Man started bank that provides loans to the poor

“Not credit-worthy.”

That is what the local bankers told Muhammad Yunus when he met with them in Bangladesh over 30 years ago to ask them why they would not loan to the poor in the village of Jobra.

At the time, he was a young economics professor, recently returned to his home country after earning a doctorate and teaching in the United States.

He sought the help of traditional banks because he wanted to help the village’s poor find an alternative to local loan sharks, street lenders who not only charged high interest rates, but also attached stipulations to the loans such as telling merchants what prices to charge for their goods or demanding that he or she sell all the product to the loan shark.

After learning that the poor could not turn to the banks, Yunus compiled a list of all the people who were working with the loan sharks.

The list totalled 42 people, and he lent them a total of $27. A few years later, he would establish Grameen Bank, a not-for-profit microfinance institution that now provides loans to the poor throughout Bangladesh and countries around the world.

“Should banks tell people they’re not credit-worthy?” he asked an audience at the University of Illinois Foellinger Auditorium on Monday evening. Or should it be the other way around, “that banks are not people-worthy?” he said.

Poverty, he told the packed crowd, “is not a creation of a person … poverty is an artificial imposition … created by the system that we built.”

“Unless we change those institutions and policies and concepts it will be extremely difficult to lift that burden of poverty,” he said.

Microlending is about lending to the poor, not asking for collateral, not asking them to sign a legal instrument.

The majority of Grameen’s borrowers are women, single mothers, and investing in them means investing in families and in the education of their children, he said.

“I’m not talking about giving money away. I’m talking about investing in others,” he said.
It’s a “social business.”

He asked audience members to “take off their profit-maximizing glasses and for a few seconds … put on social business glasses.”

The world seen through those glasses “has exciting things waiting for us,” he said. “There’s nothing called impossible in the world.”

Part of the reason for his campus visit, he told The News-Gazettte, in addition to talking about microfinance and social entrepreneurship, is to  give students the message “they can change the world. One single individual is very important.”

For his work in micro credit or microfinancing, Mr. Yunus received the Nobel Peace Prize in 2006. President Barack Obama also awarded him with  the Presidential Medal of Freedom.

And on Monday evening, UI President Stanley Ikenberry presented him with the university’s Presidential Award and Medallion.

Ikenberry said it was his privilege to give him the award “not just to  recognize your remarkable achievements but to also give voice to the  values and hope that resides in this university.”
 

By Christine Des Garennes/ The News-Gazette