I have read lots of books for pleasure, for school and to gain knowledge. Some of them included biographies. As I was surfing the internet, I came across a biography book, and I have heard of this book before. I ordered it. After it arrived, I finished it before doing anything else. The book inspired me because it gave me an idea to help poor people the way I want, not because what it talks about became famous around the world. The Book is Dr. Muhammed Yunus’ “Banker To The Poor”.
A brief explanation of the content in the book, and how Dr. Yunus came about making the model which became famous around the world is necessary to explicate how it inspired me. Dr. Yunus met a poor, credit less woman while walking around the university, Chittagong University in Bangladesh, where he was teaching, who was embittered by the loan shark that was taking advantage of her. She explained to him how the loan shark took away all her money as interest, and how it was very hard to survive or to break even after selling the product that she made using the money from the loan shark. After hearing this, Dr. Yunus loan the money to her out of his own pocket. At that time, he didn't know anything about the woman’s financial background, nor was he trying to make a model out of it, nor did he know if the woman was going to give back the money that he has had loaned her. He did this for humanitarian reason. To his surprise, the women gave back the money, and told him she had made a profit. So, he asked her to make a list of the people who were also victims of the loan shark in the area. Dr. Yunus, the lady and his students made a list of 42 such people. He loaned all these people money which was equivalent to mere 27 dollar in 1976. To their surprise, all of them gave back the money. So, he experimented in a second village, and this worked there too. So, now he wanted to do it more and wanted to get the local bank involved. However, they refused to give loan to people without any credit and without any collateral. So, he made himself a guarantor and got the local bank to loan the money to people. After doing this in many villages, he was finally able to convince the Bangladesh Bank, the government owned bank, to provision him a special banking project of his own, which later became known as the Grameen Bank. Then he developed a model for it and gave it a formal look following all the traditional bank methodologies and started to create balance sheet for the bank. The Bangladesh Bank, The World Bank and many other organizations around the world gave money to start off the bank as charity.
Now, I am going to explain why and how the model works. When a person wants to loan, he has to meet few conditions. He must be able to make something that he can sell. He must find at least four other members doing the same or similar thing, and they must be living in the same vicinity of the bank so that the bank members can keep track of them. Every week they are to meet at the local bank to make a payment with interest. They are to meet there to talk about their problems and keep track of their income. If someone is not able to come up with the amount decided, group members help him anyway they can. Peer pressure helps them to generate the money before the meet. If the person can’t come up with the whole amount even after that, he’s given the option to pay whatever he can. He’s not denied loan even after he is not able to make a payment. Just the interest accrues. The main philosophy of Dr. Muhammed Yunus is people can’t be denied credit no matter what. The borrowers can’t hide because everybody knows them. Most people give up begging, and don’t depend on handouts after they join the bank because they know they can get money any time they want even if they defaulted. It is based on some trust, but Grameen bank has success rate of 97% when it comes to loan repayment, which traditional banks couldn’t even come close to. The interest and the principal that comes back to the bank, is given back as loan to the same people and newer people. So, the bank always generates income. So, if someone starts a Grameen bank somewhere, after getting the initial money as charity, at some point the bank become self-sustainable. The money then is owned by the borrowers or as known as Grameen Bank members. People feel pride knowing that this is not begging. It is their own money. They also make up the rules and regulations of the bank, or they make up a trustee board by electing members from the borrowers who make up the rules and regulations. The best thing about this is it can be started with little money, or the money can be raised locally.
This method inspired me to open a Hospital in Bangladesh by taking money from people in my village where modern healthcare facilities are not available, or healthcare is not affordable to poor people. I know I can get loan and charity from organizations using my connection. Most people usually give money if they know that a hospital is going to be open or for a philanthropic reason. I will also get money from the people who will be members/workers of the hospital. It will be owned by every worker instead of a single person so the rules and regulations will be developed by the members/workers. When my hospital become sustainable after selling healthcare for profit, I will give back the money to the people whom I loaned from. This inspired me because I know this way I can help people very easily, and this give people a chance to do what they want with dignity, without begging.
