March - April 2002   
  Vol. 2 No.2   
Know Your Founders Oddities, Eccentricities, Etc. Of Enduring Interest Corporate Commentary Back to Main Page Editorial


Have you ever seen a bank with no telephones, no typewriters, no carpets,
no loan agreements, and, mostly, run by women? Well, difficult as it is to believe, there is one: The Grameen Bank. Grameen is not noticeably “bank-like? But it does lend money, and it does get repaid with interest. Most of its borrowers are visited by the Bank staff in villages and, sorry to state this, borrowers who are
not destitute are excluded, and so, usually, are men!
In this era of Women’s Empowerment, Rashna Ardesher pays tribute to a great
institution that has given new life to poor women throughout the world.


Muhammad Yunus(right) with wife Afrozi and daughter Deena
Muhammad Yunus(right) with wife Afrozi and daughter Deena on the 
occasion of recieving the World Food Prrize at Des Moines, lowa, 
in 1994 from former U.S.President Jimmy Carter


All my life I was told I was no good. I was told I brought only misery to my parents because I was a woman and my family could not pay for my dowry. Many times I heard my mother say she should have killed me at birth. I do not feel I was worthy of a loan, or that I could ever repay it,?says Hajeera Begum, one of the millions of Bangladeshi women who was born and brought up in utter poverty.

Hajeera Begum was born in 1959, in a village not far from Dhaka. Her father, a farm labourer, could not feed his six daughters, and he married her off to a blind man simply because he demanded no dowry. Hajeera and her husband survived on what little she earned cleaning houses, but she was unable to feed her three children regularly. She had heard of Grameen Bank, how much it had done to help the poor, particularly women. She asked her husband for permission to join Grameen. Hajeera’s husband had heard rumours of Grameen being a Christian-front organisation bent on destroying Islam. He threatened to divorce Hajeera if she joined. Hajeera was in a fix.

One day, without telling anyone, Hajeera quietly travelled to a nearby village and attended some introductory sessions where Grameen workers explained the principles of the Bank. The first time members of the group she had joined took the oral exam on the rules of Grameen, Hajeera was so nervous she couldn’t answer the questions! She would have given up, but the other members of her group encouraged her, and eventually she passed the exam. At last the day came when she mustered the strength to ask for a loan of 2,000 Taka. When she received it, tears rolled down her cheeks. Her group persuaded her to use the loan to buy a calf for fattening and a share of the rice harvest to process and sell. When Hajeera’s father brought the calf to the house, her husband was so excited that he forgot his divorce threat!

Within a year Hajeera had paid off her first loan, taken a second loan and used it to rent a piece of land, planted it with 70 banana seedlings, and used the balance to buy a second calf. Today, with a mortgage, she is proud owner of a rice field, goats, ducks and chickens. “We now enjoy three meals a day,?says Hajeera. “We can even afford some meat once a week. I intend to send all three of my children to school and college, even university.?br> This is not the only success story of Grameen Bank. There are millions of women who were below the poverty line and were able to come up in life. Thanks to the extraordinary vision and efforts of one man ?Muhammad Yunus.


Muhammad Yunus, the man whose vision has made all this possible, is a soft-spoken, bespectacled ex-professor, who lives and dresses simply. Although in public Yunus is unassuming and shy, in private he is funny, charming and approachable. His best work is done in a two-bedroom apartment at the Bank’s headquarters in Bangladesh’s capital, Dhaka, where he lives with his wife and 13-year-old daughter, Deena. He does not own a car, and, although persuaded to get a credit card for hotel bookings, has never actually charged anything to it.

Muhammad Yunus
"The Poor were my teachers"

Muhammad Yunus was born in 1940 in Chittagong, the business centre of what was then Eastern Bengal. His father, a goldsmith, did well for himself and urged his sons to seek higher education. Yunus was very fond of his mother, Sofia Khatun, who had 14 children (of whom five died in childbirth), who influenced him a great measure. “Mother always helped any poor who knocked on our door,?he explains. “Thanks to her I always knew I would have a mission in life, though I didn’t know what form it would take.?Unfortunately, a congenital illness reduced her mental abilities in later life.

In 1965, Yunus was awarded a Fulbright scholarship and went to do a Ph.D. at Vanderbilt University in Nashville, Tennessee, where he stayed for seven years. Returning in 1972 to become the head of the Economics Department in Chittagong University, he found the situation in newly independent Bangladesh worsening day by day. The horrifying man-made famine of 1974, which by some estimates killed 1.5 million Bangladeshis, changed his life forever. 

Yunus reminisces: “While people were dying of hunger on the streets, I was teaching elegant theories of economics. I started hating myself for the arrogance of pretending I had answers. We university professors were all so intelligent, but we knew absolutely nothing about the poverty surrounding us. Why did people who worked 12 hours a day, seven days a week, not have enough food to eat? I decided that the poor themselves would be my teachers. I began to study them and question them on their lives.?br>
And thus Yunus’s quest began. He spent most of 1975 and 1976 leading his students on field trips to the nearby village of Jobra. It was easy to see the problem, but tough to come up with a practical solution. Yunus introduced improved rice-farming techniques and established a farmers?cooperative to irrigate during the dry season. Soon he realised that targeting farmers was not helping the truly destitute underclass ?the landless, assetless, rural poor.

Then he made his big discovery. One day, interviewing a woman who made bamboo stools, he learnt that because she had no capital of her own, she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, she kept only a 1p profit margin. With the help of his graduate students, he discovered 42 other villagers in the same predicament. 

Yunus remarks: “Their poverty was not a personal problem due to laziness or lack of intelligence, but a structural one: lack of capital. Besides, some money-lenders set interest rates as high as 10 per cent a month, some 10 per cent a week! The existing system made it certain that however hard the poor worked, they would never raise themselves above subsistence level. What was needed was to link their work to capital to allow them to amass an economic cushion and earn a ready income.?br>
And so the idea of credit for the landless was born. Yunus’s first approach was to reach into his pocket and lend each of the 42 women approximately 1,900 Taka. He set no interest rate and no repayment date: “I didn’t think of myself as a banker, but as the liberator of 42 families.?br>
Yunus soon realised that this was not quite practical. He tried to rope in banks in institutionalising his gesture by lending to the poorest, with no collateral. Bankers laughed at him, insisting that the poor are not “creditworthy? Yunus retorted: “How do you know they are not creditworthy, if you’ve never tried? Perhaps it is the banks that are not people-worthy!?/b>

Undeterred, he started an experimental project in Jobra, the village he and his students had been studying, and staffed it with his graduate students. Between 1976 and 1979, his microloans successfully changed the lives of around 500 borrowers. But it was hard work combining the project with his full-time job as a Professor, and he continued to lobby the state-owned Central Bank and the commercial banks to adopt his experiment.

Yunus’s hard lobbying bore fruit when, in 1979, he managed to win over Central Bank, which arranged for the Grameen project, as it was then called, to be run from the branches of seven state-run banks ?initially in one province, and, by 1981, in five. Each expansion confirmed the effectiveness of micro-credit: by 1983, Grameen had 59,000 clients in 86 branches. Eventually, Yunus decided to quit academia and go it alone. Grameen was incorporated as a separate legal institution in 1983, and since then it has moved fast.

Meanwhile, critics of Grameen abound. Yunus denies all allegations of being in an undeclared war with Islam. According to him, Grameen claims to be more Islamic than ordinary banks because it builds up self-employment, instead of forcing women to seek factory jobs away from their families. Furthermore, it does not violate Islam’s ban on charging interest because its borrowers own the bank, so that in essence they are paying interest to themselves. When opponents try to prevent Grameen from entering a village, his staff have orders to remain outside, avoiding confrontation, and wait for the women to come to them.

Another frequent criticism is that Grameen charges too much interest initially i.e. 16 per cent and, since the past few years, 20 per cent. Yunus’s answer is simple: if anyone can run a bank for the poor and charge less, please go ahead and do so. He has promised to reduce interest rates if and when he can. This is significant because in 1995, for the first time in its existence, Grameen finally made enough profit to operate on a fully commercial basis without the need for any more preferential loans or grants from charitable trusts such as the Ford Foundation. Yunus also intends to pay cash dividends to his borrowers.

Even those who generally approve of him sometimes ask why Yunus’s programme needs to be profit-making at all. According to Yunus, any institution for the poor that is not self-sufficient is bound to be hurt by reliance on donors: “It is like telling a patient that he can breathe by himself for 23 hours a day, and the balance of the time the government will provide the oxygen. That means you are at their mercy. Any time a politician changes his mind, or a bureaucrat forgets, you die.?br>
It is Yunus’s very pragmatism, and his refusal to be cornered by ideology, which, his supporters say, may prevent him from getting the Nobel Prize for economics (which usually rewards theoretical work). But Yunus is far too ambitious for Grameen to worry about a mere prize. He has set his sights far, far higher on totally eradicating poverty from the world: “People say I am crazy, but no one can achieve anything without a dream. When you build a house, you can’t just assemble a bunch of bricks and mortar, you must first have the idea that it can be done. If one is going to make headway against poverty, one cannot do business as usual. One must be revolutionary and think the unthinkable.?br>
(Courtesy: ‘The Good Banker?by the late Alan Jolis, The Independent on Sunday [London], May 5, 1996.)

Yunus, a 59-year-old banker from Bangladesh, is that rare person who continues to dream of a world free from poverty. “One day,?he says confidently, “our grandchildren will go to museums to see what poverty was like.?He believes that he can fulfil his dream, all by the use of one simple but completely revolutionary idea in the field of development and aid ?micro-credit. Rather than donating billions to help large infrastructure ventures, Yunus gives loans of as little as 1,900 Taka (approx.) to the destitute. A typical borrower from his bank would be a Bangladeshi woman (94 per cent of the bank’s borrowers are women) who has never touched money before; throughout her life, her father and husband nagged her as useless and a burden to the family; finally, widowed or divorced, she was forced to beg to be able to feed her children.

Lending to such a woman was much more beneficial to the entire family, as it was discovered that a woman is more careful about her debts compared to a man. Yunus lends her money ?and doesn’t regret it. Kept on the straight and narrow by a mixture of peer pressure and peer support, she uses the loan to buy an asset, such as cotton to weave, or raw materials for bangles or a cow she can milk, anything that can immediately start paying income. She repays the loan in tiny weekly instalments until she becomes self-sufficient. Then, if she wants, she can take out a new, bigger loan.
Either way, she is no longer poor.

The Grameen Bank (“rural bank?in Bengali) is today the largest rural bank in Bangladesh. It has over 2.3 million borrowers and with 1,128 branches, provides services in 38,951 villages, covering more than half the total villages in the country. Assuming that each borrower has six dependents, it is possible that 10 per cent of the population of Bangladesh (over 13 million) now live comfortably because of Grameen loans.

Grameen Bank is one of the rare banks in the world, which seeks out the most deprived in Bangladeshi society ?beggars,illiterates, widows. It provides no training, no education, no infrastructure for its clients. Yet it claims a loan repayment rate of 99 per cent. And, since 92 per cent of its shares are owned by the borrowers themselves (the balance is owned by the government), it truly is a bank for, and of, the poor. Each borrower is issued with one non-tradeable share and has to start a saving scheme as a form of insurance against disaster.

All that an assetless and landless person must do in order to be eligible for a loan is to prove that he/she understands how Grameen works. This is the very ‘exam?Hajeera Begum passed. Over the years, representatives of the borrower-shareholders along with bank officials have evolved certain principles and commitments which they undertake to help improve their lives and their ability to meet their debts. The slogans, chanted enthusiastically by micro-borrowers, pledge to abide by the ?6 decisions,?a set of personal commitments such as “We pledge to send our children to school,?and “We pledge not to demand or pay dowry for our daughter’s marriage.?The most important of these commitments is to join up with four fellow borrowers, none of whom can be a family member, to form a “group? The group dynamic provides a borrower with the self-discipline and courage needed to enter into these unchartered waters (the way it provided to Hajeera Begum). Peer pressure and peer support effectively replace collateral: if one borrower defaults, the whole group is penalised. The system also saves the Bank the costly business of screening and monitoring borrowers.

Transactions are kept simple. Loans are always for a year and interest is fixed at 20 per cent simple interest, not compounded. Repayment starts in the second week of the loan, which, though it may sound punitive, releases the borrower from the need to produce a lump sum at the end of the year ?and, typically, builds her confidence. All loan disbursements and repayments are made publicly in “centre meetings?i.e. in front of eight or 10 groups, on a weekly basis. Thus Grameen prides itself on being as transparent and open as possible in a country steeped in corruption at all levels of administration.

Anwara begum, a Grameen 'telephone lady.'
Anwara begum, a Grameen 'telephone lady.'

You may well ask, why does micro-credit work? What theoretical framework does it rely on? Yunus simply states: “Poverty covers people in a thick crust and makes the poor appear stupid and without initiative. Yet if you give them credit, they will slowly come back to life. Even those who seemingly have no conceptual thought, no ability to think of yesterday or tomorrow, are in fact quite intelligent and expert at the art of survival. Credit is the key that unlocks their humanity.?br>
Yunus’s method is gathering supporters. Grameen has inspired people and institutions throughout the world with its success in poverty alleviation. More than 4,000 people from some 100 countries (including U.S.A.) have gone through Grameen’s training/exposure programmes over the last 10 years. Some of those visitors have returned to their countries and replicated the Grameen Bank financial system to help the poor people in their own country to overcome poverty. A total of 223 Grameen replication programmes in 18 countries have been established during the last decade. The methods are adopted to suit local conditions, but the solution of creating a counter-culture that empowers individuals with their own capital is the same.

But Yunus does not pretend to have a solution for each and every problem. What he does say is that by creating wealth in the countryside, Grameen can reduce the pressure on those moving to the urban slums.

Independent studies by World Bank and others indicate that within five years, about half Grameen’s 2 million borrowers manage to pull themselves up over the poverty line, while a further quarter hover near the line. In addition, studies of the Grameen method suggest that after a wife joins the bank, her husband is likely to show her more tenderness and respect. Divorce rates drop among Grameen borrowers, as do birth rates.

Says Hajeera Begum: “You ask what I think of Grameen? Grameen is like my mother. She has given me new life.?/font>

Pragati Kendra
for Godrej workers?wives
pragati kendra
The 'Mahila Manch' ready for Bhoomi Pujan on the occasion of laying the foundation for an over-bridge across the Eastern Express Highway

One of the unsung landmarks of Pirojshanagar is a quiet building standing at the entrance of the Udyachal High School, known as the Pragati Kendra. It dates back to 1955 when a real need was felt to engage the minds of wives of the many Godrej employees who lived and worked near the factory.

Initially, the Kendra started with activities related to adult education, nutrition, recreational activities, parcelling out auxiliary work like twine bundling, stitching of boiler suits, hand gloves, aprons and wire loom work for forklifts.

During these early days many activities were begun here and it quickly became the single focal point for all the Kendra activities. Today, with the changing times, the Kendra looks towards creating awareness in areas such as Women’s empowerment, Social awareness, Environmental awareness, Health and Entertainment.

The ‘Mahila Manch?was formed on 8th March, 2000, which coincided with International Women’s Day. The ‘Mahila Manch?meets regularly and is, in fact, a forum for Godrej Grahini’s self-expression, which meets at the Hill Side, the Station Side and the Creek Side.

A landmark achievement was the laying of the foundation for an over-bridge across the Eastern Express highway. This issue had been pending for decades, causing great inconvenience to residents living at the Creek Side. It was only due to the initiative, perseverance and collective efforts of the Mahila Manch at the Creek Side, that the bridge will now finally be constructed.

Exquisite batik work done by women at the Pragati Kendra is an activity that has received many accolades, when exhibitions are held in the city of Mumbai.

A sense of social awareness has been created, which can be seen in the way employees and their families give so willingly of their time and efforts to causes and people less fortunate than themselves. This is a very heartening trend to see.The Pragati Kendra is also involved in issues related to environment such as coordinating activities for ISO 14001, and bringing environmental awareness among the colony residents through lectures, Vanmahotsav, training, etc.
A Blood Donation Drive to commemorate the death anniversary of the late 
Shri N. P. Godrej is organised every year.

Free eye camps and ENT check ups are organised for employees and their families.

Indoor games and cultural programmes are also organised by Pragati Kendra. A good collection of library books is also being built.

Many festivals and national events are celebrated with the help of women volunteers, and a large number of employees come and participate in these festivities.

Change has been an essential part of Pragati Kendra’s philosophy and has been a tradition inculcated by the late Smt. Soonuben Godrej who gave great importance to need assessment as a decisive factor for determining the Pragati Kendra’s course of action.

Needs and aspirations keep changing, and Pragati Kendra has to keep abreast of this, continually striving for a better future for the Godrej parivar.