An Evaluation of the Grameen Bank Project of Bangladesh Introduction: The origin of Grameen Bank can be traced back to 1976

when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives: i. ii. iii. iv. v. extend banking facilities to poor men and women; eliminate the exploitation of the poor by money lenders; create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh; bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

The action research demonstrated its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 1976-1979. With the sponsorship of the central bank of the country and support of the nationalized commercial banks, the project was extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979. With the success in Tangail, the project was extended to several other districts in the country. In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. The rural poor whom it serves own today Grameen Bank. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government.

Micro-credit and Grameen Bank: What is Microcredit? The word "microcredit" did not exist before the seventies. Now it has become a buzz-word among the development practitioners. In the process, the word has been imputed to mean everything to everybody. No one now gets shocked if somebody uses the term "microcredit" to mean agricultural credit, or rural credit, or cooperative credit, or consumer credit, credit from the savings and loan associations, or from credit unions, or from money lenders. Much of the current interest in microcredit stems from the Microcredit Summit (2-4 February 1997), and the activities that went into organizing the event. The definition of microcredit that was adopted there was: Microcredit noun; programmes extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families.

Definitions deffer, of course, from country to country. Some of the defining criteria used includesize - loans are micro, or very small in size target users - microenterpreneurs and low-income households utilization - the use of funds - for income generation, and enterprise development, but also for community use (health/education) etc. terms and conditions - most terms and conditions for microcredit loans are flexible and easy to understand, and suited to the local conditions of the community.

Three C's of Credit: Character: means how a person has handled past debt obligations: From credit history and personal background, honesty and reliability of the borrower to pay credit debts is determined. Character: means how a person has handled past debt obligations: From credit history and personal background, honesty and reliability of the borrower to pay credit debts is determined. Capacity: means how much debt a borrower can comfortably handle. Income streams are analyzed and any legal obligations looked into, which could interfere in repayment. Capital: means current available assets of the borrower, such as real estate, savings or investment that could be used to repay debt if income should be unavailable. UN-General Assembly Resolution: Taking note of the report of the Secretary-General on the observance of the International Year for the Eradication of Poverty (1996) and recommendations for the rest of the First United Nations Decade for the Eradication of Poverty (1997-2006).

UN Report: Role of Microcredit The present report has been prepared in response to a request contained in General Assembly resolution 52/194 of 18 December 1997. This is the first time the Secretary-General has been requested to prepare a report on the question of microcredit and the eradication of poverty. The prominence given to the matter reflects the recent success of small-scale lending programmes such as the Grameen Bank of Bangladesh.

Credit Lending Models: Microfinance institutions are using various Credit Lending Models throughout the world. Some of the models are listed below.

Associations : -------------------------------------------------------------------------------This is where the target community forms an 'association' through which various microfinance (and other) activities are initiated. Such activities may include savings. Associations or groups can be composed of youth, or women; they can form around political/religious/cultural issues; can create support structures for microenterprises and other work-based issues. In some countries, an 'association' can be a legal body that has certain advantages such as collection of fees, insurance, tax breaks and other protective measures. Distinction is made between associations, community groups, peoples organizations, etc. on one hand (which are mass, community based) and NGOs, etc. which are essentially external organizations. Bank Guarantees : -------------------------------------------------------------------------------As the name suggests, a bank guarantee is used to obtain a loan from a commercial bank. This guarantee may be arranged externally (through a donor/donation, government agency etc.) or internally (using member savings). Loans obtained may be given directly to an individual, or they may be given to a self-formed group. Bank Guarantee is a form of capital guarantee scheme. Guaranteed funds may be used for various purposes, including loan recovery and insurance claims. Several international and UN organizations have been creating international guarantee funds that banks and NGOs can subscribe to, to onlend or start microcredit programmes. Community Banking : -------------------------------------------------------------------------------The Community Banking model essentially treats the whole community as one unit, and establishes semi-formal or formal institutions through which microfinance is dispensed. Such institutions are usually formed by extensive help from NGOs and other organizations, who also train the community members in various financial activities of the community bank. These institutions may have savings components and other income-generating projects included in their structure. In many cases, community banks are also part of larger community development programmes which use finance as an inducement for action. Cooperatives : -------------------------------------------------------------------------------A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democraticallycontrolled enterprise. Some cooperatives include member-financing and savings activities in their mandate. Credit Unions : -------------------------------------------------------------------------------A credit union is a unique member-driven, self-help financial institution. It is organized by and comprised of members of a particular group or organization, who agree to save their money together and to make loans to each other at reasonable rates of interest. The members are people of some common bond: working for the same employer; belonging to the same church, labor union, social fraternity, etc.; or living/working in the same community. A credit union's membership is open to all who belong to the group, regardless of race, religion, color or creed.

A credit union is a democratic, not-for-profit financial cooperative. Each is owned and governed by its members, with members having a vote in the election of directors and committee representatives.

Grameen : -------------------------------------------------------------------------------The Grameen model emerged from the poor-focussed grassroots institution, Grameen Bank, started by Prof. Mohammed Yunus in Bangladesh. It essentially adopts the following methodology: A bank unit is set up with a Field Manager and a number of bank workers, covering an area of about 15 to 22 villages. The manager and workers start by visiting villages to familiarise themselves with the local milieu in which they will be operating and identify prospective clientele, as well as explain the purpose, functions, and 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 rules of the bank. Only if the first two borrowers repay the principal plus interest over a period of fifty weeks do 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 , collective responsibility of the group serves as collateral on the loan. Group : -------------------------------------------------------------------------------The Group Model's basic philosophy lies in the fact that shortcomings and weaknesses at the individual level are overcome by the collective responsibility and security afforded by the formation of a group of such individuals. The collective coming together of individual members is used for a number of purposes: educating and awareness building, collective bargaining power, peer pressure etc. Individual : -------------------------------------------------------------------------------This is a straight forward credit lending model where micro loans are given directly to the borrower. It does not include the formation of groups, or generating peer pressures to ensure repayment. The individual model is, in many cases, a part of a larger 'credit plus' programme, where other socio-economic services such as skill development, education, and other outreach services are provided. Intermediatories : -------------------------------------------------------------------------------Intermediary model of credit lending position is a 'go-between' organization between the lenders and borrowers. The intermediary plays a critical role of generating credit awareness and education among the borrowers (including, in some cases, starting savings programmes. These activities are geared towards raising the 'credit worthiness' of the borrowers to a level sufficient enough to make them attractive to the lenders. The links developed by the intermediaries could cover funding, programme links, training and education, and research. Such activities can take place at various levels from international and

national to regional, local and individual levels. Intermediaries could be individual lenders, NGOs, microenterprise/microcredit programmes, and commercial banks (for government financed programmes). Lenders could be government agencies, commercial banks, international donors, etc. Non-Governmental Organizations : -------------------------------------------------------------------------------NGOs have emerged as a key player in the field of microcredit. They have played the role of intermediary in various dimensions. NGOs have been active in starting and participating in microcredit programmes. This includes creating awareness of the importance of microcredit within the community, as well as various national and international donor agencies. They have developed resources and tools for communities and microcredit organizations to monitor progress and identify good practices. They have also created opportunities to learn about the principles and practice of microcredit. This includes publications, workshops and seminars, and training programmes. Peer Pressure : -------------------------------------------------------------------------------Peer pressure uses moral and other linkages between borrowers and project participants to ensure participation and repayment in microcredit programmes. Peers could be other members in a borrowers group (where, unless the initial borrowers in a group repay, the other members do not receive loans. Hence pressure is put on the initial members to repay); community leaders (usually idetified, nurtured and trained by external NGOs); NGOs themselves and their field officers; banks etc. The 'pressure' applied can be in the form of frequent visits to the defaulter, community meetings where they are identified and requested to comply etc. Rotating Savings and Credit Associations : -------------------------------------------------------------------------------Rotating Savings and Credit Associations (ROSCAs) are essentially a group of individuals who come together and make regular cyclical contributions to a common fund, which is then given as a lump sum to one member in each cycle. For example, a group of 12 persons may contribute Rs. 100 (US$33) per month for 12 months. The Rs. 1,200 collected each month is given to one member. Thus, a member will 'lend' money to other members through his regular monthly contributions. After having received the lump sum amount when it is his turn (i.e. 'borrow' from the group), he then pays back the amount in regular/further monthly contributions. Deciding who receives the lump sum is done by consensus, by lottery, by bidding or other agreed methods. Small Business : -------------------------------------------------------------------------------The prevailing vision of the 'informal sector' is one of survival, low productivity and very little value added. But this has been changing, as more and more importance is placed on small and medium enterprises (SMEs) - for generating employment, for increasing income and providing services which are lacking. Policies have generally focussed on direct interventions in the form of supporting systems such as training, technical advice, management principles etc.; and indirect interventions in the form of an enabling policy and market environment.

A key component that is always incorporated as a sort of common denominator has been finance, specifically microcredit - in different forms and for different uses. Microcredit has been provided to SMEs directly, or as a part of a larger enterprise development programme, along with other inputs. Village Banking : -------------------------------------------------------------------------------Village banks are community-based credit and savings associations. They typically consist of 25 to 50 low-income individuals who are seeking to improve their lives through self-employment activities. Initial loan capital for the village bank may come from an external source, but the members themselves run the bank: they choose their members, elect their own officers, establish their own by-laws, distribute loans to individuals, collect payments and savings. Their loans are backed, not by goods or property, but by moral collateral: the promise that the group stands behind each individual loan.

Methods of Operation: Credit Delivery System: Grameen Bank Credit Delivary means taking credit to the very poor in their villages by means of the essential elements of the Grameen credit delivery system. Grameen Bank credit delivery system has the following features: 1 There is an exclusive focus on the poorest of the poor. Exclusivity is ensured by: i) establishing clearly the eligibility criteria for selection of targeted clientele and adopting practical measures to screen out those who do not meet them ii) in delivering credit, priority has been increasingly assigned to women iii) the delivery system is geared to meet the diverse socio-economic development needs of the poor 2 Borrowers are organized into small homogeneous groups. Such characteristics facilitate group solidarity as well as participatory interaction. Organizing the primary groups of five members and federating them into centres has been the foundation of Grameen Bank's system. The emphasis from the very outset is to organisationally strengthen the Grameen clientele, so that they can acquire the capacity for planning and implementing micro level development decisions. The Centres are functionally linked to the Grameen Bank, whose field workers have to attend Centre meetings every week. 3 Special loan conditionalities which are particularly suitable for the poor. These include: i) very small loans given without any collateral ii) loans repayable in weekly instalments spread over a year iii) eligibility for a subsequent loan depends upon repayment of first loan iv) individual, self chosen, quick income generating activities which employ the skills that borrowers already posses

v) close supervision of credit by the group as well as the bank staff vi) stress on credit discipline and collective borrower responsibility or peer pressure vii) special safegaurds through compulsory and voluntary savings to minimise the risks that the poor confront viii) transparency in all bank transactions most of which take place at centre meetings. 4 Simultaneous undertaking of a social development agenda addressing basic needs of the clientele. This is reflected in the "sixteen decisions" adopted by Grameen borrowers. This helps to: i) raise the social and political consciousness of the newly organized groups ii) focus increasingly on women from the poorest households, whose urge for survival has a far greater bearing on the development of the family iii) encourage their monitoring of social and physical infrastructure projects - housing, sanitation, drinking water, education, family planning, etc. 5 Design and development of organization and management systems capable of delivering programme resources to targeted clientele. The system has evolved gradually through a structured learning process, that involves trials, errors and continuous adjustments. A major requirement to operationalize the system is the special training needed for development of a highly motivated staff, so that the decision making and operational authority is gradually decentralized and administrative functions are delegated at the zonal levels downwards. 6 Expansion of loan portfolio to meet diverse development needs of the poor. As the general credit programme gathers momentum and the borrowers become familiar with credit discipline, other loan programmes are introduced to meet growing social and economic development needs of the clientele. Besides housing, such programmes include: i) credit for building sanitary laterines ii) credit for installation of tubewells that supply drinking water and irrigation for kitchen gardens iii) credit for seasonal cultivation to buy agricultural inputs iv) loan for leasing equipment / machinery, ie., cell phones purchased by Grameen Bank members v) finance projects undertaken by the entire family of a seasoned borrower. The underlying premise of Grameen is that, in order to emerge from poverty and remove themselves from the clutches of usurers and middlemen, landless peasants need access to credit, without which they cannot be expected to launch their own enterprises, however small these may be. In defiance of the traditional rural banking postulate whereby "no collateral (in this case, land) means no credit", the Grameen Bank experiment set out to prove - successfully - that lending to the poor is not an impossible proposition; on the contrary, it gives landless peasants the opportunity to purchase their own tools, equipment, or other necessary means of production and embark on income-generating ventures which will allow them escape from the vicious cycle of "low income, low savings, low investment, low income". In other words, the banker's confidence rests upon the will and capacity of the borrowers to succeed in their undertakings.

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 familiarise themeselves 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. Loans are small, but sufficient to finance the micro-enterprises undertaken by borrowers: ricehusking, machine repairing, purchase of rickshaws, buying of milk cows, goats, cloth, pottery etc. The interest rate on all loans is 16 percent. The repayment rate on loans is currently - 95 per cent - due to group pressure and self-interest, as well as the motivation of borrowers. Although mobilization of savings is also being pursued alongside the lending activities of the Grameen Bank, most of the latter's loanable funds are increasingly obtained on commercial terms from the central bank, other financial institutions, the money market, and from bilateral and multilateral aid organizations. Breaking the Cycle of Poverty:

The Grameen Bank is based on the voluntary formation of small groups of five people to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks. At first only two members of a group are allowed to apply for a loan. Depending on their performance in repayment the next two borrowers can then apply and, subsequently, the fifth member as well. The assumption is that if individual borrowers are given access to credit, they will be able to identify and engage in viable income-generating activities - simple processing such as paddy husking, lime-making, manufacturing such as pottery, weaving, and garment sewing, storage and marketing and transport services. Women were initially given equal access to the schemes, and proved not only reliable borrowers but astute enterpreneurs. As a result, they have raised their status, lessened their dependency on their husbands and improved their homes and the nutritional standards of their children. Today over 90 percent of borrowers are women. Intensive discipline, supervision, and servicing characterize the operations of the Grameen Bank, which are carried out by "Bicycle bankers" in branch units with considerable delegated authority. The rigorous selection of borrowers and their projects by these bank workers, the powerful peer pressure exerted on these individuals by the groups, and the repayment scheme based on 50

weekly installments, contribute to operational viability to the rural banking system designed for the poor. Savings have also been encouraged. Under the scheme, there is provision for 5 percent of loans to be credited to a group find and Tk 5 is credited every week to the fund. The success of this approach shows that a number of objections to lending to the poor can be overcome if careful supervision and management are provided. For example, it had earlier been thought that the poor would not be able to find renumerative occupations. In fact, Grameen borrowers have successfully done so. It was thought that the poor would not be able to repay; in fact, repayment rates reached 97 percent. It was thought that poor rural women in particular were not bankable; in fact, they accounted for 94 percent of borrowers in early 1992. It was also thought that the poor cannot save; in fact, group savings have proven as successful as group lending. It was thought that rural power structures would make sure that such a bank failed; but the Grameen Bank has been able to expand rapidly. Indeed, from fewer than 15,000 borrowers in 1980, the membership had grown to nearly 100,000 by mid-1984. By the end of 1998, the number of branches in operation was 1128, with 2.34 million members (2.24 million of them women) in 38,957 villages. There are 66,581 centres of groups, of which 33,126 are women. Group savings have reached 7,853 million taka (approximately USD 162 million), out of which 7300 million taka (approximately USD 152 million) are saved by women. It is estimated that the average household income of Grameen Bank members is about 50 percent higher than the target group in the control village, and 25 percent higher than the target group non-members in Grameen Bank villages. The landless have benefited most, followed by marginal landowners. This has resulted in a sharp reduction in the number of Grameen Bank members living below the poverty line, 20 percent compared to 56 percent for comparable non-Grameen Bank members. There has also been a shift from agricultural wage labour (considered to be socially inferior) to self-employment in petty trading. Such a shift in occupational patterns has an indirect positive effect on the employment and wages of other agricultural waged labourers. What started as an innovative local initiative, "a small bubble of hope", has thus grown to the point where it has made an impact on poverty alleviation at the national level ".

Method of Action The Grameen Bank's Method of action can be illustrated by the following principles: 1. Start with the problem rather than the solution: a credit system must be based on a survey of the social background rather than on a pre-established banking technique. 2. Adopt a progressive attitude: development is a long-term process which depends on the

aspirations and committment of the economic operators. 3. Make sure that the credit system serves the poor, and not vice-versa: credit officers visit the villages, enabling them to get to know the borrowers. 4. Establish priorities for action vis-a-vis to the the target population: serve the most povertystricken people needing investment resources, who have no access to credit. 5. At the begining, restrict credit to income-generating production operations, freely selected by the borrower. Make it possible for the borrower to be able to repay the loan. 6. Lean on solidarity groups: small informal groups consisting of co-opted members coming from the same background and trusting each other. 7. Associate savings with credit without it being necessarily a prerequisite. 8. Combine close monitoring of borrowers with procedures which are simple and standardised as possible. 9. Do everything possible to ensure the system's financial balance. 10. Invest in human resources: training leaders will provide them with real development ethics based on rigour, creativity, understanding and respect for the rural environment.

Data and Reports: Data Analysis of GB from 1976-2008

Evaluation of Grameen Banket Project:

Is Grameen Bank different from Conventional Banks? Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks. Conventional banking is based on collateral, Grameen system is collateral- free. Grameen Bank starts with the belief that credit should be accepted as a human right, and builds a system where one who does not possess anything gets the highest priority in getting a loan. Grameen methodology is not based on assessing the material possession of a person, it is based on the potential of a person. Grameen believes that all human beings, including the poorest, are endowed with endless potential. Conventional banks look at what has already been acquired by a person. Grameen looks at the potential that is waiting to be unleashed in a person. Conventional banks are owned by the rich, generally men. Grameen Bank is owned by poor women. Overarching objective of the conventional banks is to maximize profit. Grameen Bank's objective is to bring financial services to the poor, particularly women and the poorest to help them fight poverty, stay profitable and financially sound. It is a composite objective, coming out of social and economic visions. Conventional banks focus on men, Grameen gives high priority to women. 97 per cent of Grameen Bank's borrowers are women. Grameen Bank works to raise the status of poor women in their families by giving them ownership of assets. It makes sure that the ownership of the

houses built with Grameen Bank loans remain with the borrowers, i.e., the women. Grameen Bank branches are located in the rural areas, unlike the branches of conventional banks which try to locate themselves as close as possible to the business districts and urban centers. First principle of Grameen banking is that the clients should not go to the bank, it is the bank which should go to the people instead. Grameen Bank's 22,277 staff meet 8.36 million borrowers at their door-step in 81,378 villages spread out all over Bangladesh, every week, and deliver bank's service. Repayment of Grameen loans is also made very easy by splitting the loan amount in tiny weekly installments. Doing business this way means a lot of work for the bank, but it is a lot convenient for the borrowers. There is no legal instrument between the lender and the borrower in the Grameen methodology. There is no stipulation that a client will be taken to the court of law to recover the loan, unlike in the conventional system. There is no provision in the methodology to enforce a contract by any external intervention. Conventional banks go into 'punishment' mode when a borrower is taking more time in repaying the loan than it was agreed upon. They call these borrowers "defaulters". Grameen methodology allows such borrowers to reschedule their loans without making them feel that they have done anything wrong (indeed, they have not done anything wrong.) When a client gets into difficulty, conventional banks get worried about their money, and make all efforts to recover the money, including taking over the collateral. Grameen system, in such cases, works extra hard to assist the borrower in difficulty, and makes all efforts to help her regain her strength and overcome her difficulties. In conventional banks charging interest does not stop unless specific exception is made to a particular defaulted loan. Interest charged on a loan can be multiple of the principal, depending on the length of the loan period. In Grameen Bank, under no circumstances total interest on a loan can exceed the amount of the loan, no matter how long the loan remains unrepaid. No interest is charged after the interest amount equals the principal. Conventional banks do not pay attention to what happens to the borrowers' families as results of taking loans from the banks. Grameen system pays a lot of attention to monitoring the education of the children (Grameen Bank routinely gives them scholarships and student loans), housing, sanitation, access to clean drinking water, and their coping capacity for meeting disasters and emergency situations. Grameen system helps the borrowers to build their own pension funds, and other types of savings. Interest on conventional bank loans are generally compounded quarterly, while all interests are simple interests in Grameen Bank. In case of death of a borrower, Grameen system does not require the family of the deceased to pay back the loan. There is a built-in insurance programme which pays off the entire outstanding amount with interest. No liability is transferred to the family. In Grameen Bank even a beggar gets special attention. A beggar comes under a campaign from Grameen Bank which is designed to persuade him/her to join Grameen programme. The bank

explains to her how she can carry some merchandise with her when she goes out to beg from door to door and earn money, or she can display some merchandise by her side when she is begging in a fixed place. Grameen's idea is to graduate her to a dignified livelihood rather than continue with begging. Such a programme would not be a part of a conventional bank's work. Grameen system encourages the borrowers to adopt some goals in social, educational and health areas. These are knows as "Sixteen Decisions" (no dowry, education for children, sanitary latrine, planting trees, eating vegetables to combat night-blindness among children, arranging clean drinking water, etc.). Conventional banks do not see this as their business. In Grameen, we see the poor people as human "bonsai". If a healthy seed of a giant tree is planted in a flower-pot, the tree that will grow will be a miniature version of the giant tree. It is not because of any fault in the seed, because there is no fault in the seed. It is only because the seed has been denied of the real base to grow on. People are poor because society has denied them the real social and economic base to grow on. They are given only the "flower-pots" to grow on. Grameen's effort is to move them from the "flower-pot" to the real soil of the society. If we can succeed in doing that there will be no human "bonsai" in the world. We'll have a poverty-free world. Grameen Banks Efficiency Evaluation: Every year GB staff evaluates their work and check whether the socio-economic situation of GB members is improving. GB evaluates poverty level of the borrowers using ten indicators. A member is considered to have moved out of poverty if her family fulfills the following criteria: 1. The family lives in a house worth at least Tk. 25,000 (twenty five thousand) or a house with a tin roof, and each member of the family is able to sleep on bed instead of on the floor. 2. Family members drink pure water of tube-wells, boiled water or water purified by using alum, arsenic-free, purifying tablets or pitcher filters. 3. All children in the family over six years of age are all going to school or finished primary school. 4. Minimum weekly loan installment of the borrower is Tk. 200 or more. 5. Family uses sanitary latrine. 6. Family members have adequate clothing for every day use, warm clothing for winter, such as shawls, sweaters, blankets, etc, and mosquito-nets to protect themselves from mosquitoes. 7. Family has sources of additional income, such as vegetable garden, fruit-bearing trees, etc, so that they are able to fall back on these sources of income when they need additional money. 8. The borrower maintains an average annual balance of Tk. 5,000 in her savings accounts. 9. Family experiences no difficulty in having three square meals a day throughout the year, i. e. no member of the family goes hungry any time of the year.

10. Family can take care of the health. If any member of the family falls ill, family can afford to take all necessary steps to seek adequate healthcare. Microcredit: A Weapon In Fighting Extremism Herald International Tribune Published with the New York Times and The Washington Post Singapore, Wednesday, February 19, 1997 PARIS - The success of microcredit in combating finally being recognized this month. Hillary Clinton opened the World Summit on Microcredit in Washington. The occasion highlighted the effectiveness of using tiny loans to help the most destitute people on earth pull themselves and their families out of poverty. But there is another, astonishing side of this story: the political consequences of putting capitalism to work for the have-nots. Microcredit not only liberates the poorest of the poor from hunger, it liberates them, and us, from fanatical extremists. Microcredit was invented 20 years ago in Bangladesh by Muhammad Yunus. Today, Professor Yunus's Grameen Bank and copycat organizations have 3.5 million women borrowers; adding their dependents, that amounts to about 20 percent of Bangladesh's population. In the latest elections, held on June 12, 1996, these newly enfranchised flexed their muscle. The Islamic Society, the fundamentalist party antagonistic to the West that wants to keep women at home, lost 14 of its 17 seats in Parliament. Immediately after the vote, Mr. Yunus began getting angry phone calls from people blaming him for the results. But Mr. Yunus assured them that fundamentalists had only themselves to blame. It was their supporters who burned down microcredit banks, attacked borrowers and condemned microcredit as un- Islamic because it helps women become self-employed. Every woman borrower I interviewed in Dhaka, Chittagong and Cox's Bazaar had suffered enormously at the hands of fundamentalists. Some were beaten; others were told they would be denied proper Islamic burial; still others that Grameen would sell them into slavery, feed them to tigers, take them out to sea and drown them, or tattoo their arms with a number and secretly turn them into Christians. Having braved physical and mental abuse and used microcredit to build decent housing, freshwater wells and sanitary toilets for their families - it's not surprising that these women went to the polls and voted against the mullahs. The exact number of women who voted is not known, but observers across Bangladesh estimated that for the first time, more women voted than men. At a meeting of the Council of the Americas in New York, geo-strategists astonished by how microcredit worked to combat fundamentalism peppered Mr. Yunus with questions. He explained that microcredit was not at war with anyone, certainly not with Islam; it avoids all use of force and relies on future borrowers to convince village patriarchs to invite banks in. Giving those whom society treats as less than human access to personal profit and self- esteem unlocks a static hierarchy. It allows social mobility. Suddenly, the old repressive, patriarchal ways become less relevant.

Microcredit does what billions of dollars worth of AWACS and Patriot missiles cannot. For decades, the West has tried to defeat fanatical extremists militarily; this has been bloody, costly and highly unsuccessful. But quietly, every day, the attraction of militant Islam is being blunted, at the ballot box and in people's hearts and minds, thanks to the economic development of the poor. We have known that micro-credit helps solve a host of in-tractable, long-term social ills related to poverty: In Norway's arctic circle, it is helping repopulate the Lofoten Islands. In Oklahoma, thanks to Chief Wilma Mankiller of the Cherokee Nation, microcredit is helping reduce alcoholism. In Chicago, it is helping get unwed mothers off welfare. But we should not overlook microcredit's political dividends. If the West is truly concerned about pariah states exporting terrorism, it should get behind microcredit and support it with more than just lip service. What is needed is patient start-up capital: 99 percent of the loans are repaid. After 20 years, Grameen is a commercially profitable bank. But more important, it saves its borrowers' lives and it can save ours, too.

Microcredit or Macrowelfare: The Myth of Grameen

For those who follow the zeitgeist and the Nobel Prize committee seems always in the position of following rather than leading the 2007 Peace Prize was no surprise. It went to one of the least-criticized men on the planet: Professor Muhammed Yunus and his Grameen Bank of Bangladesh. Everyone left, right, and center appear to love him. His microcredit scheme seems to mix the best socialist ideals with free market means, and then the rhetoric alone carries the day.

The literature on Grameen is an echo chamber of hurrahs. Even the Nobel Committee didn't bother looking more deeply. Its press release is 5 paragraphs of puff. Its link to other resources includes only one source: The Grameen Bank. The uncritical attitude is especially strange given the extent to which pawn shops and payday lending which, unlike Grameen, are genuine market institutions in poor areas of the United States are hounded by the anticapitalist Left. Why is giving high-interest loans to the inner-city poor considered exploitative in the United States but wonderful and compassion in Bangladesh? The best fallout from the prize, then, will be a continued rethinking of the core assumptions behind microcredit of the Grameen model. Sudhirendar Sharma of New Delhi writes that the effect of the Grameen strategy has not been to reduce poverty but only to create a debt trap for borrowers, who are being charged very high rates of interest relative to conventional banks. The oft-repeated stories of how microcredit has helped a rural woman buy a buffalo, or how a poor woman now owns a telephone kiosk, cannot be replicated in meaningful numbers. Conversely, at the cost of the poor, a large number of NGOs have benefited; banks have found a convenient route to increased lendings; and corporations have got a growing consumer market to target. And actually, aside from my own piece in 1995, the Grameen public relations edifice has been cracking for years. In 2001, the Wall Street Journal's Daniel Pearl and Michael Phillips revealed that the repayment rate of their loans isn't anywhere near what the bank claims, that at least one quarter of its loans were being used for consumption, that the bank delays defaults and hides problem loans, that the bank isn't subject to any kind of serious supervision, public or private. The government owns 6% of its assets, while the rest is only superficially owned by borrowers who cannot sell or trade their stock. But the real problem with Grameen is not found in the data but in market logic. Consider the absurd claims that we are being asked to believe. We are told that Yunus discovered a wonderful new way of making profitable loans to the poor by doing something that all conventional bankers in Bangladesh had overlooked. Half the population lives below the poverty line in Bangladesh. Are we really supposed to believe that banks blithely overlooked millions of poor people out of bias or hatred or snobbery?

Even if we can accept that he had some sort of entrepreneurial insight that no one else had, Grameen has been giving loans to poor women for thirty years. Are we really supposed to believe that conventional bankers were so stupid as not to spot this opportunity after decades of demonstration? He says that he discovered that the poor are "bankable" but if this were true in the way that he says, others would have discovered the same profit opportunities and done it without help from government. Actually, Grameen is not an enterprise at all. Yunus's first pile of cash came from the United Nations. Then he went to the Bangladesh government. Then he went to US foundations. In the 1980s and '90s, the bank received nearly $150 million in grants. At the same time, he started borrowing at low interest rates from governments around the world, and lending out the same money at higher rates. His institution keeps the difference. As Connie Bruck explains, the dominant issue that is being debated right now in microbanking circles is how best to build institutions that are genuinely market viable as verses subsidy dependent. Until very recently and with only few exceptions, microbanking has been commerce in name only. The Bank says it no longer accepts outright grants the grant money goes to a dozen or so spinoff "enterprises" but it still borrows low and sells high, and since its books are under wraps and its stockholders are that in name only, we'll never know for sure. But this much we do know. The Grameen "foundation" received 1.5 million from Bill and Melinda Gates just a few months ago. Meanwhile, George Soros has given some $12 million plus to all sorts of Grameen spinoffs, including gifts to expand "banking" in other countries. Since Yunus and Grameen won the prize, many institutions have rushed forward to take credit for the success, by virtue of their vast giving. Here is a small sample of other grant announcements: 1, 2, 3, 4, 5, 6, 7, 8. The repayment tactics of Grameen are very disturbing. The bank assembles peer groups to lean on delinquent borrowers, and makes political-mental reconstruction a condition of the loans, which are now being taken out to repay previous loans and so on. His "Sixteen Decisions" that must be adopted by all borrowers read like a party platform for collectivist regimentation. "We shall take part in all social activities collectively." "We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus."

"We shall build and use pit-latrines." "If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline."

A very strange bank indeed! And why would economists and sophisticated free market economists, of all people fall for the line that more debt can somehow save the world? Vijay Mahajan, the chief of Basix, reports to the Guardian that Grameen's tactics suffer from five fatal assumptions. First is the idea that poor should be self-employed rather than work for wages. That is contrary to the whole history of successful economic development. Second is the idea that loans are the main financial service needed by the poor, whereas they really need savings and insurance. Third is the idea that credit is what builds enterprise, whereas the truth is that entrepreneurship and management are more important. Fourth is the idea that the non-poor don't need credit, whereas the truth is revealed in marketbased banking: higher incomes can handle higher debt. Fifth is the idea that microcredit institutions can become self-sustaining, whereas all experience shows that new enterprises in poor areas that are built on credit alone rarely emerge from dependency.

For years, I've received notes from financial professionals in Bangladesh that have thanked me for writing about this institution, which has made their lives very difficult. But I thought it might be useful to share these recent additions to my pile of correspondence: Your article on Grameen system is informative and thought provoking. I fully agree with you that the Grameen success stories are nothing but over blown claims supported by tricky financial arithmetic. As a Bangalee, I am delighted that Dr. Yunus won the Nobel peace prize. Any one should feel proud when another person of his country gets a Nobel. But I also reflect that now the whole Grameen operation will come under intense international scrutiny. I am sure that they will come to the same conclusions as you did. Dr. Yunus founded so far 17 companies. Except for Grameen Phones, all flopped. How did he manage to fund these projects? Is it the Grameen Bank that funds his 'innovative ideas'. Perhaps we will never know, for Grameen Bank never publishes its audited annual balance sheets. Every other commercial banks in this country does that and it's mandatory. Grameen Bank does not pay any corporate tax which is about 20%. Other commercial banks have to pay the taxes.

Last year Grameen Phone made US$450 million profit (that's what I read in the newspaper). Out of these profit, TeleNor which owns 62% share took the profit and transferred it as US dollar. Who provided the hard currency? The poor Bangalee labourers who toil in Middle east like slaves. They send the dollars earned as their wage. These labourers, like the Grameen women are from deep rural areas where there is no electricity. In fact there are more than 70% households (mostly in the rural areas) where electricity is not available. How do these people use the mobile phone? They don't. Because they can not re-charge their mobile phone battery. Yet, Dr. Yunus is jetting around the world to tell that the Grameen phone has revolutionized the countryside. This is a massive fraudulent act involving millions of truly poor people who are incapable of getting beyond the razzle dazzle economic talk Dr. Yunus is making. The western enthusiasm over Dr. Yunus verging on madness should now end. We should not be taken in by a fast talking economist whose life-long objective has been to be a player in the international arena. And he found out fast, that the all pervading poverty in this country could be used profitably to gain international attention and perhaps appreciation. Whenever, I see this guy on the TV, I feel the presence of a very sleek salesman who target group is rich and powerful in the west who are apparently on a guilt trip over the poverty in third world countries. The poverty problem in Bangladesh and many other countries are truly frightening and it has deep rooted causes. We should evaluate other models where a nation came out of poverty and fulfilled their basic human needs. And another concerning the Sixteen Decisions: My daughter did an internship with Yunus/Grameen while she was doing her under graduate studies in the late 90's, and came back with both admiring and critical position on their works. She did have some concerns as you also mention mainly in the pushy privacy violation aspects. As a gifted observer with US upbringing and heightened respect for the universally prevalent, taken-for-granted individual rights, it was hard for her to not notice the harsh big brotherism. She privately told me of some troubling aspects.

The real problem is Bangladesh is revealed in the account in the Index of Economic Freedom. Its government's bad economic policies include huge barriers to trade, vast amounts of state-owned enterprise, unionization, heavy taxes on foreign investment, a high tax burden, and some of the world's worst political violence and official corruption.

The irony of it all is that Bangladesh is making economic progress in its export sector for fish and clothing. There is no mention of Grameen's contribution to its 5% rate of economic growth in any reliable source. The best that Professor Yunus could do to help his country would be to use his now-considerable credibility to push for a freer market through radical privatization and free trade. And it is true that he has pushed a bit for halfway privatization in health care. But in general, he has a stake in keeping the status quo just as it is. Published on Sunday, October 15, 2006, by The Nation Microcredit, Macro Problems by Walden Bello The awarding of the Nobel Peace Prize to Muhammad Yunus, regarded as the father of microcredit, comes at a time when microcredit has become something like a religion to many of the powerful, rich and famous. Hillary Clinton regularly speaks about going to Bangladesh, Yunus's homeland, and being "inspired by the power of these loans to enable even the poorest of women to start businesses, lifting their families--and their communities--out of poverty." Like the liberal Clinton, the neocon Paul Wolfowitz, now president of the World Bank, has also gotten religion, after a recent trip to the Indian state of Andhra Pradesh. With the fervor of the convert, he talks about the "transforming power" of microfinance: "I thought maybe this was just one successful project in one village, but then I went to the next village and it was the same story. That evening, I met with more than a hundred women leaders from self-help groups, and I realized this program was opening opportunities for poor women and their families in an entire state of 75 million people." There is no doubt that Yunus, a Bangladeshi economist, came up with a winning idea that has transformed the lives of many millions of poor women, and perhaps for that alone, he deserves the Nobel Prize. But Yunus--at least the young Yunus, who did not have the support of global institutions when he started out--did not see his Grameen Bank as a panacea. Others, like the World Bank and the United Nations, elevated it to that status (and, some say, convinced Yunus it was a panacea), and microcredit is now presented as a relatively painless approach to development. Through its dynamics of collective responsibility for repayment by a group of women borrowers, microcredit has indeed allowed many poor women to roll back pervasive poverty. However, it is mainly the moderately poor rather than the very poor who benefit, and not very many can claim they have permanently left the instability of poverty. Likewise, not many would claim that the degree of self-sufficiency and the ability to send children to school afforded by microcredit are indicators of their graduating to middle-class prosperity. As economic journalist Gina Neff notes, "after 8 years of borrowing, 55% of Grameen households still aren't able to meet their basic nutritional needs--so many women are using their loans to buy food rather than invest in business." Indeed, one of those who have thoroughly studied the phenomenon, Thomas Dichter, says that the idea that microfinance allows its recipients to graduate from poverty to entrepreneurship is inflated. He sketches out the dynamics of microcredit: "It emerges that the clients with the most experience got started using their own resources, and though they have not progressed very far--

they cannot because the market is just too limited--they have enough turnover to keep buying and selling, and probably would have with or without the microcredit. For them the loans are often diverted to consumption since they can use the relatively large lump sum of the loan, a luxury they do not come by in their daily turnover." He concludes: "Definitely, microcredit has not done what the majority of microcredit enthusiasts claim it can do--function as capital aimed at increasing the returns to a business activity." And so the great microcredit paradox that, as Dichter puts it, "the poorest people can do little productive with the credit, and the ones who can do the most with it are those who don't really need microcredit, but larger amounts with different (often longer) credit terms." In other words, microcredit is a great tool as a survival strategy, but it is not the key to development, which involves not only massive capital-intensive, state-directed investments to build industries but also an assault on the structures of inequality such as concentrated land ownership that systematically deprive the poor of resources to escape poverty. Microcredit schemes end up coexisting with these entrenched structures, serving as a safety net for people excluded and marginalized by them, but not transforming them. No, Paul Wolfowitz, microcredit is not the key to ending poverty among the 75 million people in Andhra Pradesh. Dream on. Perhaps one of the reasons there is such enthusiasm for microcredit in establishment circles these days is that it is a market-based mechanism that has enjoyed some success where other marketbased programs have crashed. Structural-adjustment programs promoting trade liberalization, deregulation and privatization have brought greater poverty and inequality to most parts of the developing world over the last quarter century, and have made economic stagnation a permanent condition. Many of the same institutions that pushed and are continuing to push these failed macro programs (sometimes under new labels like "Poverty Reduction Strategy Papers"), like the World Bank, are often the same institutions pushing microcredit programs. Viewed broadly, microcredit can be seen as the safety net for millions of people destabilized by the large-scale macro-failures engendered by structural adjustment. There have been gains in poverty reduction in a few places--like China, where, contrary to the myth, state-directed macro policies, not microcredit, have been central to lifting an estimated 120 million Chinese from poverty. So probably the best way we can honor Muhammad Yunus is to say, Yes, he deserves the Nobel Prize for helping so many women cope with poverty. His boosters discredit this great honor and engage in hyperbole when they claim he has invented a new compassionate form of capitalism-social capitalism, or "social entrepreneurship"--that will be the magic bullet to end poverty and promote development.

Microfinance, macro problems?

Abheek Barman, ET Bureau, Oct 19, 2010, Is it possible to make money while helping people out of poverty? In the last five years or so, one business microfinance seemed to suggest that the answer was yes. Look at the numbers: from merely $12 million in 2003, the market for lending tiny amounts of money mainly to groups of women has grown to more than $7 billion now. And analysts expect this to grow to a staggering $50 billion soon. It's easy to understand why. Many people in rural India don't have access to loans from formal banks. In any case, procedures are cumbersome, paperwork intimidating. That explains why people go to moneylenders, who charge them upwards of 50% for loans. Microfinance, based on a model borrowed from Bangladesh, was supposed to change all that.

Poverty Alleviation through the Rural Non-Farm Sector Development: An Overview of Bangladesh Experiences Biswajit Choudhury Abstract Bangladesh shows the important role that the rural non-farm sector has played an important role in limiting rural poverty, particularly where land ownership is skewed, labour force growth remains high, and movement of other rural areas with higher earnings potential remains difficult for sociological or economic reasons. The availability of non-farm wage or self-employment has also tended to tighten rural labour markets for landless labour and provide a floor for their wage rate. Given the scale of poverty in Bangladesh, there is a need to ensure that the poor continue to have access to non-farm activities as productivity increases. This will require that new distortions are not be introduced in rural labour markets; efforts continue to improve the access of the poor to education and health services and to credit and skills for micro-enterprises; that public safety net programmes are well targeted.) Introduction From the very beginning of its independence, the issue of poverty alleviation has been pursued as the major development objective in Bangladesh like the other developing countries of Asia, Africa and Latin America. Despite the considerable progress, the issue of poverty is still widespread in both rural and urban areas calling for adoption of more effective approaches in dealing with weaknesses in the policy framework and deficiencies in the implementation mechanism and associated institutional arrangements. Over the years, the anti-poverty policy framework in Bangladesh has put emphasis on the pursuit of a two-pronged strategy of accelerated labour-intensive growth and human

resources development of the poor. The formulation and implementation of such a strategy require regular and comprehensive information, particularly on the nature and processes of poverty, for meaningful poverty assessment and to help in identifying the factors that contribute to and spread poverty. Poverty alleviation and social sector development have been the core issues in development planning in Bangladesh since 1971. Among the least developed countries in Asia, Bangladesh is among the most densely populated (866 per square kilometre) countries in the world with a population of 124.8 million squeezed into 144,000 square kilometres (Rahman 2002). Urbanization is low but infant mortality rate is high. The share of manufacturing is low but the rate of growth of the manufacturing sector is high. Bangladesh is a delta, mostly plains through which the Ganges and the Brahmaputra flow to reach the Bay of Bengal. In Bangladesh, development projects of agriculture, rural development, primary and mass education, health and family welfare, women and children affairs and labour and employment are considered under the poverty alleviation programmes. The social sector includes all poverty-related programmes minus agriculture plus education, youth and sports, mass communication, cultural affairs and public administration. Mr Biswajit Choudhury, PhD Candidate, South Asian Studies, School of International Studies, Jawaharlal

Bangladesh | Crisis of the Grameen Bank Tuesday, 05 April 2011 08:13 Nobel Laureate Muhammad Yunus's three-decades-long journey with microfinance was laborious. But he most certainly did not encounter a crisis like the one he is facing now. It was only in December 2010 that the Bangladeshi who shared the Nobel Peace Prize with the Grameen Bank in 2006 first came across an utterly odd situation when a Norwegian television documentary accused him of diverting huge aid funds to a business concern. The news was widely reported in the local media, particularly those sections which were not

appreciative of his model of microfinance for poverty alleviation. Dr. Yunus denied this and other allegations in the media that he developed many businesses using the Grameen brand name. The Norwegian government, too, came out in his defence. Following the controversy, the Bangladesh government in January formed a committee to review the Grameen Bank's activities. As the issue deepened, Finance Minister A.M.A. Muhith argued that the 70-year-old Yunus should hand over the bank to others as, according to the country's banking rules, the retirement age for executives in private banks was 65. He is a respected man but you don't continue all the time in any institution, Mr. Muhith told media. MOUNTING DEBATE Amid a mounting debate for and against Dr. Yunus, Bangladesh's central bank on March 2 ordered his removal from the post of Managing Director on the ground that he had crossed the retirement age. Dr. Yunus defied the order but the High Court rejected his writ petitions challenging the legality of the central bank's action. Now his appeal is pending in the Supreme Court. The local media were sharply divided. Some sections supported him accusing even the Prime Minister of disrespecting the highly respected Nobel laureate and others said he flouted the laws and indulged in other malpractices. Meanwhile, Dhaka is facing a strong reaction from the West, particularly the United States. The 1/4 Bangladesh | Crisis of the Grameen Bank Tuesday, 05 April 2011 08:13 U.S. has called for a dialogue and compromise between Dr. Yunus and the Hasina government for an honourable solution. A compromise is possible and I am encouraging dialogue between the parties to find a mutually acceptable solution,'' Robert Blake, Assistant Secretary of State for South and Central Asia, told a news conference. If there is no compromise, it will have an effect on bilateral relations, said the senior official, who was in Dhaka recently to demonstrate Washington's strong backing for the Nobel Laureate. The former World Bank president, James Wolfensohn, was also in Dhaka to back Dr. Yunus, who has strong admirers in the West. Friends of Grameen, another powerful international backer, came out strongly against the Hasina government. Sa-dhan (the association of Community Development Finance Institutions consisting of over a hundred microfinance practitioners and experts of India) has also lent full support to Dr. Yunus. Secretary of State Hilary Clinton personally communicated her concern to the Bangladesh Prime Minister and talked to the embattled microcredit pioneer, who is a close friend of the Clinton family. Re-emphasising the U.S. concern, Mr. Blake said we in the United States have been deeply troubled by the difficulties he is currently facing. A DISTRACTION AND DEPARTURE' The official, while being appreciative of the Hasina government's achievements in many sectors, saw the removal of Dr. Yunus as a distraction and unnecessary departure from all the great work being done. Mr. Blake's comments drew partial support as some government sympathisers claimed that the removal of Dr. Yunus should not have been the government's top priority since it had other important issues to be resolved. To a pointed question whether the U.S. stand was not an interference in Bangladesh's internal affairs, Mr. Blake did not give a straight reply. He merely said: Prof. Yunus and the Grameen Bank have a positive reputation in the U.S. and among many Congressmen, members of the Bangladesh congressional caucus, President Obama and Secretary Clinton. This is a matter of great interest in USA.

Whatever the criticism of the U.S. stand in Bangladesh's political and social circles, analysts believe that it is a clear disapproval of the government action against Dr. Yunus, although the 2/4 Bangladesh | Crisis of the Grameen Bank Tuesday, 05 April 2011 08:13 Grameen Bank is neither an NGO nor private bank. It was founded in 1983 under an ordinance and the government still holds a 25 per cent share in it. Dr. Yunus had been the Managing Director ever since the bank was founded. Dr. Yunus has mustered meaningful support at home too, making the ruling party more apprehensive. The main opposition, BNP, led by Khaleda Zia, is siding with him. However, a section of the media and Left-leaning parties dubbed Mr. Blake's statement a naked interference in the country's internal affairs. A section of the ruling Awami League leaders, who have long suspected that Dr. Yunus has a hidden political agenda and that he was extending secret support to past military rulers, has also criticised Mr. Blake. Foreign Minister Dipu Moni told Parliament recently that the Opposition wanted the government to satisfy the foreigners, compromising on the laws of the land. But this will not happen, she asserted. However, Gawhar Rizvi, Prime Minister's adviser on foreign affairs, said the government was trying to find an amicable solution. Despite the controversies, many analysts are of the opinion that the Hasina government may take the U.S. stand seriously but it will, for sure, find it difficult to come to an amicable solution since the Supreme Court verdict is awaited. The government's attitude was amply reflected by Mr. Muhith who, following Mr. Blake's strongly worded remarks, issued a statement asserting that the government was seeking an amicable solution and still looking for a mutual understanding to resolve the issue. But he insisted that Dr. Yunus initiate the dialogue. However, the mainstream Bengali dailies have reported that a committee was formed to broker a compromise, an indication of a shift in the government stand. The fact is the present government is not very appreciative of Dr. Yunus' contribution to poverty alleviation through the microfinance model, although Sheikh Hasina in her first tenure attended the world microcredit summit at the United Nations where he got the world body's support. The Prime Minister has accused him of treating the Grameen Bank as his personal property and claimed that the group is sucking the blood of the poor. A host of studies have disagreed with the claim that microfinance is a panacea for poverty. Many have even called the model a villain. But Dr. Yunus has the support of many important sections, particularly from the world's powerful lobbies. In any case, the present crisis is not over the microfinance model but with his becoming the life-long Managing Director of a bank that is allegedly flouting the law. 3/4 Bangladesh | Crisis of the Grameen Bank Tuesday, 05 April 2011 08:13 But the West's support to him is so loud that, it appears, even if the final court verdict goes against him, a negotiated settlement may be found so that the Nobel Laureate's image and his contribution to the institution are well protected, and the independence and smooth functioning of the Grameen Bank remains undisturbed. But for an out-of-court compromise, Dr. Yunus will have to withdraw his case and start a dialogue with the government. If the government decides to let him continue as Managing Director, the law will have to be amended.If, on the other hand, an amicable solution is brokered for his honourable exit, many observers are of the opinion the Grameen Bank chief may not get back his previous position. With Dr. Yunus indicating that he is ready to sit with the

Prime Minister to find a solution, some of his supporters have already suggested a way out making him chairman with necessary powers. It appears that Dr. Yunus has successfully challenged the political authority by mobilising powerful lobbies in his favour. Only an open-minded negotiation can bring a solution. (The Hindu)