I had an assignment last week in my Accounting 200 class to research this bank online for at least 1 hour and then write a two page report about what I found out.
This bank is amazing.
Maybe you've heard of it. Last month's Ensign mentioned it in one of its articles on self-reliance. (I only knew that because Katie read that article and when I was telling her about it she said that she already knew about it. Way to go, Ensign...stealing my thunder like that...)
Anyway, so this bank was founded by a man named Muhammad Yunus who is from Bangladesh. Basically, the purpose of this bank is to give very small loans (maybe $20) to poor people who have no credit or collateral and they will pay it back with a small amount of interest ($2-3 dollars). These loans are primarily made to women (97%). He does not require any sort of written contract since most of the people he does business with can't read anyway. He works on an honor basis. To get a loan, you need to join a group of five or so people and take out a loan together. That group motivates and encourages each other to pay off the loan. If someone can't make a payment, the other members of the group usually help her to make the payment, although they are not required to do so. If someone chooses not to make any more payments, that doesn't affect anyone else in the group.
The people who take out the loans are also required to adhere to the Sixteen Decisions, which are basically rules of conduct created to socially engineer the people of Bangladesh to live a better life style. These decisions include agreeing to repair their own homes once they become damaged; sending their children to school; building and using a pit-latrine; growing vegetables year-round, eating plenty of them and selling the surplus, and much more. You can see the whole list here.
This bank is a huge success. He has one of the highest payback rates of any financial institution (over 98%), which is quite astounding since his clients have no credit and not written contract. He believes that human life and honor should be credit enough. Muhammad Yunus and the Grameen Bank were awarded the Nobel Peace Prize in 2006 for his efforts to alleviate the predicament of the poorest of the poor. With these micro-loans, poor people can jump start their businesses and provide for their families. Many other banks around the world were founded that have similar policies.
What I really like about this idea is that its not some humanitarian effort and he is just donating his money to poor people. He is earning money and letting poor people help themselves. When he sees a poor person, he doesn't think of welfare; he views them as a client.
3 comments:
I remember learning about micro-credit banks in some of my classes and always really liked the idea. I think for the most part, people don't like just having something given to them without any responsiblity on their part. This is such a great system. It helps everyone. It's kind of like your banana question except not really at all. never mind. 63.
I think I researched somewhere online once about these sites that offer people in third world countries contact with first world countries and seek to find person-to-person loans for them. I seems like a pretty good idea but I don't know if its legit or what not. Also, freerice.org is pretty dapper.
I like to scam people. When I see poor people I don't see clients, I see prey.
not just kidding.
but there is a website, Kiva.org, that does what you are talking about. Except it is an online lending thing and you can lend to entrep... entrepen... business-minded folks who will pay back. It is a pretty cool idea. Loans are for as little as $25 and there is like a 92% payback rate. It seems pretty cool.
When i get a job, maybe I will try that.
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