Part 2: Muhammad Yunus and Grameen Bank: Banking for the Poor

Excerpted from Dr. Denise Ames’ forthcoming book: Human Rights: Towards a Global Values System.

My greatest challenge has been to change the mindset of people. Mindsets play strange tricks on us. We see things the way our minds have instructed our eyes to see.”

– Muhammad Yunus

Defending human rights takes many forms. Muhammad Yunus took the path of defending the human rights of some of the poorest women in the world through economic empowerment. His strategy of lending money to poor women and requiring them to pay it back with interest enhanced not only their own lives but that of their families’ as well.

Grameen bank logoIn 1983, after 7 years of experimenting, Yunus officially started the Grameen Bank. The word Grameen, is from the word gram or village, and means “of the village” in the Bengal language. This revolutionary bank is still going strong today with 2.4 million families with loans, and more than 1,050 branches serving 35,000 villages in Bangladesh; 94 percent of the clients are women. Its rules are strict. Initial loans are as little as $10 dollars and must be repaid with 20 percent interest; 98 percent of Grameen’s borrowers repay their loans in full, a rate of return far higher than other banks.

Yunus was able to overcome two major obstacles when he started the Grameen program. First, commercial banks discriminated against women. He overcame this obstacle with trust-building and designing a system that built on women’s support groups. Secondly, commercial banks had blocked credit to the poor by demanding collateral, something no poor person had. He found that the poor do have an intangible type of collateral. They will probably need a second or third loan; therefore, their collateral is to be timely and responsible in their payments so they can establish a good credit record.

07 Chanda

Chanda from Bangladesh

According to Yunus, Grameen Bank has worked in ways not initially anticipated. For instance, some women borrowers decided to commit themselves to a set of promises that they called the “sixteen decisions.” These are commitments that the women borrowers agreed upon to help improve themselves and their families above and beyond the loans. They decided to maintain discipline, to create unity, to act with courage, and to work hard in all of their endeavors. They agreed to keep their families small and to send their children to school, to plant as many tree seedlings as possible, and even to eat vegetables. These are some of the resolutions the women created; the bank did not impose them.

Grameen is involved in transformation. The clients are transforming their lives from powerless and dependent to self-sufficient, independent, and politically aware. The next generation will reap the benefits; a generation with better food, education, medication, and the firsthand satisfaction of taking control of their lives. The 16 decisions are an example of the transformation. Yunus has found that Grameen children attend school in record numbers because their mothers really take that commitment seriously. Now many of the children are continuing in colleges, universities, and going to medical schools. Grameen Bank recently came up with another loan product to finance higher education for all Grameen children in professional schools.

Milena from Bolivia

Milena from Bolivia

Yunus cited resistance to his program from husbands who felt insulted, humiliated, and threatened that the bank gave loans to their wives and not them. Sometimes the tension within the family led to violence against the women. In response to this problem, the bankers decided to start meeting with the husbands and explained the program in a way that they could see how it would benefit their family. They also arranged to meet with husbands and wives together so everyone understood the expectations. Easing the husband’s concerns reduced their initial resistance. Some neighborhood men opposed the program because of religious objections. The bank carefully examined whether the program was in some way anti-religious, but found that these critics actually cloaked their opposition to women’s independence in religious trappings instead of admitting that they felt threatened. According to Yunus, “It was the male ego speaking in religious terms. We found that it was best to give the program some time. It soon became clear that the women borrowers were still attending to their religious duties, at the same time earning money and becoming confident.” Women even started confronting the religious critics.

Yunus pointed out that the Grameen Bank program received some of the strongest criticism from development professionals. Grameen bankers never expected opposition from the development quarter, but it happened and became controversial. Development has traditionally been multi-million dollar loans from the World Bank or other big Western and Chinese banks for large infrastructure development projects, such as dams, highways, ports, irrigation projects, and airports. The money for these projects would go to a large Western multi-national corporation or Chinese state enterprise that would employ a few local laborers (men). The profits mostly would go to the upper level management of the multi-national corporation or state enterprises and little if any would “trickle down” to poor local people. The large development projects would have no positive effect on women’s lives.

Grameen Bank Building, Dhaka, Bangladesh

Grameen Bank Building, Dhaka, Bangladesh

The development projects were just the opposite of what Yunus and his bank were doing. Critics insisted that giving tiny loans to women who do not have knowledge and skills does not bring about real change in the country or the village and is not true development. The real issue was Yunus and the Grameen Bank offered a different kind of development that challenged the powerful. Their grassroots method threatened profits for multi-nationals and the kickbacks to local officials; therefore, critics ridiculed and dismissed their program. Yunus adds, “What we do is not in the development professionals’ or academics’ book. It does not fit into their universe. If you are an academic, you wander around in your abstract world, and decide microcredit programs are silly because they don’t fit your ideas.” But Yunus forcefully claims, “I work with real people in the real world. So whenever academics or [development] professionals try to draw those conclusions, I get upset and go back and work with my borrowers—and then I know who is right.”

Family receiving a loan

Yunus has garnered world-wide attention and praise for his grassroots, ground-breaking strategy of working to alleviate world poverty. In 2006, Yunus and the Grameen Bank were jointly awarded the Nobel Peace Prize “for their efforts to create economic and social development from below.” He is one of the founding members of Global Elders, a group of public figures noted as elder statesmen, peace activists, and human rights advocates. The goal of the group is to solve global problems with over 1,000 years of experience among individual members. Yunus said he would use part of his share of the $1.4 million award money to create a company to make low-cost, high-nutrition food for the poor. The rest would go toward setting up an eye hospital for the poor in Bangladesh. The food company, Social Business Enterprise, will sell food for a nominal price. Yunus has taken his Boy Scout motto to heart, showing compassion for all, in all of his endeavors.


  1. Why would development officials and academics criticize Yunus and the Grameen bank? Do you think they are justified in their criticism?
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