Making Microfinance Work for the Poor: The Grameen Bank of Bangladesh - Assignment Example

Grameen Banks grew at an astounding rate with 2400 branches across 78000 villages across the country. Grameen Bank is a micro-credit institution that is a self-financing body. It gives out loans to the self-help groups through members’ deposits. It helps to provide the poor with the necessary credentials to start income-generating activity and thereby raise their living standard. The members have to comply with the sixteen components of ‘decisions’ which contribute to the improved socio-economic status of the community.

The charter includes hygiene, restructuring of a dilapidated house, no dowry, education for children, etc. The genuine defaulters are given fresh leases through a re-structured loan repayment schedule and if required, more finance to improve business prospects. The timely payment serves as an incentive for the higher loan amount. The example of Bangladesh microcredit institutions has now been taken up in other underdeveloped countries for poverty alleviation. The concept of phone lady is highly innovative and connects the village with external linkages while providing the person with the cell phone, a profitable means of income generation. The proactive participation of nongovernment agencies is also encouraged for improving the living standard of the poorest of the poor.