Muhammad Yunus & His Microcredit

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Muhammad Yunus & His Microcredit

  1. 1. Muhammad Yunus & His Microcredit Wesley Shu National Central University IM Department
  2. 2. His Life <ul><li>1940 born in Bangladesh </li></ul><ul><li>In 2006, Yunus and Grameen bank were jointly awarded the Nobel Peace Prize </li></ul><ul><li>Ph.D. in Economics, Vanderbilt University </li></ul><ul><li>1972 returned to Bangladesh </li></ul><ul><li>1974 Famine in Bangladesh </li></ul><ul><li>His first loan consisted of US$27 from his own pocket to 42 women, one of them made bamboo furniture sold for 2 ¢ each to the lender. </li></ul>
  3. 3. Grameen Bank <ul><li>Established in 1976, means Village </li></ul><ul><li>has issued more than US$ 5.1 billion to 5.3 million borrowers </li></ul><ul><li>Repayment rate: 95% </li></ul><ul><li>Interest rate: 16% </li></ul><ul><li>50% borrowers out of poverty </li></ul><ul><li>Of the total equity of the bank, the borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh. </li></ul>
  4. 4. Critical Success Factors <ul><li>Loan to women (96%) - often benefit the whole family than loans to men do </li></ul><ul><li>Loan to groups ( solidarity groups ) - apply together for loans and its members act as co-guarantors of repayment </li></ul><ul><li>16 decisions </li></ul><ul><li>Way of operation </li></ul>
  5. 5. Operations of Grameen Bank <ul><li>A group of five </li></ul><ul><li>At first, only two are eligible for a loan </li></ul><ul><li>The group is observed for a month to see if the members are conforming to the rules of the bank. </li></ul><ul><li>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. </li></ul><ul><li>the whole group is denied further credit if one person defaults. </li></ul><ul><li>Group pressure is the collateral. </li></ul>

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