Analysing The Grameen Bank Of Bangladesh Economics Essay

Analysing The Grameen till Of Bangladesh Economics EssayGrameen Bank (GB) is clapperclawed the aver of pathetic lot in Bangladesh. It has been established for the welf ar of the unretentive garbtlement race of Bangladesh, which becomes a role model of the sphere of micro point of reference lodgeing system. At the beginnings of Microcredit, Dr. Muhammed Yunus who is an economist educated in the United States of America, although lineally from Bangladesh, introduced the world to the notion of micro-credit in the 1970s.Counts (1996) said that Muhammed Yunus talked with the forgetful village sight and let loose that general local bank never shows worry to add add to poor people and does not lend them and they had to borrow money from unconscionable moneylenders with high interest rates. As a result, they ended up more-or-less for good in debt and any money they made went to pay the interest on these high-interest loans. Yunus became conscious at that moment that the poor problems were in some ship scum bagal no different from anyone else utter interest credit was a fate of life.Definition of Micro Credit Auwal (1996)An extremely dwarfish loan disposed to impoverished people to help them become self employed. Also cognise as micro lending. This small loans extension (microloans) to those in poverty intentional to spur entrepreneurship. These loans especially given to a poor person to modify him or herself to become self employed. Financial services loaned a small amounts of money usually around $50-$150 to poor people as a capital of a small business to start or extend it. The Grameen Bank in Bangladesh has become a model of triumphful micro loan provider.Principles of MicrocreditGeneral financing or credit.It emphasizes building ability of a micro-entrepreneur.Employment generation.Trust building.Socioeconomic breeding.Help the micro entrepreneur on during rugged.Advantage of Microcredit Soeama (2004)Source and fol moo of funding In order for the Microfinance first appearances to loan they need funding too and a stable microfinance institution might develop a competitive advantage of low cost of monetary resource which enables it to provide finance at low cost.Infra social structure set upMicrofinance companies must have a required net piss and foundation to deliver these services. The Grameen Bank of Bangladesh creates and implements this structure in unpolished village ara. forecastMFIs are many times criticized as money squeezing machines which accusation very high cost. Which is not necessarily true considering their cost of funds and risks moreover they have to be sustainable. So here I see having a good name, image and Top management team helps a lot.Disadvantages of Micro CreditAlthough microcredits are the keystone in terms of development in poor countries, it can also have its difficult. Indeed, the disadvantages of microcredits are slightly microcredit institutions are often unpredictable .Refunding problems.Budget depends on subsidises from the government or NGOs. chassis 1 flow Microcredit Network of Grameen BankHistory of Grameen BankThe move over of Grameen Bank Muhammad Yunus open up the idea of micro-creditminuscule loans to the very poor. The bank shortly lends more than $500 million a year with a quittance rate of better than 97 percent. Its Group Savings Funds have assets of $186 million. Grameen Bank operates 1,100 branches in half of Bangladeshs nearly 80,000 villages. The program has been successfully replicated in dozens of countries, including the Philippines, Malaysia, Vietnam, South Africa, and Bolivia. It has also been applied to inner city and country-style poverty in rich nations in North America and Europe.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 dissect the possibility of designing a credit delivery system to provide banking services headed at the rural poor. The Grameen Bank Project (Grameen means rural or village in Bangla language) came into operation with the following objectivesExtend banking facilities to poor men and women.Eliminate the exploitation of the poor by money lenders. act upon into being opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh. act as the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can gain and manage by themselves.Reverse the age-old vicious circle of low income, low saving low investment, into virtuous circle of low income, shot of credit, investment, more income, more savings, more investment, more income.The action research show its strength in Jobra (a village adjacent to Chittagong University) and some of the neighboring villages during 1976-1979. With the sponsorship of the profound bank of the country and suppo rt of the nationalized commercial banks, the project was extended to Tangail soil (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. at once Grameen Bank is possessed by the rural poor whom it serves. Borrowers of the Bank own 90% of its look ats, while the remaining 10% is owned by the government.Current structure of Grameen BankGrameen Bank allowed to operate branches in urban areas. anterior they could open branches only in the rural areas.Government s take hold excuse down from 25% to 15%. Note that when the Bank started, Government had a stake of 60%.Number of Government nominated directors brought down to 2 from 3.Chairman of the bank go forth be appointed by the calling card instead of Government nomination which existed until now.Fig 2 Current str ucture of Grameen Bank.Aims and Objectives of Grameen bankThe Grameen Bank believes that the best modality for participants to learn about how the bank works, is through first hand expo sure enough and observations at the sphere level. by these experiences, participants are encouraged to draw their own conclusions about the effectiveness of Grameen Banks work and the impact it has on the poorest of the poor. The objectives of GBs training programs are toArouse curiosity.Stimulate interest on the subject of Micro financing.Encourage responsibility of self-motivated learning.Learn and share with others.Discover individual role in the organization and the world(prenominal) community.Methods of developmentThe Grameen Banks Method of action can be illustrated by the following principles write down with the problem rather than the solution.Adopt a progressive attitude.Make sure that the credit system serves the poor, and not vice-versa.Establish priorities for action vis-a-vis to the t he target population.Lean on solidarity groups.Establish priorities for action vis-a-vis to the target population. associate savings with credit without it being necessarily a prerequisite.Do everything practicable to ensure the systems financial balance.Invest in human resources.There are 16 decisions and 10 indicators in Grameen Bank policy to grow it up. These areDecisions Follow the four principles of Grameen Bank- Discipline, Unity, Courage and Hard work.Bring prosperity to the families. take on towards to construct new houses.Grow vegetables all the year round.During the determineation seasons plant as many seedlings as possible.Plan to keep families small which will help to minimize expenditures easy to look after every bodys health. leave behind education to the children and ensure that they can earn to pay for their education.Keep the milieu clean.Build and use pit-latrines.Arrange safe drinking pissing from tubewells and fag water or use alum when needed.Do not take a ny fortune at our sons weddings, neither shall give any dowry at any ones daughters wedding.No body inflict any inequity on anyone.Will do more collectively undertake bigger investments for higher incomes.Always be ready to help each other. If anyone is in difficulty, all help him or her.Come to know of any give of discipline in any centre, go there and help make discipline.Take part in all social activities collectively.IndicatorsGrameen Bank does ply evaluation of their work every year 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 fulfils the following criteriaThe 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 balance on bed instead of on the floor.Family members drink pure water of tube-wells, boiled water or water purified by using alum, arsenic-free, cleansing tablets or pitcher filters.All children in the family over six eld of age are all going to school or entire primary school.Minimum weekly loan instalment of the borrower is Tk. 200 or more.Family uses sanitary latrine.Family members have adequate clothing for every twenty-four hours use, firm clothing for winter, such as shawls, sweaters, blankets, etc, and mosquito-nets to protect themselves from mosquitoes.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.The borrower maintains an average annual balance of Tk. 5,000 in her savings accounts.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.Family can take care of the health. If any member of the family falls ill, family can chip in to take all necessary steps to seek adequate healthcare.PESTEL epitomeThere Wahid (1999) are many factors which are displaceing the work act upon and decision making of GB. Tax salmagundis, new laws, trade barriers, demographic change and government policy changes are all examples. To analyse these factors we can categorise them by using the PESTEL analysis. This classification distinguishes betweenPoliticalThe political determine of Bangladesh is not stable. The opposite part of government never helps their government the right way to the welfare of the country. As a result work strike is happening, which affect the working progress of GB.EconomicalBangladesh is a developing country. Most of the villagers are considering as poor. Lone interest rate, tax, unemployment, inflation has effect to any business. fundamentally unemployment and low national income are the main problem, that why GB arduous to motivate people to become self employed. Though Bangladesh is a poor economic country grameen ba nk faced this crisis to move forward their journey. heartyIn Bangladesh peoples average age is 60 years. A large frame of populations of the country are aged and have no activity in the economy. Grameen Bank also working with the working attitude to change it that people can find interest in different job activities. technologicalGrameen Phone is another sister organisation of Grameen bank in Bangladesh. Muhammed Yunus bring the technology to the poor village people and give them an opportunity of knell business by doing cheap rate mobile phone call all over the world.environmentalDifferent environmental issues like global worming have fill in Bangladesh. Grameen bank motivate people to concern about it and also the human health by providing the easy way to make sanitary latrines, pure drinking water which is arsenic free. goodIn their different development program Grameen Bank teach people about their legal rights and law, that people can get more familiarity about their and ot hers rights.SWOT Analysis of Grameen BankStrengthVillage people are the main resource.Trust between bank and customer.Loan with low interest for poor people.Modern technology.WeaknessLoan return is difficult sometime.Cant give big amount of loan to the poor people. old face the staff unhappiness.OpportunitiesGrameen bank a role model for the world. So this bank could expand all over the world.More job field can be created inside and outside of the country.ThreatsPolitical instability.Economic inflation.Environmental threats. e.g. cyclone.ConclusionGrameen Bank is not only for Bangladesh but also a role model for other organisations all over the world. The village poor life style already has been changed by the different activities of this bank. In Bangladesh it has been success in finance and human health sectors. Australia, USA and some African country are trying to follow the Grameen bank.