by Higerta Gjergji
The Grameen Bank, set up by economist Muhammad Yunus in Bangladesh, is a microcredit institution that lends small unsecured loans to people who don’t fit the traditional borrower profile, such as those in rural or underdeveloped areas. In 2006, Yunus and the Grameen Bank were awarded the Nobel Peace Prize.
The Grameen model, which Yunus came up with in 1976, is based on groups of five potential borrowers who regularly meet with Grameen Bank field officers. As a rule, only two of the five people who start get loans. If the first two borrowers stick to the repayment plan, the other group members can then get loans. In this framework, social pressure replaces traditional collateral. In 1983, Grameen Bank became an independent entity headquartered in Dhaka, Bangladesh, with over 2,200 branches nationwide. This model is emblematic of providing the poor with the opportunity to improve their situation through self-employment. Over 97% of Grameen’s loan recipients are women.
Today, Grameen Bank operates in 81,678 villages across Bangladesh, covering 94% of the country, and serves nearly 45 million people, including family members, through 10.61 million borrower members. Grameen’s microcredit programme has been adopted in lots of countries as an effective way of tackling poverty. As well as loans for education and new business projects, the bank provides scholarships for members’ children and interest-free loans to help beggars set up their own businesses, which allows them to stop begging. So far, 21,383 people have given up begging and are now self-sufficient.
By June 2024, Grameen Bank had given out a total of $38.654 billion (3.127 trillion BDT) to 10.61 million borrowers, 97% of whom were women. Thanks to its excellent banking practices, Grameen Bank has a loan recovery rate of 96.29% (as of June 2024), which is higher than any other banking system.
Grameen Shakti (GS) is a subsidiary of Grameen Bank in Bangladesh, a member-owned organization founded in 1976 that provides microcredit to its affiliates. GS was established in 1996 to address the issue of limited national electrical coverage, which at the time reached only 16% of the country’s 21 million households. The goal was to provide renewable energy to rural families.
By mid-2001, GS had already installed over 5,800 home photovoltaic systems, with a total capacity of 290 KWp, and planned to install another 8,000 over the next three years. GS offers its customers easy financing options and a year of free maintenance for the system after purchase. On top of that, it also teaches customers how to deal with minor technical issues themselves, so that everyone can take part in the programme.
GS also runs training courses to help create skilled technicians and dealers in rural areas who can install solar systems, provide accessories and after-sales services, and educate people about renewable energy technologies. To date, more than 300 photovoltaic technicians have been trained through this programme. On top of that, GS runs promotional and demo activities to get people excited about solar PV tech and shows customers how they can make money from it.
On the cover photo, screenshot of Grameen Bank website
