Grameen Bank Case Study

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The Origin Traced to Bangladesh Grameen Bank Operationally, the origin of microcredit has generally been traced to 1976 when Muhammad Yunus as part of his experimental research sowed its seeds by lending 856 Taka($27) to 42 bamboo weavers who are very poor in a village on the outskirts of the Chittagong University Campus(Mahajan,2005 and Yunus,2004).He found that lending small amounts has resulted in bringing radical changes in the lives of the poor people and the poor people were able to repay the loan with interest. The success led to the establishment of Grameen bank in Bangladesh in 1983 The programme showed huge growth rate in Bangladesh during the period between 1980 and 1990. As a result of which many organizations and institutions…show more content…
GB focuses exclusively on lending to groups of five with small initial loans and subsequent loans dependent on timely repayment of the first loan. Initially loans are given after a period of one month of observation to see whether the borrowers are confirming to the rules of the bank. Then only two members of the group are given loans. Other members are given loans only if the first two repay the principal and interest due for six weeks. Loans are made at market rates with repayment in small weekly instalments (Fuglesang and Chandler,1993; Grameen Bank, 1988; Aghion and Morduch,…show more content…
The programme acquired a national priority from 1999 through Government of India budget announcements. With the support from both the government and the Reserve Bank of India, NABARD successfully spearheaded the programme through partnership with various stakeholders in the formal and informal sector. Since the time of its origin, NABARD provides policy guidance, technical and promotional support mainly for capacity building of NGOs and SHGs. Realising the potential in the field of microfinance, the government allowed various private players to provide microfinance in the country. These private microfinance providers, commonly known as MFIs, are various NGOs, Non-banking Financial Companies (NBFCs) and other registered companies. Many state governments amended/passed their State Co-operative Acts to use co-operative societies for providing microfinance. These days many public and private commercial banks, regional-rural banks, co-operative banks, co-operative societies, registered and unregistered NBFCs, societies, trusts and NGOs are providing microfinance by using their branch network and through different microfinance delivery models. The Ohio school of Economists actually propagated the idea of microfinance and withdrawal of directed credit with support of United States Agency for International Development

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