Everyone Is Bankable
Author: HealthyWealthynWise Total views: 14 Word Count: 487
Muhammad Yunus, a professor in Bangladesh, is the creator of a new trend in banking called microcredit in which poor people in countries around the world can take out tiny loans to start a small business. They need no background check and no collateral. There is no interest charged on the loan. The surprising thing is that most are paid back in a timely manner.
Until microcredit came along, banks only made loans available to people starting large companies. They were large loans requiring approval and were subject to all the things we've become accustomed to seeing like collateral, interest, and late fees. Now poor people are able to better themselves and their communities with small loans, usually less than $1,000, to open businesses like roadside fruit stands.
Even now, traditional banks rarely or never offer these small loans to the poor, so Muhammad Yunus founded Grameen Bank. In 2006 he and the bank were jointly awarded the Nobel Peace Prize. The bank now has about 2,500 branches in rural Bangladesh serving 80,000 villages. The bank is 94% member-owned, and those members are people who have no land or less than an acre of land.
Most of the world's business owners are men, so obviously most of the loans are also in the name of men. This is another major difference between traditional and microcredit loans. Microcredit loans are given to women 96% of the time. In poor countries, women traditionally manage the basic needs like food and clothing, so it makes sense that they would open businesses to sell their excess.
Muhammad Yunus made his first personal loan in 1974. At that time, there was a famine in Bangladesh. People were struggling and turning to loan sharks. As a professor of economics, Yunus saw that the real world isn't anything like the theories taught in a classroom. He wanted to help these poor people dig themselves out of poverty.
More shocking than the poverty all around him was just how little Muhammad Yunus needed to do to help these people. His first loan was only $27, and it was made to a group of 42 women who were in trouble with loan sharks. They were able to pay off their interest-bearing loans and better their lives. When Muhammad Yunus brought the idea to banks, he was laughed out the door.
It only takes one person. Muhammad Yunus' passion has changed the face of economics and the lives of people around the world forever. Little things can be so much more powerful than they seem. He believes everyone should have the same right to credit regardless of their financial background.
Microcredit banks are the opposite of traditional banks in so many ways, yet the repayment rate is still almost 100%, even when disasters like floods or earthquakes happen. There is no need for lawyers or collateral. Payments are made by honest people working hard to change their lives and the lives of their community.
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About the Author
Muhammad Yunus is the founder of microcredit, which allows poor people in countries all over the world to obtain money. Visit Muhammad Yunus to see how Grameen Bank became a lifesaver for millions.
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