H|6R0 F|NAN6E

ThE NEw HANTRA 0F RURAL F|NAN6E T0 RE0U6E P0VERTY

Tre rura| l|rarce po||cy pursued |r rosl deve|op|rg courlr|es oeg|rr|rg lror 1950s Was oased
or prov|d|rg suos|d|zed cred|l lrrougr slale corlro||ed or d|recled |rsl|lul|ors lo rura| segrerls
ol popu|al|or. Tre |ey proo|er areas v|sua||zed |r rura| l|rarc|a| rar|els |rc|udes- |ac| ol
cred|l |r rura| areas, aoserce ol roderr lecrro|ogy |r agr|cu|lure, |oW sav|rgs capac|ly |r rura| areas
ard preva|erce ol usur|ous rorey|erders. Erergerce ol r|cro cred|l |r |ale 19Z0s ard ear|y 1980s |r
lre oac|drop ol groW|rg Wor|d allerl|or or del|c|erc|es ol ear||er approacr |r rura| l|rarce exp|a|rs
rucr ol |ls dor|rarl lreorel|ca| urderp|rr|rgs.

V|crol|rarce relers lo prov|d|rg |oars ard l|rarce lo poor peop|e lor se|l-erp|oyrerl. 0erera||y, sra||
arourls are d|soursed as |oars, ard lre l|relrare lor repayrerl ol |oars |s |orger corpared lo
correrc|a| oar|s. Togelrer W|lr prov|d|rg l|rarc|a| serv|ces, rary r|crol|rarce |rsl|lul|ors Wor|
lor soc|a| deve|oprerl |r lre areas |r Wr|cr lrey operale.

V|crol|rarce |rsl|lul|ors gerera||y rave lre lo||oW|rg craracler|sl|cs:
O !rov|d|rg sra|| |oars lor lre Wor||rg cap|la| requ|rererls ol lre rura| poor.
O V|r|ra| appra|sa| ol oorroWers ard |rveslrerls as corpared lo correrc|a| oar|s.
O o co||alera| derarded; roWever, lrese |rsl|lul|ors |rpose corpu|sory sav|rgs ard group
guararlees.
8ased or lre |oar repayrerl r|slory ol lre reroers, r|crol|rarce |rsl|lul|ors exlerd |arger |oars
lo lre reroers repealed|y.Trougr r|crol|rarce |rsl|lul|ors prov|de lre recessary rorelary supporl ard
lry lo |rcrease soc|a| aWareress arorg lre|r reroers, lre|r acl|v|l|es do rol |rc|ude prov|d|rg lra|r|rg lor
oas|c s||||s requ|red lor do|rg ous|ress. Trey do rol exlerd ary rar|el|rg lac|||l|es ror urderla|e acl|v|l|es
lo |rprove lre ||leracy rale ard rea|lr cord|l|ors ol reroers.

Crameen ank . A Ro|e Hode| |n H|crof|nance
Yel arolrer rorsoor seasor Was approacr|rg; oul Josrura 8egur (8egur) ur|||e rer re|groors Was
rol Worr|ed aooul rer rouse gell|rg daraged dur|rg lre rorsoor. ler rouse roW rad a l|r rool, rud
Wa||s ard Wooder W|rdoWs, a |uxury |r rura| 8arg|adesr. Ear||er, 8egur's rouse rad a slraW rool ard
oarooo Wa||s, Wr|cr used lo gel daraged |r lre rorsoor seasor, lorc|rg lre Wro|e lar||y lo ||ve |r lre
||lcrer. 3re gol rer rul repa|red W|lr a |oar lror lre 8arg|adesr 0rareer 8ar| (0rareer 8ar|).
8egur Wasr'l lre or|y ore; lrere Were lrousards ol peop|e |r rura| 8arg|adesr Wro rad |rproved
lre|r ||v|rg cord|l|ors W|lr lre re|p ol lre r|crol|rarce progrars ol 0rareer 8ar|, a p|oreer |r
r|crol|rarce. 0rareer 8ar| re|ped lrousards ol poor 8arg|adesr| Worer lo |rprove lre|r ||ves oy
exlerd|rg |oars lo lrer lo slarl lre|r oWr erlerpr|ses. 8y 2003, |l Was reporled lral oelWeer 33-18
ol 0rareer 8ar| oorroWers rad roved aoove lre poverly ||re. 8y 2003, W|lr 1,1Z0 orarcres across
8arg|adesr, 0rareer 8ar| Was seer as a ro|e rode| lor r|crol|rarce a|| over lre Wor|d.
Tre 0rareer 8ar| rode| Was rep||caled across lre Wor|d . rol or|y |r deve|op|rg courlr|es |||e lrd|a,
!a||slar, ard v|elrar, oul ever |r deve|oped courlr|es sucr as Auslra||a ard lre u3A, Wrere s|r||ar
screres Were sel up lo |rprove lre ||ves ol lre uroar poor.

loWever, lre 0rareer 8ar| a|so allracled cr|l|c|sr lror lre red|a ard ecoror|sls a|| over Wor|d.
Ara|ysls po|rled oul lral lrere Was ro proper ror|lor|rg ol roW lre |oars Were ul|||zed; |l Was reporled
lral lre |oars ava||ed ol oy Worer Were used |arge|y lor corsurpl|or ralrer lrar lor |rveslrerl
purposes. Ara|ysls a|so po|rled oul lral lre accourl|rg relrods used oy 0rareer 8ar| Were rol |r
accordarce W|lr |rduslry slardards, ard lral lre oar| d|d rol prov|de lu|| dela||s aooul |ls l|rarc|a|
pos|l|or ard |oar repayrerls pos|l|or.
ackground Note
lr lre r|d-19Z0s, !rolessor Vurarrad Yurus (Yurus), lrer lead ol lre Rura| Ecoror|cs !rograr
al lre ur|vers|ly ol Cr|llagorg, ooserved lral oar|s d|d rol exlerd lre|r cred|l screres lo lre rura|
poor as lrey Were rol cors|dered cred|lWorlry. lr lr|s s|lual|or, lre rura| poor Were lorced lo approacr
rorey|erders Wro crarged exoro|larl rales ol |rleresl. lr 19Z, Yurus |aurcred Tre 0rareer 8ar|
!rojecl, or ar exper|rerla| oas|s lo sludy lre lrareWor| ol oar||rg serv|ces lor lre rura| poor. Tre
oojecl|ves ol lre 0rareer 8ar| !rojecl Were:
O !rov|d|rg oar||rg serv|ces lo lre rura| poor
O E||r|ral|rg exp|o|lal|or ol lre rura| poor oy rorey|erders
O ac|||lal|rg se|l-erp|oyrerl projecls lor urerp|oyed rura| peop|e
O Va||rg Worer se|l-re||arl oy prov|d|rg lrer opporlur|l|es lrrougr 0rareer 8ar|
O To reverse lre v|c|ous cyc|e ol . |oW |rcore, |oW sav|rg & |oW |rveslrerl, |rlo a reW cyc|e ol rore
cred|l, rore |rveslrerl, rore |rcore.

To slarl W|lr, Yurus loo| |oars lror correrc|a| oar|s ard exlerded lre rorey lo 12 reedy Worer |r
Joora v|||age |r Cr|llagorg d|slr|cl. Tre projecl spread lo surrourd|rg v|||ages oelWeer 19Z ard 19Z9.
loWever, oar|ers Were s|epl|ca| aooul lre projecl ard argued lral |l Was |r|l|a||y successlu| oecause
Yurus |rp|ererled |l arourd lre ur|vers|ly carpus Wrere re rad a good repulal|or. lr order lo
corv|rce oar|ers aooul lre projecl's |org-lerr v|ao|||ly, Yurus loo| lWo years |eave lror lre ur|vers|ly
ard slarled Wor||rg |r lre Targa|| d|slr|cl. Tre 8arg|adesr Cerlra| 8ar| prov|ded l|rarc|a| supporl
lor lre Targa|| projecl ard Yurus Was appo|rled as lre !rojecl 0|reclor.

Tre projecl Was slarled |r 19Z9. w|lr lre successlu| |rp|ererlal|or ol lre 0rareer 8ar| projecl |r
lre Targa|| d|slr|cl, |l Was exlerded lo olrer d|slr|cls |r lre courlry. 8y 1980, 0rareer 8ar| rad
d|soursed S1.10 r||||or as |oars lo lre rura| poor. lr 1983, 0rareer 8ar| Was g|ver lre slalus ol ar
|rdeperderl oar| oy a spec|a| ord|rarce ol lre 8arg|adesr 0overrrerl. lr|l|a||y, goverrrerl
corlr|ouled arourd 0 ol lre oar|'s cap|la| ard oar| reroers re|d lre rera|r|rg 10. loWever, oy
2003, goverrrerl re|d or|y Z ard reroers re|d a 93 sla|e |r lre oar|.

lr|l|a||y, 0rareer 8ar| ra|sed lurds lrrougr oords |ssued lo lre correrc|a| oar|s ard |l a|so oorroWed
lror Cerlra| 8ar| al suos|d|zed |rleresl rales. 0rareer 8ar| a|so gol lurds lror |rlerral|ora|
agerc|es |||e lre wor|d 8ar| ard lre ord ourdal|or. ore|gr goverrrerls a|so prov|ded lurds lor
lre 0rareer 8ar| al suos|d|zed rales.

lr lre |ale 1980s, 0rareer 8ar| d|vers|l|ed |rlo a ruroer ol d|llererl l|e|ds. ll slarled |eas|rg urul|||zed
ard urderul|||zed l|sr|rg pords ard |rr|gal|or purps. Al lre sare l|re, |l a|so slarled lra|r|rg ard
exlerd|rg supporl lo peop|e lror olrer deve|op|rg courlr|es lo rep||cale lre 0rareer 8ar| rode| |r
lre|r courlr|es.

wrer |l Was successlu| |r |eas|rg l|sr|rg pords lo lre poor, 0rareer 8ar| slarled expard|rg |ls
roroar||rg acl|v|l|es. Tre 0rareer |srer|es ourdal|or ard lre 0rareer Kr|sr| ourdal|or Were
lorred lo oversee lre |eas|rg ol l|srer|es ard |rr|gal|or purps. lr 1989, lre 0rareer Trusl Was
lorred lo prov|de lra|r|rg ard supporl lo peop|e lror olrer courlr|es lo slarl r|cro l|rarce progrars.
8y lre r|d-1990s, 0rareer 8ar| rad exparded |ls acl|v|l|es lo areas sucr as verlure cap|la|, lexl||e
|rduslry ard lrlerrel 3erv|ce !rov|der (l3!). A|| lre ror-oar||rg verlures ol 0rareer oar| Were
grouped urder lre 0rareer ar||y.

8y 2002, 0rareer 8ar| rad 2.1 r||||or oorroWers (95 ol lrer Were Worer) ard |ls acl|v|l|es Were
spread across 11,000 v|||ages W|lr over 1,100 orarcres. 8y Augusl 2002, |l rad d|soursed curu|al|ve
|oars ol S3Z08.22 r||||ors ard lre |oar repayrerl rale Was reporled lo oe arourd 95.

The 8uccess 8tory of Crameen ank
Tre 0rareer 8ar| rode| Was ore ol lre rosl W|de|y researcred r|crol|rarce rode|s a|| over Wor|d.
Tre 8ar| rad lour l|ers, lre |oWesl |eve| oe|rg orarcr oll|ce ard lre r|gresl |eve| oe|rg lre read oll|ce.
Tre orarcr oll|ce superv|sed a|| lre grourd acl|v|l|es ol lre oar| sucr as orgar|z|rg largel groups,
superv|s|rg lre cred|l process ard sarcl|or|rg |oars lo reroers. or every 15-22 v|||ages, a orarcr
Was sel up W|lr a rarager ard slall. Ar area oll|ce superv|sed arourd 10-15 orarcr oll|ces. !rograr
oll|cers ass|sled lre area oll|ce lo superv|se lre uWere urder lre purv|eW ol a Zora| 0ll|ce. Eacr zora|
oll|ce superv|sed arourd 10-13 area oll|ces ard a|| zora| oll|ces reporled lo lre read oll|ce s|lualed |r
0ra|a.

0rareer 8ar| operaled or lre pr|rc|p|es ol rulua| lrusl, superv|s|or, accourlao|||ly ard reroer
parl|c|pal|or. ur|||e correrc|a| oar|s, Wr|cr grarled cred|l or lre oas|s ol co||alera| secur|ly, 0rareer
8ar| d|d rol derard ary secur|ly lor exlerd|rg cred|l. Tre |rleresl crarged oy 0rareer 8ar| Was
r|grer lrar lral crarged oy correrc|a| oar|s, oul |oWer lrar lre |rleresl crarged oy rorey|erders.
Tre d|llererce oelWeer lre |rleresl earred oy lre 0rareer 8ar| ard |rleresls pa|d oy |l or lre |oars
la|er lror correrc|a| oar|s Was used lo cover lre operal|ora| cosls ol lre 8ar|.

wrer 0rareer 8ar| slarled, rary le|l lral |l Wou|d soor la||; oul or lre corlrary lre oar| exparded
|ls operal|ors very rap|d|y. ror 15,000 oorroWers |r 1980, lre reroersr|p |rcreased lo 100,000 |r
1981; oy 1991 |l rad 910,812 reroers, ard oy 2002, lre ruroer |rcreased lo 2.3 r||||or. ror a
l|gure ol u3 S198 |r 19Z, lre oar|'s lola| d|soursererls |rcreased lo u3 S1Z0.39 r||||or |r Augusl
2002.
Tre |oar repayrerl rale Was reporled lo oe 95. Tre r|gr repayrerl rale Was prooao|y a resu|l ol
peer group pressure, ard lre 0rareer 8ar|'s ru|e . lral lor ava|||rg ol lresr |oars, ear||er |oars rad
lo oe repa|d. Arolrer |rporlarl laclor lral |ed lo r|gr repayrerls ol |oars Was soc|a| pressure. Cred|lors.
|roc||rg al lre door lor |oar repayrerls Was cors|dered d|sgracelu| arorg 8arg|adesr|s. ll |s oe||eved
lral lre aoove laclors |ed lo lre success ol 0rareer 8ar|, Wr|cr a|so succeeded |r |rprov|rg lre ||ves
ol |ls reroers.

Vary researcr slud|es |rd|cale lral 0rareer 8ar| oougrl pos|l|ve crarges |r lre ||ves ol lrousards
ol rura| 8arg|adesr|s. Tre |ard|ess poor oerel|led lre rosl lror lre 0rareer 8ar| rovererl. Tre
|ard|ess poor, Wro ear||er Wor|ed as agr|cu|lura| |aoorers, acqu|red |ard lor lre|r oWr larr|rg acl|v|l|es
aller oecor|rg 0rareer 8ar| reroers. Accord|rg lo a wor|d 8ar| sludy corducled |r 1991, 0rareer
8ar| rad |rproved lre pos|l|or ol Worer |r rura| 8arg|adesr. worer reroers ol 0rareer 8ar|
Were rore corl|derl ard soc|a||y aWare lrar lre|r ror-0rareer 8ar| courlerparls. 0rareer 8ar|
reroers ever loo| acl|ve parl |r po||l|cs. lr lre 199Z |oca| e|ecl|ors, rore lrar 2,000 0rareer 8ar|
Worer reroers Were e|ecled lo |oca| c|v|c ood|es.

0rareer 8ar| a|so ercouraged lre rura| poor lo gel educaled. ll prov|ded educal|ora| |oars lo |ls
reroers lo erao|e lre|r cr||drer lo go lo scroo| ard co||ege. Accord|rg lo reporls, lre rale ol scroo|go|rg
g|r|s arorg 0rareer 8ar| reroer lar|||es Was 5Z r|grer lrar lral |r ror-reroer lar|||es.


C|oba| Acceptance of H|crof|nance
ll |s c|a|red lral lr|s reW parad|gr ol ursecured sra|| sca|e l|rarc|a| serv|ce prov|s|or re|ps poor
peop|e la|e advarlage ol ecoror|c opporlur|l|es, expard lre|r |rcore, sroolrer lre|r corsurpl|or
requ|rererl, reduce vu|rerao|||ly ard a|so erpoWers lrer. orrer wor|d 8ar| !res|derl Jares
wo|lersorr sa|d .V|crol|rarce l|ls square|y |rlo lre 8ar|'s overa|| slralegy. As you |roW, lre 8ar|'s
r|ss|or |s lo reduce poverly ard |rprove ||v|rg slardards oy prorol|rg susla|rao|e groWlr ard
|rveslrerl |r peop|e lrrougr |oars, lecrr|ca| ass|slarce, ard po||cy gu|darce. V|crol|rarce corlr|oules
d|recl|y lo lr|s oojecl|ve.. Tre erpras|s or r|crol|rarce |s rel|ecled |r r|crol|rarce oe|rg a |ey lealure
|r !overly Reducl|or 3lralegy !apers (!R3!s).

H|crof|nance & H0C
V|cro cred|l 3urr|l Carpa|gr.s 2005 reporl argues lral lre carpa|gr ollers rucr reeded rope lor
acr|ev|rg lre V|||err|ur 0eve|oprerl 0oa|s, espec|a||y re|al|rg lo poverly reducl|or. As|ar 0eve|oprerl
8ar| (A08) |r |ls lrere crapler or r|crol|rarce c|les access lo l|rarc|a| serv|ces as cr|l|ca| lor e||r|ral|rg
poverly ard reacr|rg V00s (A80, 2001). ood ard Agr|cu|lure 0rgar|zal|or (A0) ard lre wor|d ood
!rograrre (w!) dec|ared lral |l W||| oe poss|o|e lo acr|eve lre e|grl V|||err|ur
0eve|oprerl 0oa|s (V00.s) oy lre eslao||sred dead||re ol 2015 .|l lre deve|op|rg ard |rduslr|a||zed
courlr|es la|e acl|or |rred|ale|y. oy |rp|ererl|rg p|ars ard projecls, |r Wr|cr r|cro cred|l cou|d
p|ay a rajor ro|e.

"uest|ons for 0|scuss|on
1. Accord|rg lo ara|ysls, 0rareer 8ar| Was successlu| oecause ol |ls ur|que Wor||rg rode|. Ara|yze
lre Wor||rg rode| ol 0rareer 8ar| ard d|scuss roW |l d|llers lror lre lrad|l|ora| correrc|a|
oar||rg rode|?
2. Vary ara|ysls cr|l|c|zed 0rareer 8ar| lor |ls sly|e ol lurcl|or|rg. Ara|yze lre draWoac|s ol lre
0rareer 8ar| rode|.
3. V|crol|rarce ras lrererdous polerl|a| as ar |rslrurerl lor poverly reducl|or (V001). Correrl
upor lre slalererl.
1. 0o you suggesl lral lre 0rareer 8ar| rode| lor poverly a||ev|al|or oe eru|aled |r olrer deve|op|rg
courlr|es? Exp|a|r W|lr reasors.