance programs. The conclusion of the study was that the social capital created help in women empowerment but that the organization must give appropriate support and policies to the social capital such as capacity building programmes to help decision making.Islamic microfinanceCritics of microfinanceMicrofinance in MauritiusTo coordinate the activities of Grameen Foundation, we have staff based at our headquarters in Washington, D.C., at the Grameen Technology Center in Seattle, Washington and in offices in Los Angeles, Ghana and the Philippines. Overseeing the staff is a Board of Directors. Our Grameen Foundation Advisory Council and our Board Committees and Councils nurture new ideas, innovations, strategic thinking and program development. Much of Grameen Foundations work is done by our network of volunteers who are committed to our mission, some of whom have been working in partnership with us for more than ten years.Alex Counts, chair CEOAlex Counts is President and CEO of Grameen Foundation, a nonprofit organization focused on enabling the poor to escape poverty, using microfinance and applied science. Counts founded Grameen Foundation and became its CEO in 1997, after having worked in microfinance and poverty reduction for 10 years. Since its modest beginnings, sparked by a $6,000 seed grant provided by Grameen Bank founder (and founding Grameen Foundation board member) Professor Muhammad Yunus, Grameen Foundation has grown to a leading international humanitarian organization with an annual budget of approximately $25 million.A Cornell University graduate, Counts commitment to poverty eradication deepened as a Fulbright scholar in Bangladesh, where he witnessed advanced(a) poverty solutions being developed by Grameen Bank. He trained under Dr. Muhammad Yunus, the founder and managing manager of Gramee n Bank, and co-recipient of the 2006 Nobel Peace Prize.Counts has propelled Grameen Foundations philosophy through his writings, including Small Loans, Big Dreams How Nobel Prize Winner Muhammad Yunus and Microfinance Are Changing the World. Counts has also been published in TheWashington Post, the International Herald Tribune, the Stanford Social Innovation Review, The Miami Herald, The Christian Science observe and elsewhere. In 2007 he received the Distinguished Alumni Award from Horace Mann School.Counts chairs the Fonkoze USA board of directors and is the immediate past chair of Project Enterprises board. He sits on the Advisory Council of the Center for Financial Inclusion, the Advisory Board of the Think world-wide Arts Foundation, and he co-chairs the Microenterprise Coalition. He serves on the Board of Directors of two social businesses Grameen-Jameel Pan-Arab Microfinance Ltd. and YouChange PuRong Information Advisory Co. Ltd., which promote microfinance and related effo rts in the Arab World and China respectively.Before leading Grameen Foundation, Counts served as the legislative director of RESULTS and as a regional project manager for CARE-Bangladesh. He speaks fluent Bengali and lives in Washington, DC, with his wife, Emily, and their cat, Seymour.TopPeter Bladin, executive wrong-doing President, Programs and RegionsPeter Bladin is Executive feebleness President of Programs and Regions at Grameen Foundation, and the Founding Director of the Grameen Foundation Technology Center. below his leadership, the Technology Center has led the microfinance industry in driving relevant and appropriate technology innovation, creating information and communications initiatives that benefit the worlds poorest.Peter was a founding member of the MTN-Village Phone board, the first public-private partnership to extend telecommunications access to the rural poor. He is a frequent speaker at international telecommunication and microfinance conferences, and is an Executive Board Member of the International Telecommunications Union Connect the World initiative. Peter is also actively involved with unhomogeneous Seattle-based non-profits, including Global Partnerships and Social Venture Partners. Before joining Grameen Foundation, Peter worked for Microsoft for more than 10 years, managing various projects and departments during his tenure. He has a degree in Mathematics from the University of Uppsala, Sweden.TopJennifer Meehan, CEO, Asia RegionJennifer Meehan joined Grameen Foundation in February 2005 as the founding Director of the Capital Markets Group, during which time she led the development and launch of the Growth Guarantees product. She by and by led Grameen Foundations strategic programmening process before taking on her current role in January 2009. She is based in Hong Kong.Jennifer has lived in Asia Singapore, Malaysia, Hong Kong, Japan, and China since 1996. She started her career in the formal financial sector with result Manhattan Bank (now JP Morgan Chase), but made the transition to microfinance following the 1997 Asian Financial Crisis. Prior to joining Grameen Foundation, she worked extensively with poverty-focused MFIs throughout Asia including CASHPOR, the Asian network of Grameen Bank Replicators, on financial management, business planning and financing. She has also consulted for Calvert Social Investment Foundation, among others, and published a number of articles. She was a founding investor and, until October 2007, served on the Investment Committee of the Aavishkaar India Micro Venture Capital monetary fund.Jennifer graduated summa cum laude, Phi Beta Kappa with a B.A. in International personal business from George Washington University.TopAlberto Solano, CEO, AmericasAlberto Solano joined Grameen Foundation in October 2009 and provides leadership and management oversight for our portfolio and activities across the Americas. He also serves as our senior representative in the region. He has more than 10 years experience in microfinance, principally in Latin America, and most recently was the Latin America Program Director for Global Partnerships.He previously worked with the Central American Bank for Economic Integrations microfinance and technical assistance programs in Honduras, and ran his own consulting company specializing in sustainable development and microfinance.TopJulia Soyars, General Counsel and Assistant Corporate secretaryJulia Soyars joined Grameen Foundation in March 2005 and started the Grameen Foundation legal department. After working five years in energy and government contracting law and litigation at Pillsbury, Madison and Sutro in Washington, Julia joined the legal department at The American National Red Cross, where she spent eleven years handling domestic and international transactions. Julia is a founding member of the Microfinance Council of Counsels and is a member of the District of Columbia Bar. Julia holds a JD Magna Cum Laude from Syracuse University.TopJoshua Tripp, Chief Financial OfficerJoshua Tripp is Grameen Foundations Chief Financial Officer. Joshua joined Grameen in 2007 after spending seven years at Community Wealth Ventures (CWV), most recently as a wrong-doing President. In his time at CWV, Joshua worked with dozens of innovative nonprofit organizations, helping them to assess, plan and launch for-profit business ventures to increase their sustainability. He became an expert in financial planning and capitalization of social enterprises, and was a presenter at several industry conferences and seminars. Before joining CWV, Joshua was a Project carriage for GS Telecom, a start-up satellite telecommunications company in Ghana. Prior to GS Telecom, Joshua worked in the investment banking division of Deutsche Bank, where he worked on a variety of public equity financings, private placements and merger and acquisition transactions in the technology industry. Joshua has a BA in Economics from Williams College and an MBA from the George Washington University School of Business.TopSandra Adams, Vice President, External AffairsSandra Adams brings three decades of nonprofit development, communications and event marketing experience to Grameen Foundation. Throughout her career her focus has been on improving the status of women in positions with the AAUW Educational Foundation, American Nurses Association, and National Breast Cancer Coalition and on environmental advocacy through her work with the National Parks Conservation Association and The Wilderness Society. An zealous student and proponent of philanthropy, she was elected Chair of the Association of Fundraising Professionals national board of directors, served as President of their Washington, DC chapter and is one of only 150 people to have achieved the Advanced Certified Fundraising Executive credential. She was named Washingtons Outstanding Fund Raising Executive of the Year in 1994. Sandra has served on the boards of Earth Share and CFRE International. She holds a Bachelors degree from Mercyhurst College, a Masters from the University of Massachusetts-Amherst and a certificate in Teaching English as a Second Language from Georgetown University.TopCamilla Nestor, Vice President of Microfinance ProgramsCamilla Nestor joined Grameen Foundation in August 2005 and previously served as Growth Guarantees motorbus and Director of the Capital Management and Advisory Center. She was appointed Vice President for Microfinance in April 2009. She has 14 years of experience in microfinance and commercial banking. Before joining Grameen Foundation, she worked in Citigroups Structured Corporate Finance subdivision where she executed credit-enhanced debt financings for emerging markets firms in Africa, the Middle East and Eastern Europe. Prior to joining Citi, she spent five years on the ground in Southeast Asia, the Balkans, and Africa working with microfinance institutions on start-up, new product development, and capital raising. Camilla holds an MBA and a masters degree in International Affairs from Columbia University and a bachelors degree in Political Science and International Relations from Colorado College. She speaks Bahasa Indonesia and is conversant in French.TopDavid Edelstein, Vice President of Technology Programs, and Director of the Grameen Foundation Technology CenterDavid Edelstein is Director of the Grameen Foundation Technology Center and Vice President of Technology Programs at Grameen Foundation. As the leader of Grameen Foundations work in technology, he guides programs that create innovative and sustainable approaches to employing technology for the benefit of the worlds poor. This includes efforts to develop services that can be accessed on widely gettable mobile phones, in domains such as health and agriculture, to improve lives and livelihoods. It also encompasses efforts in technology for microfinance, including an open-source software initiative designed to acceler ate the growth of microfinance institutions (Mifos) and efforts to enable the poor to transfer funds using mobile phones.Before joining Grameen Foundation, David spent three years at Microsoft, designing busine