Grameen Bank facts for kids

Quick facts for kids
Grameen Bank

Badge of Grameen Bank
Native name	গ্রামীণ ব্যাংক
Type	Statutory public authority
Industry	Bank
Founded	2 October 1983; 41 years ago (1983-10-02)
Founder	Muhammad Yunus
Headquarters	Dhaka, Bangladesh
Number of locations	2,568 branches (2022)
Area served	Bangladesh
Key people	Abdul Hannan Chowdhury (Chairman) Sarder Akhter Hamed (Managing Director)
Products	Microfinance Banking services Consumer Banking Investment Banking
Net income	৳2360.49 million (2022)
AUM	৳169.251 billion (members), ৳74.94 billion (non-members)
Total assets	৳301.05 billion (2022)
Total equity	৳26.920 billion (2022)
Number of employees	18,203 (2022)

Grameen Bank (which means "Rural Bank" in Bengali) is a special bank in Bangladesh. It helps people who are poor by giving them small loans. These loans are called microcredit. The bank does not ask for anything valuable as a guarantee, which is called collateral. This makes it easier for people without much money to borrow.

Grameen Bank is a public organization. It started in 1976 with the ideas of Muhammad Yunus. He was a professor at the University of Chittagong. He wanted to find a way to offer banking services to poor people in the countryside. In October 1983, Grameen Bank became an official, independent bank.

The bank has won awards for its work. In 1998, its "Low-cost Housing Program" won a World Habitat Award. In 2006, Grameen Bank and its founder, Muhammad Yunus, won the famous Nobel Peace Prize. This was for their efforts to help people escape poverty. The bank's success has inspired similar projects in over 64 countries worldwide.

How Grameen Bank Started

Muhammad Yunus got the idea for Grameen Bank during a big food shortage in Bangladesh in 1974. He saw how poor people struggled. He made a small personal loan of about US$27 to 42 families. This money helped them start making things to sell. They did not have to borrow from lenders who charged very high interest. Yunus believed that giving small loans could help many people start businesses. This could reduce rural poverty in Bangladesh.

Nobel Laureate Muhammad Yunus, the bank's founder

Yunus developed the rules for Grameen Bank from his research. He started a project with a national bank and the University of Chittagong. They tested his idea of giving small loans to poor people in villages. In 1976, the village of Jobra was the first to get help from this project. The project grew to more villages over the next two years. With support from the Bangladesh Bank, it expanded to the Tangail District in 1979. Over the next few years, the project reached other parts of Bangladesh.

On October 2, 1983, the project officially became Grameen Bank. Bankers Ron Grzywinski and Mary Houghton from ShoreBank in Chicago helped Yunus set up the bank. They received help from the Ford Foundation. The bank faced challenges after a big flood in Bangladesh in 1998. But it recovered well. By early 2005, the bank had loaned over US$4.7 billion to poor people. By the end of 2008, this amount reached US$7.6 billion.

In 2011, Muhammad Yunus had to leave Grameen Bank. The Bangladesh government said he was too old for the job at 72.

Grameen Bank also started working in wealthier countries. By 2017, Grameen America had 19 branches in eleven US cities. Almost all of its 100,000 borrowers were women.

In 2024, Professor Abdul Hannan Chowdhury became the new Chairman of Grameen Bank. As of August 2025, there is a plan to change how the bank is owned. The government's share might go from 25% down to 5%. This would give more control to the people who borrow money from the bank.

How Grameen Bank Gets Money

Grameen Bank gets its money from different places. In the beginning, many donor organizations gave money at low interest rates. By the mid-1990s, the bank started getting most of its money from the central bank of Bangladesh. More recently, Grameen has sold special bonds to get money. These bonds are guaranteed by the Government of Bangladesh.

In 2013, the Bangladesh parliament passed a new law for Grameen Bank. This law allows the government to make rules for how the bank operates.

Helping People with Microcredit

Grameen Bank believes that giving loans is better than giving charity to reduce poverty. The bank thinks that everyone has the ability to improve their lives.

Grameen offers loans to groups who usually cannot get money from big banks. This includes poor people, women, people who cannot read or write, and unemployed people. They get loans with fair rules, like a group lending system. They pay back the loans in small weekly amounts over a reasonable time.

Grameen's main goal is to help poor people become financially independent. Yunus encourages all borrowers to save money. This way, local savings can help fund more loans. Since 1995, most of Grameen's loans have been paid for by the interest earned and money saved by customers. This means borrowers and savers work together. Money saved in villages is used to give loans to others in the same communities.

Grameen Bank focuses on women borrowers. About 97% of its members are women. A study by the World Bank found that microcredit helps women. It gives them more access to money and more say in decisions.

Grameen has also created different types of loans. It supports loans for hand-powered wells. It also helps Grameen members' families start businesses. The bank found that loans for seasonal farming and agreements to rent-to-own equipment or animals help poor people improve their farming.

Grameen Bank Building in Dhaka

Grameen Bank uses a system called solidarity lending. This means people form groups, and the group supports each other in repaying loans. The bank also has a set of values called the Sixteen Decisions (updated to Eighteen Decisions in 2023). Borrowers at every Grameen Bank branch say these Decisions and promise to follow them.

These Decisions encourage good habits. For example, one habit is sending children to school. Because of this, almost all Grameen borrowers send their school-age children to regular classes. This helps bring positive social change and educates the next generation.

Solidarity lending is a key part of microcredit. This system was used in over 43 countries by 1988. Each person is responsible for their own loan. Group members are not forced to pay for someone who doesn't pay back their loan. However, in real life, group members often help pay if someone defaults. They do this because Grameen will not give more loans to a group if one member doesn't pay.

Grameen Bank does not use written contracts with its borrowers. The system works based on trust. To help with lending, Grameen Bank asks members to save small amounts regularly. These savings go into special funds for emergencies or the group. These savings act like insurance in case something unexpected happens.

Grameen has a very high loan repayment rate, over 98 percent. Grameen says that more than half of its borrowers in Bangladesh have moved out of extreme poverty. They measure this by things like all children going to school, families eating three meals a day, having a clean toilet, a rainproof house, and clean drinking water.

The bank also works on social businesses. In 2009, the Grameen Creative Lab and the Yunus Centre started the Global Social Business Summit. This meeting is a place for social businesses worldwide to discuss ideas and work together. They aim to find solutions for big problems in the world.

Village Phone Program

Grameen Bank has used microcredit in different ways. In the Village Phone program, women can start businesses to offer wireless payphone service in rural areas. This program won an award in 2004 for using technology to help development. Through this program, Grameen helped women become entrepreneurs and escape poverty. It also helped farmers and others get important market information and connect with relatives. Over 55,000 phones were in use, helping more than 80 million people in about 28,000 villages in Bangladesh.

Helping Struggling Members

In 2003, Grameen Bank started a new program. It was different from its usual group loans. This program was just for beggars in Bangladesh. It gave small loans to help them.

Housing Loans

In 1984, Grameen wanted to start a housing loan program. They asked the Central Bank for help. Their idea was rejected because the suggested US$125 loan seemed too small to build a good house. Grameen then suggested "shelter loans," but these were also rejected. The Central Bank thought borrowers could not afford loans that didn't directly make money. Grameen tried a third time, calling them "factory loans." They explained that people worked from home, so their homes were like factories that helped them earn money. This was also rejected.

After these rejections, Yunus, the bank's founder, met with the Central Bank governor. He asked for their application to be approved. When asked if he thought the borrowers would repay, he said, "Yes, they will. They do. Unlike the rich, the poor cannot risk not repaying. This is the only chance they have." Grameen was then allowed to offer housing loans.

By 1999, Grameen had given $190 million in housing loans. This helped build over 560,000 homes, and almost all loans were repaid. By 1989, their average housing loan was $300. That year, the Grameen housing program won the Aga Khan International Award for Architecture.

How Grameen Bank Works

Grameen Bank is owned by its borrowers, who are mostly poor women. In 1983, the government owned 60% of the bank. Over time, this dropped to a small percentage. However, by the mid-2010s, the government's share increased to 25%.

The bank grew a lot between 2003 and 2007. As of January 2022, nearly 9.5 million people borrow from the bank. About 96.81% of these borrowers are women.

The number of borrowers has more than tripled since 2003, when there were 3.12 million members. The number of villages covered also grew. By October 2007, the bank had over 24,703 employees. Its 2,468 branches served 80,257 villages. This was up from 43,681 villages in 2003. By the end of 2021, the bank reached 81,678 villages. This means it covered about 94% of the country's villages.

By the end of 2021, the total amount of loans given since the bank started was over 2.5 trillion taka (about US$33.767 billion). The bank says it recovers about 95% of its loans.

Staff Training

Grameen Bank staff often work in challenging conditions. Employees get 6 months of training while working with experienced people from different Grameen branches. This training helps them understand the potential of poor people. It also helps them find new ways to solve problems at the bank. After 6 months, trainees go back to the main office in Dhaka for review before getting a job at a bank branch.

Awards and Recognition

• In 1994, Grameen Bank received the Independence Day Award. This is the highest state award in Bangladesh.
• On October 13, 2006, the Nobel Committee gave Grameen Bank and its founder, Muhammad Yunus, the 2006 Nobel Peace Prize. This was for their work to create economic and social development. The award announcement said that Yunus, through Grameen Bank, made microcredit an important tool in fighting poverty. Grameen Bank has inspired many other microcredit organizations around the world.

On December 10, 2006, Mosammat Taslima Begum accepted the Nobel Prize for Grameen Bank. She used her first loan of 16 euro (US$20) in 1992 to buy a goat. She became a successful business owner and an elected board member of the bank.

Grameen Bank is the only business to have won a Nobel Prize. The Chairman of the Norwegian Nobel Committee said that by giving the prize to Grameen Bank and Muhammad Yunus, they wanted to highlight achievements in the Muslim world, the importance of women, and the fight against poverty.

Other Projects by Grameen

Grameen Bank has grown into over two dozen related businesses. These are called the Grameen Family of Enterprises. Some of these organizations include Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti (Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education), Grameen Motsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear Limited, and Grameen Uddog (which owns the brand Grameen Check).

In July 2005, the Grameen Mutual Fund One (GMFO) was launched. This allowed Grameen Bank members and others to invest in Bangladesh's stock market. The bank and its related organizations are together worth over US$7.4 billion.

The Grameen Foundation was created to share Grameen's ideas and help more poor people around the world through microfinance. Grameen Foundation provides microloans in the USA and supports microfinance groups worldwide. It offers loan guarantees, training, and technology. As of 2008, Grameen Foundation supported microfinance groups in many regions:

• Asia-Pacific: Bangladesh, China, East Timor, Indonesia, India, Lebanon, Pakistan, Philippines, Saudi Arabia, Yemen
• Americas: Bolivia, Dominican Republic, El Salvador, Haiti, Honduras, Mexico, Peru, United States
• Africa: Cameroon, Egypt, Ethiopia, Ghana, Morocco, Nigeria, Rwanda, Tunisia, Uganda

Since 2005, Grameen Bank worked on Mifos X. This is an open-source technology for banking solutions. In 2011, Grameen Bank gave this technology to the Mifos Initiative, a non-profit group in the US.

Grameen Bank in Movies

• The movie To Catch a Dollar (2010) shows how Grameen America programs were started in Queens, New York, in 2008.
• The documentary film Living on One Dollar (2010) features Grameen Bank. It shows how the bank provided microcredit to help people start small home businesses in a village in Guatemala.

See also

In Spanish: Banco Grameen para niños

• Accion International
• Acción Emprendedora
• Accion USA
• Cooperative banking
• Count Me In
• Flat rate (finance)
• Grama Vidiyal, Indian Microfinance Bank
• Islamic banking
• Kiva
• Micro credit for water supply and sanitation
• Microgrant
• Opportunity International
• Project Enterprise