Micro Finance: A Case of Grameen Bank, Bangladesh



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Code : SEP0003

Year :
2004

Industry : Banking, Insurance and Financial Services

Region : Bangladesh

Teaching Note:Not Available

Structured Assignment : Not Available

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GRAMEEN BANK – CREDIT DELIVERY SYSTEM
The underlying motive of the Grameen Bank was to save the poor and landless peasants from the clutches of middlemen. Poor people were in die hard need of credit for their working capital requirements. As the then institutional structure did not favour the poor, they had to depend upon the unorganised moneylenders who charged interests ranging from10%to 20%permonth. In defiance of the traditional rural banking postulate, whereby “no collateral (in this case, land)means no credit”, the Grameen Bank experiment set out to prove that lending to the poor was not an impossible proposition...

THE ROAD AHEAD
As a pioneer in the emerging field of micro-finance, Grameen Bank was successful in meeting the financial needs of the poor in Bangladesh. The success of the bank revealed to the world, the potential ofmicro-finance.With the high recovery rates, it posed a challenge before many state-owned conventional (commercial) banks, which feared that lending to the poor was a risky business. The Grameen concept had become amodel formicro-lending programmes even in countries like Kenya, Ethiopia and Sri Lanka...

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