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Microcredit nobel prize

microcredit nobel prize

WHAT IS IT. The Grameen Bank hands out microcredit, or very small loans, to the poor of Bangladesh who do not qualify for loans from conventional banks. No collateral is needed and repayment is based on an honor system.

HOW DID IT START. In 1974, Yunus, then an economics professor recently returned from the United States, lent a total of $27 to 42 villagers who made bamboo furniture. The loans, which were all paid back, allowed them to cut out the middlemen and purchase their own raw materials. Emboldened by his experiment, Yunus won government approval in 1983 to open Grameen, Bengali for "rural."

WHO QUALIFIES. Anyone can qualify, but they must belong to a five-member group. Once the first two members begin to pay back their loans, the others can get theirs. While there is

no group responsibility for returning the loans, the bank believes it creates a sense of social responsibility, ensuring all members pay pack their loans.

DOES IT WORK. Grameen claims a 99 percent repayment rate. According to a recent Grameen survey, 58 percent of the families of Grameen borrowers have crossed the poverty line.

WHO OWNS THE BANK. The government of Bangladesh owns 6 percent of the bank while the borrowers own the other 94 percent.

WHAT ARE THE NUMBERS. The bank has handed out $ 5.72 billion since its inception to 6.61 million people and been repaid $ 5.07 billion. Women account for 97 percent of the loan takers. Grameen Bank has 2,226 branches, works in 71,371 villages and has a total staff of 18,795.

Sources: The Grameen Bank and The Associated Press

Category: Payday loans

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