The success of rural microfinance at Grameen Bank

in Bangladesh
Ayesha Akter

School of Economics and Management,Zhejiang University of Science and Technology

, Hangzhou,China.

Liu Jilu

Business School,Taizou University,Taizhou,China.

Abstract
Generally, Grameen Bank's success in the rural microfinancing system and profitability, which was to achieve
balanced economic growth. Grameen bank model is a poverty reduction tool tha
contradictory evidence in the microfinance system. The Grameen Bank research process and ideas based on a
Microfinance credit system, which one successfully developed by Dr. Mohammad Yunus and his microfinance
concept f p for oor
w c amilies,
i d ho w an a rndependently
G B g w evelop
t r ithout
poverty b m yl icro
c s anding
t a a redit g ystem
a T ools
p w nd
m fttracting o lobal
p o o r r u r a l w o m e n , e s p e c i a l l y w h o w a n t t o i m p r o v e t h e i r o w n l
T h e o b j e c t i v e o f t h i s p a p e r i s t o a
Grameen Bank in Bangladesh.

Keywords: Rural microfinance; Grameen Bank; Business model; Risk Management; Profitability;

1.0 INTRODUCTION
During t p she yast e everal a o ears,s s conomists
h c a r nd ther
o i ocial
i t cientists
concept of social capital. Previously, researchers had recognized the importance of the concept; they just did
n o t u s e t h e t e r m s o c i a l c a p i t a l t o i dPeunttni faym i, t 2(0)0. 0F r o m t h e p e r s p e c t i v e o f t h e g l o b a l e c o n o m y,
b a n k i n g a n d m i c r o f i n a n c e a r e t w o i m p o r t a n t t e r m s . M i c r o f i n
administrations for people and private companies that need customary banking and related administr
Banks assume a significant job in improving the economies of any creating nation. B
traditional banking is completely out of place in rural areas. Since its inception, Grameen Bank has reached a
wide r oange
i ft ndividuals
i s f hrough
s T ts l mall c inancial
h r ervices.
a radit
tradi tional banks refuse to lend to the poor for fear of instabi lity. Grameen has done a great deal to provi d
effective l t t oans
r p oa the e ural
t t roor p and u oe nsure a e hat i he
am ural oor
and effective manner. Grameen and its founders were honored by M.A. Younis, a Nobel Prize winner, for their
bank recovery and other achievements. He founded the Grameen Bank- the Poor Bank in Bangladesh in 1976.
M i c r o f i n a n c e h a s b e e n q u i t e s u c c e s s f u l i n r e d u c i
(Khandker, 1998
) and elsewhereRobinson,
( 2001
). Credit was seen as a human right, and they did not agree
wi t h the tr adi t iona l banki ng syste m si nc e eve n t he poor di d not have ac cess t o j usti c e. A ssumi ng t hey do
repay the loan, you might want to consider building a plan and institution around the personal circumstances
and needs of the poorest. In 1983, government regulation transformed the scheme into an independent bank.
Overall, the Bank's goal is to reduce poverty in rich and poor countries. Grameen Bank's micro-lending to the
poor is attracting global attention. The Nobel Committee considers microfinance to be "an important editorial
force and an important tool for poverty eradication". Grameen Bank is like a microcredit tool f
reduction.

1.1 Statement of the study

This p aaper t e imst e o xplore
s i r heB conomic
t c o ystem
G B n i ural
h angladesh,
business model, risk appetite, and profitability. Through every one of these points of view, Grameen Bank is
considered monetarily and socially effective as a foundation and pioneer of the
development. The rate of interest in Grameen Bank is very high and due to high-interest rates the poor women
can’t use the loan in a highly profitable business to bear this burden, so some of the borrowers lose lands and
assets to pay the loan.
Grameen Bank focuses mainly on poor rural women to improve their way of life and
make t ehem ntrepreneurs.
T B i a c he
t t e ank so w
lso hommitted
w h o he mpow
education, etc.

2.0 LITERATURE REVIEW

As of now, we referenced before there is colossal writing on Global Microfinance on Grameen Bank. Despite
the a ccomplishment
o M w fa c icrofinance,
o d t w o sith p o ouple
M fA aesires, he
significant part of the Social Capital Initiative of the World Bank social capital decreases the cost of defective
i n f o r m a t i o n t h a t i s n a t u r a l f o r M i c r o f i n a n c e . A d d i t i o n a l l y, h e t o l d t h a t t h e f u n d a m e n t a l
G r a m e e n b a n k i s t h e c o n s i s t e n t c o n n e c t i o n b e t w e e n so c i a l s t a ff a n d i n d i v i d u a l s a n d t h e s u p p o r t e r c u s t o
c o n n e c t i o n b e t w e e n c r e d i t o f f i c i a l s a n d b o r r o w e r s . We e x a m i n e d t h e c o n n e c t i o n b e t w e e n s o c i a l c a p i t
Microfinance in the Philippines. He assessed the adequacy of utilizing Grameen type standards, for example,
ordinary participation in gatherings, emphasis on convenient reimbursement, and so on., a
replications in the Philippines. The first Grameen approach"— high goo
dependent on values implemented through preparing, peer choice and friend implem
discipline. In any case, he proposes that to be effective, Microfinance Institutions
Bangladesh need to develop extra and restricted components of social capital. Additionally
assists with succeeding rustic individuals recognize stiff-necked defaults and defaults b
contrary individual stuns.

2.1 The theoretical basis of rural finance in Bangladesh

The main impetus behind Grameen Bank and its microfinance in 1974. The example of giving credit to poor
fa mi l i es wi t h the goal t hat t hey ca n m ake i nde pendent wor k openi ngs rose duri ng dry spel l s and st ar vat io
bringing about the passing of 1.5 million individuals in Bangladesh. In 5 During the dry season, Muhammad
Professor Yunus visited the townJobra
of in provincial Bangladesh and took a gander at how the poor could
battle to get away from the destitution trap since they didn't approach reasonable credit. Yun
p r o p e r t i e s t h e i n c e p t i o n s o f h i s s m a l l - s c a l e c r e
（In Sufia Begum's story, the 21-year-elderly person acquired around 25 pennies from a moneylender at the
current s wapping
s a a 1 cale
p d Mt B bout u 0%
t c ser o ay. t m s. b egum
s tilized
and was then compelled to offer it to a moneylender at a beneath advertise value, making a benefit of around 2
cents）; Unsecured credits to the country poor. Even though Yunus is persuaded that the poor will reimburse
their advances if, given the opportunity, customary banks are not keen on allowing them little credits. They
guarantee t p b hat oor
w n orrowers
r t c G
ill ever
B m eimbursem f i hea a redit. ram
option in contrast to customary destitution decrease methodologies planned f
hierarchical contributions to the individuals who might some way or another have been reject
formal budgetary framework.

2.2 Bangladesh's rural financial system

According t t B o heO angladesh
( a 4 ffice
p o t2009),
p l pproximately
b t p 0 erce
line. Funding was provided to improve this poverty level, to provide it to make
m i c r o fi na n ce pr o gr a m s p ro vi de d l o a ns t o h e l p t h e p oo r. T hi s t yp e o f se l f- e m p l o ym e n t l oa n . Th e c o nc e p t
microsystems originated in Bangladesh. Due to high unemployment and illiteracy, the majority of the poor are
unabl e t o m ee t t he ir fi nanc ia l needs. To addre ss thi s probl em , t he S ME progr am m ed has c ome for war d an
taken s t teps
p a r o i t layB olee n I he
B angladeshi
m a conomy.
c s m n angladesh,
institutional types. Grameen Bank, a private bank owned by its members. There are approximately 1,500 non-
governmental organizations. Organizations (NGOs), such as Brick Indu
Assistance, etc. Cuomo commercial and special banks, such as Bangladesh's Krishi Bank (BKB), R
Krishi Anan Bank (Rakub), and the government. Government-funded financial programs, such as the BDRB,
Swaniwal, B angladesh,
R a m o o D-12, a ndt any
m ither t rganizations,
M o re
W o m e n a n d C h i l d r e n , t h e M i n i s t r y o f Yo u t h a n d S p o r t s , a n d t h e M i n i s t r y o f S o c i a l W e l f
departments a t o re a t argeted
p A o t nlyi t phe oor.
u lll f l heset p nstitutions
of the same age group for which they are jointly responsible.

2.3 Why Grameen Bank is important in rural finance in Bangladesh

A l t h o u g h B a n g l a d e s h i s a d e v e l o p i n g c o u n t r y, i t i s o f t e n r e f e r r e d t o a s t h e " p o o r e s t c o u n t r y " i n t h e
Population growth has slowed to 1.6% from 2.2% a decade ago. After independence, about 82 percent of the
population w b t asp elow
l A t he
t Goverty B h ine.m a pt hatc ime, t p rameen ank
reduction in Bangladesh. In 1976, Dr. Mohamed Yunus became a bank, supporting the poor and landless. The
Bank is a special financial institution approved by the Government in 1983 to provide loans to the po
improve t f heir s inancial
G B ituation.
p ak r i rrameen
p i B ank I lays
s o t ey ole
country's economy is innumerable. So why Grameen is so important depends on certain criteria
reason is its success as a bank from the grassroots to the poor. Grameen Bank's policy is different from that of
large c ommercial
b I 1 G anks. B cn 993,
h o B rameen 1 b ank T bovered
s alf f
1.8 million lenders and delivered $9,169 million. Another feature of the bank is that it aims to provide more
loans to women than men. Nearly 97 percent of the bank's members are women, accounting for a
percent of its accumulated savings and receiving more than 80 percent of total loans. For women with higher
recovery rates, credit risk is higher than for men, according to Grameen Bank. As a result, social respect for
women has increased.

3.0 The Success of Grameen Bank

G r a m e e n B a n k ’ s s u c c e s s e s c a n b e m e a s u r e d i n t e r m s o f b o t h s o c
M o h a m m e d Yu n u s G r a m e e n B a n k i s a h a n d s - o n r e s e a r c h p r o j e c t i n t h e v i l l a g e o f J o b r a n e a
University. Professor Yunus is a professor of economics at the university. After three years of experience, the
project was repeated in five regions of Bangladesh from 1979 to 1982. He has worked with financial support
from commercial banks, the Rural Bank, the Bank of Bangladesh (National Bank of Bangladesh),
I n t e r n a t i o n a l F u n d f o r A g r i c u l t u r a l D e v e l o p m e n t ( I FA D ) . T h e p r o j e c t b e c a m e a s p e c i a l i z e
government supervision in September 1983. Since then, Grameen Bank's branches have grown rapid
February 1987, 298 branches had begun to cover more than 6% of the landscape. The Grameen m
repeated in more than 40 countries.

3.1 History of Grameen Bank

Grameen Bank, a bank called The Bank for the Poor, has proved that "the poor can finance". It was founded in
1976 by a professor. Dr. Mohammad Yunus, who won the Nobel Peace Prize in 2006. She is the founder of
Grameen Bank and now owns 95 percent (mostly women) lenders and 5 perce
government. The total number of lenders at Grameen Bank is 8.35 million, with 97 percent of lenders being
women. The bank operates in 81,397 villages and has 2,565 branches. An important feature of the bank is that
its payment rate is usually set at around 16 percent. This makes banks very different from other commercial
banks. (Grameen-info.org.2014).According to Grameen, bank poverty is not caused by the poor. They believe
that the lack of skills makes it harder and harder for them. The surrounding politicians and institutio
creating poverty. Most people in the world call for charitable work to stop poverty. But Grameen's ideas are
d i f f e r e n t . F r o m t h i s p o i n t o f v i e w, G r a m e e n B a n k h a s f o r m e d a c r e d i t i n s t i t u t i o n f o r t h e
provides loans to rural areas with less than 0.5 hectares of land.

3.2 The Concept of Grameen Bank

Grameen Bank accepts that even the most unfortunate of the poor can deal with their funds and advancement
under the correct conditions. The apparatus is microcredit: the advance sum is little; the credit term is basic.
Microfinance administrations are situated in associations called microfinance organizations. Gram
intended f b or w orrowers
j s o ho
n oin g elf-sorting
o f w c ut, " on-family
w atherin
and companion support". " Borrowers must experience a short preparation period. During the preparation, they
took in the Grameen technique and officially sorted out a five-man gathering. A little credit was then made to
t w o i n d i v i d u a l s . T h e s e g a t h e r i n g s m u s t m e e t o n c e e v e r y w e e k t o r e i m b u r s e t h e a d v a n c e . Wi t h t h e e ff e c
reimbursement of each advance, this builds the number of individuals who can obtain and the measure of each
credit. On the off chance that one individual from the gathering defaults, the whole gathering isn't qualified for
another c T redit.
e his
s m ncourages
f a Golid i otivating
t g t aorces mong ro
and reimbursement of others' organizations. The social capital model permits poor people to be incorporated at
the network level, while automatic and independent. This lessens the requirement for borrower oversight and
advances basic information that empowers enterprising achievement. The Grameen approach w
screen a s nd t b creen i he
l orrower
t e o atself, t essening
a T hee xpense f ctu
groups o p fe eople
l t e ngaget a adies r o c xtend a f heir i m ctivities,
t c b eimburse
accomplished just by giving monetary capital.

3.3 The Management Structure of Grameen Bank

Grameen Bank has four regulatory levels, each with an alternate arrangement of capacities: central command,
provincial workplaces, locales, and branches. Local and provincial workplaces
workplaces. Headquartered in Dhaka, it is the focal unit of Grameen Bank. Driven by The Deputy Gene
Manager, Deputy General Manager, General Manager, and above 400 other staff individuals. Field workplaces
are made out of the branch, provincial and territorial workplaces, autonomous of base camp. A si
component o i a f ts s dministrative
i t s e o structure c s he t h eriousu T xtent f
territorial office is a little central command except for noteworthy disciplinary measures for any staff part, all
regulatory choices taken. Interestingly, the administrative center is increasingly engaged with giving preparing
and raising microcredit small scale credit and award awards from the Grameen Fund, just as from
so ur c e s. T h e S e r vi ce i s a f i el d- l e v e l o ff i c e w i t h t he m os t c on t a c t w i t h i nd i v i du a l s; A r u n of t he m i l l b r a
supervises fifty to sixty focuses situated inside strolling separation of a part of the town, covering a territory of
close t 3 so 0m quare
T b i iles.
t e he
p ranch
u o G s he
B ssential
an b roductive
w ni
small s a cale a dvances
1 G r nd 0i rameen
ab c epresentatives,
as r h s b ncluding
w o r k e r s , a n d a p e o n y m o n i t o r. G i v e n t h e s t r e n g t h o f b r a n c h e s i n G r a m e e n b a n k ' s t a s k s a n d t h e e x e c u
structure, they additionally have the most elevated extent of workers.

3.4 Micro Credit Structure

Grameen Bank Credit Delivery means taking credit to the very poor in their villages utilizing the ess
elements of the Grameen credit delivery system. Grameen Bank credit delivery system has t
features; e stablishing
t e c fhe s ligibility
o t c riteria
a a or p election
m t f argeted
screen o t utw dhose
n m t ho I do ot c eet
p hem.
h b i n elivering
a t w redit, riority
The d elivery
s i g ystem
t m t ds eared
s o d eet hen iverse
o t p O ocio-economic
t o
hand, Special loan conditions with any collateral; Very small loans given without a
repayable in weekly installments spread over a year. Eligibility for a subsequent loan depends upon repayment
of the first loan. Individual, self-chosen, quick income-generating activities which em
borrowers already prosses. Close supervision of credit by the group as well as the bank staff. Stress on credit
discipline and collective borrower responsibility or peer pressure. Special safeguards through compulsory and
voluntary savings to minimize the risks that the poor confront. Transparency in all bank transactions most of
which take place at center meetings.

3.5 Grameen Bank's business model

Grameen Bank's working methods can be explained by the following principles:
1. Start with the problem, not on the problem: the credit system must be based on a social background
check, not on pre-established banking technology.
2. Ensure that credit systems serve the poor, not vice versa: credit officers visit villages so that they can
learn about borrowers.
3. Prioritize action for the target population: to serve the poorest people who need investment resources
most and do not have access to credit.
4. Initially, credit was restricted to income-generating production stakes that were freely chosen by the
borrower. Enable borrowers to repay loans.
5. Relying on solidarity groups: small informal groups of elected members from the same background
and of mutual trust.
6. Combine close monitoring of borrowers with as simple and standardized procedures as possible.
7. Investing in human resources: Training leaders will provide them with real development ethics based
on rigor, creativity, understanding, and respect for the rural environment.

3.6 Grameen Bank's risk mechanism

Microfinance insti tut ions implement m echani sms t o overcome screening and enforcem ent issues, reduce th
r i s k o f d e f a u l t , a n d i n c r e a s e r e i m b u r s e m e n t r a t e s . AAc rcm
o rednidnagr itzo a n d M o r d u c h ( 2 0 0 5 ) a n d G i n ?
(2010), m icrofinanceh b a r as ecome
w o r evolutionary
p a s o ay a t f d educing ov
of t he
w t ayo hey
a b perate
a t f i re etter
p ble
To e xplain
o t ace
s ohe
nformation
m uccess i f roblems.
icrofina
providing credit to the poor, a large number of theoretical works have used the principal/a
demonstrate that microfinance contracts are lent to jointly responsible groups to add
m i c r o f i n a n c e i n f o r m a t i o n a sCyr m
e dmi et tm
r ya.r k e t s , a l l o w l e n d e r s t o b y p a s s a d v e r s e c h o i c e s a n d m
h a z a r d s a n d t h e r he fe ol pr es m a i n t a i n h i g h r e p a y m eKnot nroa taensd. T a k a h a s h i (d2e0s1c0r )i b e e x i s t i n g
lit erature and theoretical models of the innovati ons behi nd the high repaym ent rat es of m icrocredi t projec
They put forward a simple model to demonstrate that the different elements of microcredit, such as collective
loans, solve the problem of information asymmetry in the credit market. However, a large proportion of MFI
does not offer groups, but only personal loans. Many collective loan practitioners are now steadily turning to
p e r s o n a l l o a n s . I n a n i n t e r e s t i n g t h eAo rr m
e tei nc da al rai nz a al ny ds i sM, o r d u chhi g(h2l0i 0g 0h )t s e v e r a l
important mechanisms that enable micro-investment mechanisms to generate high repayment rates from poor
borrowers w c ithouto c ollateral
l c Tr m
ollective i oan
t u o ontracts.
n hese e
threats, periodic repayment schedules, mortgage alternatives, and the provision of no
Grameen Bank has certain risk management and maintenance rules and regulations. Grameen Bank also offers
unsecured l I t oans.
n c n o he
b ormal
G B ourse
f s f d usiness,
r i rameen
c ank
risk, operational risk, strategic risk, liquidity risk, and market risk. Here are some steps you can take to begin
the process of preparing mediation. The credit delivery system has several distinct characteristics.
Grameen bank lenders meet with members every week and spend time with them about the
concerns. This is one of the most important factors affecting timely payments.

3.7 Profitability of Grameen Bank:

Grameen Bank's 2016 net profit rebounded, with microfinance pioneer Tk 10 billion tonnes due to increased
loan spending and recovery.A stable economic environment and the absence of major natural disasters helped
the bank increase its profit by only 243 million figures in 2015. In 2015, net profit fell significantly and has a
retrospective effect after its 21,000 employees implemented the national compensation scale. Lenders have to
spend $45 billion on extra wages. However, officials say the new pay scales encourage employees to invest
m ore i n l oans a nd loa n repa ym ent s. The ba nk pai d 1875.4 bi ll i on fi gure s la st ye ar . In 2016, i ts out st andi
loans were 1,182.4 billion Tk, compared with 964.2 billion tons a year earlier. In 2014, the company made a
profit of 4.3 billion tons. Bankers said the bank's activity slowed in 2013 and 2014 because of unce
affecting its profit margins.In 2015, the government received a dividend of 583 million tons because it held a
25% stake in the bank. The bank's 62 Lac shareholders received the remaining dividen
Grameen Bank, founded by Nobel laureate Professor Mohamed Yunus, added more than one Lac memb
bringing the total to 89. While the bank is doing well financially, other problems have hampered its activities.
B or r o we r s w ho o w n 75 p er c e n t o f t h e b a nk a r e n ot r e pr e s e nt e d o n t he bo a r d be c a us e t h e t e rm s of t he ni n
elected directors ended in February last year. Since then, the election to select directors from among borrowers
has not been held. Another problem is that the bank has been managed by an acting managing director since
Prof Y unus
l i 2 eft
T i n i b011. h a he n ssue
e d s eing
c eard
t b after t ine lected
publish n ewspaper
a t a dvertisements
c e O S o Fppoint M hief
A M xecutives.
s n
the government would take action to get the case resolved. Grameen Bank lends an average of 150 billion tons
per m onth.
I h 2 tb as t ,566 t cranches I n hroughoutl r i l he t 2ountry.
S i ts on-perfo
inception in 1983, the bank has issued $1.23 billion in loans. Since its founding, Grameen Bank has made a
profit e yverye i ear,
1 1 xcept
a 1 Pn 983, r a991u t nd
d 992.
ac rofitability
b atio
line and are important to the company's managers and everyone. (7. Here are some basic criteria bas
profitability measures. These measures calculate the bank's asset returns, the owner's investments, and stock
values.

Net profit margin:Net profit margin treats the percentage of remaining revenue after deducting all expenses
(including t T axes).
h t n phe m ighert b het c et w
rofitb N pargin,f Mhe i etter he
calculated as:
N e t p r o f i t m a r g i n ( n e t p r o f i t a f t e r t a x / n e t o p e r( N
a tei tn gP ri on fciot ma ef )t =
e r Ta x / N e t S a l e s o r
Operating Income) x 100
Table 1: Net Profit Margin
Years 2013 2014 2015 2016 2017
Net profit after tax 1332 436 24 1392 2275
Operating income 13,579 14,015 15,330 16,935 19,135
Net profit margin (%) 9.81 3.11 .16 8.22 11.78
Source: Grameen Bank Annual Report (2013-2017)
Grameen's net profit margin has varied over the year, according to the table. The net profit margin fell from
9.81 percent in 2013 to 0.16 percent in 2015. However, the net profit margin increased from 0.16% in 2015 to
8.22% in 2016.
ROA(Return on Assets):
Although ROA Grameen Bank gives the bank the efficiency of using its assets to
generate profits. It is calculated by dividing the bank's annual earnings by total assets. The formula is as follows
ROA= Net Profit after tax/Total Asset x 100
Table 2: Return on Asstes
Years 2013 2014 2015 2016 2017
Net profit after tax 1332 436 24 1392 2275
Total assets 178,936 200,961 220,885 229,360 239,619
Return on assets (%) 0.74 0.22 0.01 0.61 0.95
Source: Grameen Bank Annual Report (2013-2017)

THE ROA RATIO HAS CHANGED OVER THE YEARS. In 2017, the return on the asset was the highest, at
0.95 percent. From 0.74% in 2013 to 0.01% in 2015.
ROE (return on equity):
This ratio measures the profitability of a company, how much profit they generate,
and how much shareholders put in it. Its calculation formula is like
Return on Equity(ROE) = Net Profit after Tax/Shareholders Equity) x 100
Table 3: Return on Equity
Years 2013 2014 2015 2016 2017
Net profit after tax 1332 436 24 1392 2275
Shareholders' equity 10,394 10.,642 11,227 12,345 14,288
ROE （%） 12.81 4.1 .21 11.28 15.28
Source: Grameen Bank Annual Report (2013-2017)

The return sits on ROE ratios have varied over the years. In 2017 it was 15.92 percent. 15.92%. However, the
return on equity fell from 12.81 percent in 2013 to 0.21 percent in 2015.
Cost-income r : T hec atio
ost-income
r s t r atio b hows r hea t elationship
c o t r etween
The lower the bank's CIR ratio, the more efficient it is. The formulaCost-to-Income
is Ratio (Total Operating
E x p r e s s / To t a l O p e r a t i n g I nCcoosmt -et)o - i n c o m e r a t i o i s m o r e e f f i c i e n t t h a n h a n d l i n g m a n a g e m e n t c o n t r
costs. T c he ost-to-income
r i f 5 atio
i 2 t ncreased
7 i 2 T roms 9.9%
t b hn 013 o
failed to reduce costs relative to revenue.
Cost Income Ratio= (Total Operating Expenses/Total Operating Income) x 100
Table 4: Cost Income Ratio
Years 2013 2014 2015 2016 2017
Total operating expenses 8,134 8,808 10,111 13,552 14,421
Total operating income 13,579 14,015 15,330 16,935 19,315
Cost-to-income ratio (%) 59.9 62.85 65.96 80.02 74.66
Source: Grameen Bank Annual Report (2013-2017)

The cost-to-income ratio measures the efficiency of management's control of expenses. According to the table,
this increased from 59.9 percent in 2013 to 74.66 percent in 2017. This suggests that banks have fa
reduce costs relative to revenue. 7 Anne Norgaard Jorgensen, August 2011, "The link between the profitability
of microfinance institutions and the return on total portfolio".
4.0 Conclusion
The Grameen Bank's success was the reason as a bank from the grassroots to the poor because the bank policy
is d ifferent
f t o rom
t l c hat f b he A arge
a r ommercial
w t b a t ank.
p m ndl nother
t o w o m e n t h a n m e n b e c a u s e o f l o a n r e c o v e r y r a t e s w o m e n h i g h e r. T h e G r a m e e n b a n k b u s i n e s s m o d e l w
specially applied in rural people, who are below the poverty line. Who can’t afford a high amount of loan and
collateral s T ystem!
m w e he aodelm asf ncouraging
a g i tndg otivating
a orce
r e imb ur se me n t c re d its o f o the r ’s org a ni za t ion s. T h e org a ni z at ion a n d op e r a tio n m
component of its administrative structure is the serious extent of self-sufficiency concurred to all handle units.
Grameen Bank is among the traditional high-credit institutions as it faces serious challenge
financial services to non-suicide bombers. What's more, Grameen Bank operates only in rural areas because of
the production risks caused by environmental factors. Unlike other banks, Grameen has significantly reduced
fi xed c redi t ri sk by di versi fyi ng i t s ent i re por tf oli oGof
ramloa
eens.
n B ank's conc ept i s to pr ovide l oans t o
basic savings groups to improve its economic and social discipline. By lending to the poor in Bang
especially women, the Grameen Bank model was successful because of Dr. Mohammed Yunus and his unique
background design. Many organizations replicate the Grameen model. Almost more than 40 countries repeated
this Grameen Bank Model. The Grameen model also provides a small perspective. In my opinion, China can
also apply this model for its farmers or Entrepreneurs, who are below this poverty line. It’s a unique method to
help poor people by the banking system without maximum risk, who are especially female.

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