The tragedy of Grameen Bank

Published: September 6, 2012
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The writer is founder and managing director of Kashf Foundation and founder of Kashf Microfinance Bank Limited based in Pakistan

The writer is founder and managing director of Kashf Foundation and founder of Kashf Microfinance Bank Limited based in Pakistan

The Grameen Bank has been a global icon for both poverty-reduction and the economic empowerment of women, which it has achieved in multiple ways. For example, women make up 97 per cent of the Grameen Bank’s borrowers, own more than 95 per cent of its equity and hold nine out of 13 seats on the bank’s board of governors. Which financial institution in the world can boast a 95 per cent female ownership of its equity and a 70 per cent female representation on the board?

The Grameen Bank is a living example of how women’s participation at myriad levels within a financial institution can lead to long-term financial stability. If we look more closely at the Grameen Bank, the small village experiment in Jobra, outside the city of Chittagong, has spread to 80,000 villages in Bangladesh, covers 8.3 million female clients or indirectly connects with 41.5 million individuals and has cumulatively disbursed over $10 billion in loans. However, the buck just does not stop here; the active involvement of women in the household economy has generated over $1.4 billion in deposits, with the current loans to deposits ratio for the bank at 145 per cent. In other words, the bank’s liquidity is fully-funded from its deposits, thus emphasising the strong financial health of the institution. The miracle of the Grameen Bank is manifest in its ability to demonstrate that women can not only be entrepreneurs in their own right, but can also generate capital through regular savings, thus busting the myth that poor households cannot save or are not financially responsible.

However, the most important step that the Grameen Bank has undertaken is to demonstrate an ownership model where women are at the forefront as shareholders of the bank and are involved in top decision-making. As a result of the active involvement of borrowers/owners at the board level, the Grameen Bank has not only been a financially viable institution but it has also been able to pass on the gains of its financial performance to clients by constantly bringing down the interest rate on its loans. The stewardship that the Grameen Bank’s clients and owners have provided to the institution has ensured that its social mission is aligned with the commercial gains of the organisation. I have yet to see an institution that has managed to handle its social and economic mission so well.

The unfortunate thing is that today, the independence of the Grameen Bank and the ownership shares of its women clients are threatened by the actions of Prime Minister Sheikh Hasina Wajid of Bangladesh. Over the past few years, Prime Minister Hasina has led efforts by her government to force Professor Muhammad Yunus out of his position as managing director of the bank, while recently, the government has passed a new ordinance where it will have the right to appoint the bank’s CEO and also directly intervene on all executive and policy level decisions. It amazes me that such a travesty is being undertaken by a female prime minister — where on the other side is a man, who has not only dedicated his life to improving the lot of women but has also been able to demonstrate that women can and are active economic agents of change. As someone working in the field of gender rights, I am extremely disheartened at one level that women are women’s worst enemies, and at the same time, am highly optimistic that a positive engagement with men is possible to overcome existing gender inequities, Professor Yunus being a shining example of this possibility.

When I met Dr Yunus post his unfair and forced removal from the Grameen Bank, I asked him why he didn’t ask the 8.3 million female clients to come out on the street in protest? In his usual manner, he smiled at my temerity and said, yes that was a possibility, but a road he would never take or encourage anyone else to follow for it would harm the organisation and in the long run hurt the economic rights of the bank’s borrowers. I was also heartened by the statement he made to me about not giving up the fight, “We’ll have to fight on until Grameen Bank is restored to its real owners”. Indeed, even if we have taken several steps backwards, I believe that no one can close the floodgates of women’s economic empowerment. Nonetheless, it is important that we all speak up and ensure that the true owners of the Grameen Bank are in the driving seat once again.

Published in The Express Tribune, September 6th, 2012.

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Reader Comments (17)

  • mr. righty rightist
    Sep 6, 2012 - 1:23AM

    I didn’t know that there was interest in microfinancing. I thought it was interest free loans.

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  • shireen khan
    Sep 6, 2012 - 1:31AM

    A very apt article written by someone doing admirable work in Pakistan, we hope the forces that be in Bangladesh may wake up and make decisions for the welfare of their women…

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  • Falcon
    Sep 6, 2012 - 1:37AM

    Roshaneh – Very informative article. I feel this is a blow back from Doctor Sahab’s 2007 attempt at a political career for betterment of Bangladesh. It is sad to see that most of the traditional politicians across South Asia are so selfish that they would do anything to malign their opponents without realizing the damage they are inflicting on humanity.

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  • Mirza
    Sep 6, 2012 - 2:54AM

    While I can understand that a man can be more feminist than a woman but this case is not that simple. There were some allegations of diverting funds by Norway and it opened the whole issue starting 2010. While Dr. Yunus has had a long and admirable inning he is well past 70 years and it is not surprising that the govt cannot continue to give him extensions. The functioning and survival of any institution should not be connected with an individual. The individuals can disappear but the institutions must continue to function. The whole world respect Dr. Yunus but like any other great mortal he has to learn to slowly give up. This by no means a criticism of his achievements but only a universal truth.

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  • dasmir
    Sep 6, 2012 - 4:14AM

    Many clones of Gramin banks in India and other countries have started preying on vulnerable poor women.Is there any safeguard for them in this system or they are the mercy of loan sharks in the guise of do gooders?

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  • varuag
    Sep 6, 2012 - 5:46AM

    This is a pretty ill-informed and unidirectional analysis of the problems that beset Grameen Bank. To reduce the litany of issues between the government and the bank to that of gender rights is not just gross generalization but actually is a classic case of confusing co-relation with causality. I hope someone informed, preferably some Bangladeshi journalist, writes a detailed account to remove the fog of dis-information.

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  • Selvam
    Sep 6, 2012 - 7:13AM

    It amazes me that such a travesty is
    being undertaken by a female prime
    minister
    That can happen in a male dominated society: see what Mamata Banerjee is doing today in West Bengal or what Benazir Bhutto did to encourage the Taliban after 1996. These women have to prove to their society that they are tougher the the men around; a pity and self damaging.

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  • Anonymous
    Sep 6, 2012 - 7:49AM

    @varuag:
    I agree
    Mr garmeen was above 60 and according to law of land he has to retire
    Author may have some hatred against Mujib family otherwise I don’t see any reason of this article.
    Miss hasina has reestablished secular status of Bengla Desh , has started cases against local collaborators of JI and alshamas and albadar . She should be credited for certain things

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  • Indian
    Sep 6, 2012 - 7:59AM

    poor can help themselves- they cannot depend on banks.

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  • Qutaama
    Sep 6, 2012 - 8:53AM

    Fruits of democracy! Dynastical politics!

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  • varuag
    Sep 6, 2012 - 10:11AM

    @Anonymous:
    This is precisely the point. Most of the people who have posted comments realize the multidimensional nature of the problem here. And off-course there will be the usual people who will try to give it communal colors due to the predisposition of the current Bangladeshi government. That is expected but here the tragedy is that this issue has been explored from the angle of gender rights which is not just naive but positively harmful. Its a pity because I do genuinely believe that the author meant no malaise but still ended up with an article that is biased and stinks of blind hero-worship. Such a pity …………….

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  • nahmed
    Sep 6, 2012 - 10:56AM

    Why did you stop singing?? You were having a beautiful voice Roshaneh.

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  • khalil Ahmed
    Sep 6, 2012 - 12:40PM

    This is typical mindset of subcontinent rulers.The politicians in this part of the world are demagogues.They have a strong tendency to become autocrats once they assume power under the garb of democracy.The people of subcontinent need to understand that they will never be able enjoy the fruits of democracy unless they get rid of the dynasties which are ruling them in the guise of political parties.

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  • abhi
    Sep 6, 2012 - 1:26PM

    @mr. righty rightist

    not only they charge interest they actually charge it at very high rate, this is because these loans are risky in nature and defaults are more common.

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  • Haider Bhurgri
    Sep 6, 2012 - 7:13PM

    Dear Roshne

    Thank your for sharing this insightful information on Grameen Bank.
    But what I dont understand is that why do we plead and encourage Cult specific development rather than putting in place the institutions and systems to work. Why is it necessary that Dr Yunus (otherwise a respectable academician and visionary) would like to cling on to the position of MD of Grameen Bank despite being well over 70 years of age. Should there not be any substitution plan?

    Governance during Hasina Wajid’s period has been exemplary – by large free of corruption. All the development indicators show upward trend and it must be appreciated…

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  • Raza
    Sep 6, 2012 - 9:38PM

    Excellent article Ms. Roshaneh; though it would have been encouraging to read your insights on the reasons cited by the Bangladeshi government. The situation at Grameen is truly disheartening; its quite amazing that governments in our part of the world not only abstain from development themselves, but also obstruct any private welfare efforts. For those who’re citing Dr. Yunus’ age, oh come on, does the law only apply here? At that rate, Pakistan’s biggest philanthropist, Abdul Sattar Edhi, should have retired 25 years ago. Dr. Yunus is a legend in the field of micro-credit; give him some credit now.

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  • Sep 9, 2012 - 9:51AM

    Very well expressed article at the travesty which is being attempted by the Bangldesh Government. Unfortunately, the only language the politicians understand is if the 8.3 million of the customers of Grameen Bank and over 41 million of their family members stand up and put a halt to the destruction of their institution.

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