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Business Encyclopedia Entry 1783750030

** The **Grameen Bank** is a pioneering microfinance institution that revolutionized the way small businesses and individuals access financial services, particularly in developing countries. ## Overview The Grameen Bank is a Bangladeshi bank that was founded in 1983 by **Muhammad Yunus** and **Alamgir Hossain**. The bank's mission is to provide financial services to the poor, particularly women, and help them become self-sufficient. Grameen Bank's innovative approach to microfinance has made it a model for other institutions around the world. The bank's name, "Grameen," means "village" in Bengali, reflecting its focus on rural development. Grameen Bank's approach to microfinance is based on the concept of **group lending**, where a group of borrowers, typically 5-10 individuals, come together to form a solidarity group. This approach helps to reduce the risk of lending to individuals who may not have a credit history or collateral. The bank provides small loans, known as **microloans**, to these groups, which are typically used for business purposes, such as purchasing livestock or starting a small business. ## History/Background The idea for Grameen Bank was born out of Muhammad Yunus's experience as a professor of economics at Chittagong University in Bangladesh. In the 1970s, Yunus conducted research on poverty and economic development in rural Bangladesh, where he observed that the poor were unable to access traditional banking services due to lack of collateral and credit history. Yunus believed that the poor had the potential to become entrepreneurs and create jobs, but they needed access to capital to do so. In 1976, Yunus began experimenting with microfinance by providing small loans to a group of 42 women in a village near Chittagong. The loans were successful, and Yunus expanded his program to other villages. In 1983, the Bangladeshi government granted a charter to establish Grameen Bank, which was officially launched on October 3, 1983. ## Key Information Grameen Bank has several key features that have contributed to its success: * **Microloans**: Grameen Bank provides small loans, typically ranging from $50 to $500, to individuals and groups. * **Group lending**: The bank's group lending approach helps to reduce the risk of lending to individuals who may not have a credit history or collateral. * **Solidarity groups**: Borrowers form solidarity groups, which provide mutual support and encouragement. * **Interest rates**: Grameen Bank charges interest rates that are lower than those of traditional banks, typically ranging from 20% to 30% per annum. * **Repayment**: Borrowers are required to repay their loans in installments, typically over a period of 6-12 months. ## Significance Grameen Bank's impact has been significant, both in Bangladesh and globally. The bank has: * **Empowered women**: Grameen Bank's focus on women has helped to empower them economically and socially. * **Reduced poverty**: The bank's microloans have helped to reduce poverty by providing access to capital for small businesses and entrepreneurs. * **Created jobs**: Grameen Bank's loans have helped to create jobs and stimulate economic growth in rural areas. * **Inspired innovation**: The bank's approach to microfinance has inspired innovation in the financial sector, with many other institutions adopting similar models. INFOBOX: - **Name:** Grameen Bank - **Type:** Microfinance institution - **Date:** Founded in 1983 - **Location:** Bangladesh - **Known For:** Pioneering microfinance and empowering women economically and socially TAGS: Microfinance, Grameen Bank, Muhammad Yunus, Bangladesh, Poverty reduction, Women's empowerment, Economic development, Financial inclusion, Social entrepreneurship.