Excellent read. This was a letter written by Yunus defending his bank on accusations of below board practices. Loved reading this.
A Counter-Culture
Grameen had to create a banking counter-culture of its own. Grameen's central focus is to help poor borrower move out of poverty, not making money. Making profit is always recognised as a necessary condition of success to show that we are covering costs. Volume of profit is not important in Grameen in money-making sense, but important as an indicator of efficiency. We would like to make more profit so that we can reduce interest rate — and pass on the benefits to the borrowers. In Grameen system when a borrower cannot pay back we try to activate our system to help her overcome her problems, rather than go in a punishing mode.
We consider credit as a human right. We built our system on the faith that the poor always pay back. Some times they take longer than the originally scheduled time period, sometimes natural disasters like flood, drought, cyclone, etc and political unrest, rules and procedures of the bank, make it difficult or impossible to pay back; but given the opportunity they pay back. Non-repayment is not a problem created by the borrowers, it is created by factors external to them.
We have always carefully avoided the practices of the conventional banks to make sure we do not fall into the same logical loop which kept the poor out from financial institutions. Grameen had to create new systems to balance financial and human considerations. For example, it presents loan information separately for women and men, lists meticulously every single business of the borrowers in its annual report, and recognizes that a house is not just a house, but a workplace for the poor women, something that is categorised as a 'consumption' loan by the conventional banks is actually a 'production' loan for the poor. Grameen is a system based on human-relationships, not on threats of penalty imposed by legal system or any other agency. Grameen required new style of business, new banking culture of its own.
Sometimes people who are used to conventional banking become suspicious of Grameen because it is different. It is a conflict of two different banking cultures. Just because they do not understand us, they think we are wrong. When they spend some time with us with patience they start enjoying the exciting world of Grameen banking.
via Grameen Bank – Response to Wall Street Journal article.
