BOOK SUMMARY

Banker to the Poor : Micro – Lending and the Battle Against the World Poverty is a book
which is the autobiography of Mohammed Yunus , who is the founder of Grameen Bank. In
this book he is describing his experiences and also about how he reached upto the foundation
of Grameen Bank. He was the Nobel Peace Prize winner in the year 2006 for founding the
Grameen Bank . He starts the book by describing his experience at the time of Bengal Famine
of 1974 when he was working as an economic professor in Dhaka . The poverty faced by the
people around inspired him to study about the reasons for the distress faced by them which
led to the formation of his idea regarding the need for an institution to provide credit to the
poor who has nothing in their hands. His idea was born when he came to realize that most of
the poor people depends upon middlemen for the money required to purchase the raw
materials used for making the product and sells the product back to that middlemen resulting
in a very low profit. He then decided to provide the money required by for the purchase of
raw materials from his personal earnings and even after the repayment also he found that the
poverty cycle remained to be continued. It was then he thought about the need to change this
situation and he approached the local bank , Janata Bank asking them to provide loans to
these poor people and the bank refused and then he guaranteed himself to provide loans to
the poor and this really helped them to break the lines of poverty.

In the midst of the story regarding the formation and growth of the Grameen Bank , he also
recount about his life story. He was born in 1940 as the third of the fourteen children at a
time when the country was a part of the British Empire and grew up in Chittagong. His
mother was mentally unstable but was very influential on him and his father who was running
a jewellery shop also had a great presence in his every stages of life. He also talked about his
passion where his first passion was Boys scout programme and during the time when he met
Quazi Sahib whom he admired deeply and the one who helped him a lot to channelize his
passions. Then he went behind his next passion of being a teacher and at that time he
launched a business of printing and packaging shop using the loan amount from a bank
which was a successful venture. But since he wished to continue his studies he got an
opportunity to do PhD in America and he worked on it. And it was there he met Vera
Forostenko whom he was later married with in 1970 but their life together was short lived
and later got divorced. Later when the Bangladesh Liberalisation War had started , Yunus
formed Bangladesh Citizens’ Committee joining with other six Bengalis and supported the
independence of Bangladesh. Finally Bangladesh had won the independence and then later
Yunus joined the new Government’s Planning Commission but he failed and quit since his
role was as not as expected. Then he returned to the Chittagong University and worked as the
department head there during which the Bengal Famine of 1974 happened.

During the time of the Bengal Famine he came to notice that many agricultural fields were
laid unused and barren and he tried to find out the reason for the non usage of several
agricultural farms even at the midst of huge starvation among the people with the help of
some of his students and found that the reason was poor irrigation. It was in these context he
thought about the need to merge the academic as well as the practical world so that he
founded the Chittagong University Rural Development Project which helped the students to
earn credit by helping and assisting the poor local people which had its main focus on
irrigation technology which helped the farmers to produce high yielding rice. Yunus had
funded himself for experimenting this project with the Agricultural cooperatives and this
project was a success. It was after this he felt the need to do more to help the poor people in
terms of credit and finally he ended up with the idea of an institutionalised credit to the poor
and finally evolved to the formation of the Grameen Bank in 1977 without any prior
experience in managing a bank. But he used to manage the bank by observing and studying
about the functioning of the other banks and learned from their mistakes and exactly done
opposite to what they practiced. He laid down the principles for the foundation of Grameen
Bank from his experiences. All the transactions of the Grameen Bank were open and
transparent that there was no secrets and everybody was able to see the functioning of the
system. Grameen Bank didn’t involve the hands of anyone from outside the Grameen .

The major guideline underlying the formation and functioning of the Grameen Bank was that
every borrower has the right to credit and the major principles underlying the functioning and
disbursal of loans to the borrowers are that loans would be provided when the borrowers
formed groups based on the line of thinking by Yunus that borrowers would repay the loan
only when there comes a peer pressure on them. The loans would be provided in such a way
that at first the loan would be provided to the first two members in the group and only after
their repayment of the loan amount successfully for the first six weeks, the next two people
would avail the loan from the Grameen Bank. The loan would last for one year and the
instalments have to be paid weekly and the repayment would start after one week from the
date of extension of the loan amount to the borrower and the interest rate would be 20 % on
the loan amount and repayment every week is 2 percent of the total loan for fifty weeks
straight. He also wanted the borrowers to make savings which can be then used to lend to the
other borrowing group members. Then he started providing loans exclusively to the women
because of his finding that when she is given the smallest opportunity she struggles extra hard
to get out of poverty and it was found that credit given to the woman brought about changes
faster than when given to men. Besides the institutional arrangements to ensure better
husband – wife relationships , the Grameen system of group loans also provides informal
forces which work towards bringing this about. Sometimes the group itself works almost like
informal marriage counselling. Independent studies have found that the incidence of women
being beaten up by their husbands is much lower after the women join Grameen.

It was in 1977 Grameen Bank’s first official physical branch was opened after the
formation of partnership with Krishi Bank and the Grameen Bank continued its growth which
led to its expansion beyond the Jobra and the receipt of funds from Ford Foundation and loan
amount received from International Fund for Agricultural Development enabled the Grameen
Bank to move into five more districts. Thus the availability of funds from around the world
enabled the bank to disburse tens of millions of dollars to the poor through various small as
well as large loans which was successful. In 1982, Yunus was trapped during a military coup
at a conference where he happened to meet the person who would become the country’s new
finance minister. He wisely used that opportunity to describe about the structure and
functioning of the Grameen Bank and his work associated with the bank was explained to
him. He helped Yunus and with that help Yunus could restructure the Grameen Bank into an
independent institution which no longer needed any donations or funds from outside and it
became capable of meeting its requirement of funds from its own profit itself. With the
independence of the Grameen Bank as an institution changes occurred rapidly and the bank
grew much faster adding even 100 branches an year. It was on October 2 1983 the Grameen
Bank project at last became the “ Grameen Bank”. It started expanding its activities and
functioning to other poor countries such as India, Nepal,Vietnam etc and even started to
operate in US with the support of the then president.

Yunus also discussed about the importance of the committed bank workers. The workers who
are totally committed in implementing the project and who is serious in holding the line all
the way down and eventually eradicating the poverty problem among the borrowers are
important to have in the bank. He also put forward the fact that it is the hard work and
dedication of the bank workers which leads to the success of the bank and he also tells about
the importance of recruiting young blood and providing training to them to yield the best out
of them which contributes to the success of the bank. He also emphasize about the need for
Grameen Replication which simply means reproducing the essential features of his approach
in different national contexts. He believes in practical innovation and change and to become
the Grameen replication the recovery rate should be near to 100 percent and the replicators
are advised to start their experiment with the bottom 25 percent of the population and to focus
on the poorest women. Today Grameen – type credit programmes are being replicated in fifty
nine countries both in the developing and the developed world.

Yunus had started several other antipoverty programmes such as the textile production, fish
farming etc and the institution which was begun in Jobra was a successful antipoverty
programme. Grameen Bank’s Fisheries Foundation helped to provide jobs to the poor by
utilising the unutilised resources and Grameen Uddog which helped the poor textile weavers
by providing a platform to sell their cloth to the textile industry were started. In 1996
Grameen Sakthi was started to provide renewable sources of energy and in 1996 Grameen
Cybernet to provide internet was also started. Then Grameen Communications was also
started to further the education and research. Grameen Bank functions with around 2000
branches with more than 11000 staffs with loaned amount of 3.9 billion US dollar having a
recovery rate of 98 percent with around 90 percent of loans are being financed from its own
funds. Grameen Bank has not used any funds from outside since the year of 1998 for its
loaning programmes. Other than the years when Bangladesh was affected with the
devastating effects of cyclones the Grameen Bank has performed well and always earned
good yearly profits.

The book concludes with the dream of Yunus regarding how the world would likely to be and
he dreamt of a world without poverty which means that every person would have the ability
to take care of his or her own basic life needs and where nobody would die of hunger and
suffer from malnutrition and where no children would die of hunger related diseases. He
wants a world where everybody in the world would have access to education and healthcare
services because he or she would have the ability to access it. For him the temporary
problems such as some shared disaster like flood, cyclone etc could be taken care of by the
market mechanism through insurance and other self- paying programmes. He says that a
poverty free world would not be perfect but it would be the best approximation of the ideal.
He believes that charity is not the right way to create a poverty free world instead giving
every human a fair chance levelling the field to play. He always believed that elimination of
poverty from world is just a matter of will and imagines a world free from poverty by 2050.