A business based on Selflessness!!

There is the expression of selfishness and there is the expression of selflessness - but economists or theoreticians never touched that part. They said: 'Go and become a philanthropist.' I said, 'No, I can do that in the business world, create a different kind of business - a business based on selflessness.'

-Muhammad Yunus

A brief introduction about Dr. Muhammad Yunus:-

•   Muhammad Yunus is a Bangladeshi banker, economist and Nobel Peace Prize recipient.
•    Muhammad Yunus was born in 28th June, 1940 in the village of Bathua, in Hathazari, Chittagong,      the business centre of what was then Eastern Bengal.
•   Inspired by his mother to help the poor, he committed himself to eradicating poverty.
•   Professor Yunus studied in Dhaka University and later received a Ph.D. economics from                    Vanderbilt in 1969 and became an assistant professor at Middle Tennessee University the following  year.
•   He served as an instrumental member in International Advisory Group for the Fourth World  Conference on Women, Global Commission of Women's Health, the Advisory Council for  Sustainable Economic Development and the UN Expert Group on Women and Finance.
•   He came up with the concept of micro-credit and micro – finance.
•   In 2006 Yunus and Grameen Bank received the Nobel Peace Prize "for their efforts through  microcredit.

While presenting in the TED TALKS, Muhmammad Yunus recalls “It all started with a very little amount of money, so little you will laugh at, the total amount of $17 to 42 people, less than a dollar for a person, this somehow inspired me to do more and I put myself as a guarantee to banks to avail the loan to people. This small thing transformed into a long inning luckily”.

Against the advice of banks and government, Yunus carried on giving out 'micro-loans', and in 1983 formed the Grameen Bank, meaning 'village bank' founded on principles of trust and solidarity.

The four pillars on which Grameen Bank is established:-

The sole aim behind the foundation of Grameen Bank is to ‘give to the poor, uneducated, women of Bangladesh – OPPORTUNITY’.

The simple belief that anyone can do things when given an opportunity and this belief paid off well when children who were once given small educational loans to finish primary education began entering world-class universities. 

The functioning of Grameen Bank is very unorthodox as compared to conventional banks and that is one of the reasons of its success.

Conventional Banks	Grameen Banks
Cater to rich –“more you have, more you get”	Cater to poor with a little or no money
More than 99% of the borrowers are men	97% of the borrowers are women out of a total 8 million borrowers
Collateral is needed by talking loans	Collateral is not needed
Rich own the banks	Borrowers are the owners of the bank

It can be easily perceived that “Grameen Banks and Conventional banks are two sides of a coin, the paths of these two are totally different and so is the destination”.

So how does the Grameen Bank works?

The mode of operation of Grameen Bank is as follows:-

 A bank branch is set up with a branch manager and a number of center managers and covers an area of about 15 to 22 villages. The manager and the workers start by visiting villages to familiarize themselves with the local milieu in which they will be operating and identify the prospective clientele, as well as explain the purpose, the functions, and the mode of operation of the bank to the local population. Groups of five prospective borrowers are formed; in the first stage, only two of them are eligible for, and receive, a loan. The group is observed for a month to see if the members are conforming to the rules of the bank. Only if the first two borrowers begin to repay the principal plus interest over a period of six weeks, do the other members of the group become eligible themselves for a loan. Because of these restrictions, there is substantial group pressure to keep individual records clear. In this sense, the collective responsibility of the group serves as the collateral on the loan.

Operational Statistics:

Of the total equity of the bank, 94 % is owned by borrowers and 6 % by Government of Bangladesh. It has more than 8 million borrowers of which 97 % are women. The bank has a loan recovery rate of 96.67 %.

In a simple language, what Grameen Banks is trying to do is to create a social business in Bangladesh, a joint venture to create restaurants for common people. Good, healthy food at affordable prices so that people don't have to opt for food that is unhealthy and unhygienic. 

And final words,

“It’s often said that one is architect for his own future but one should also understand that he/she can help others in architecting theirs’ too.”