Muhammad Yunus:Muhammad Yunus:Banker to the Poor/Banker to the Poor/

Father of Father of “microlending”/“microlending”/

2006 nobel peace2006 nobel peace prize winner prize winner

““It’s not people who It’s not people who aren’t credit-worthy. aren’t credit-worthy. It’s banks that aren’t It’s banks that aren’t

people worthy.”people worthy.”Muhammad Yunus

Grameen Bank: “Borrowing Group”Grameen Bank: “Borrowing Group”

Self-formed; 5 members; Group approvesSelf-formed; 5 members; Group approves all loan requests, but individual liability;all loan requests, but individual liability;

8 Groups to a “Center” 8 Groups to a “Center”

Weekly payment, 1-year loan (5% to Group Fund;Weekly payment, 1-year loan (5% to Group Fund; if one defaults, no more loans to Group)if one defaults, no more loans to Group)

No legal instrumentNo legal instrument

1st loan about $15 (housing loan possible only after 3 1st loan about $15 (housing loan possible only after 3 successful 1-year loans; property to wife’s name)successful 1-year loans; property to wife’s name)

Lend to two, then six weeks later two more;Lend to two, then six weeks later two more; Chairman lastChairman last

Process purposefully aims to excludeProcess purposefully aims to exclude non-resilient peoplenon-resilient people

Source: Muhammad Yunus, Banker to the Poor

Grameen Bank/BangladeshGrameen Bank/Bangladesh

Typical 1Typical 1stst loan: loan: $15$15..

9898%% recovery rate recovery rate94%94% to women to women

1/31/3rdrd out of poverty; out of poverty; 1/31/3rdrd up up to non-poverty thresholdto non-poverty threshold

Muhammad Yunus, Banker to the Poor

9494%% of loans to of loans to

…… womenwomen

MBWA, Grameen Style!MBWA, Grameen Style!“Conventional banks ask their clients to come “Conventional banks ask their clients to come to their office. It’s a terrifying place for the poor to their office. It’s a terrifying place for the poor

and illiterate. … The entire Grameen Bank and illiterate. … The entire Grameen Bank system runs on the principle that people should system runs on the principle that people should not come to the bank, the bank should go to the not come to the bank, the bank should go to the

people. … If any staff member is seen in the people. … If any staff member is seen in the office, it should be taken as a violation of the office, it should be taken as a violation of the

rules of the Grameen Bank. … It is essential that rules of the Grameen Bank. … It is essential that [those setting up a new village Branch] have no [those setting up a new village Branch] have no

office and no place to stay. The reason is to office and no place to stay. The reason is to make us as different as possible from make us as different as possible from

government officialsgovernment officials.” .” Source: Source: Muhammad Yunus, Banker to the Poor

“There is one thing [I don’t like about

Grameen] . I used to enjoy beating my wife. But the Group came to me and argued with me and shouted at me. Who gave them the right to shout at me? The borrowing group threatened they will get really mean if I beat my

wife again.”Husband of borrower, to Muhammad Yunus

[from Banker to the Poor]

““The Grameen loan is The Grameen loan is not simply cash. not simply cash. It It becomes a kind of becomes a kind of

ticket ticket to self-discovery and to self-discovery and

self-explorationself-exploration.”.”Muhammad Yunus

B>A (R.F.A.)B>A (R.F.A.) … ’71-’06 … ’71-’06ImplementationImplementation … ’73-’77 (’06) … ’73-’77 (’06) “Hard is soft” “Hard is soft” … ’77-’79 (’06) … ’77-’79 (’06)(Org) Structure>Strategy(Org) Structure>StrategyMBWAMBWA … ’80-’85 … ’80-’85ExcellenceExcellence … ’79-’84 … ’79-’84Mid-size biz is coolMid-size biz is cool … ’84-’89 (’06) … ’84-’89 (’06)Customer serviceCustomer service … ’84-’88 … ’84-’88InnovationInnovation … ’87-’92 … ’87-’92Free trade/HayekFree trade/Hayek … ’90-’92 … ’90-’92New Org ModelsNew Org Models … ’92-’96 … ’92-’96PSFPSF … ’92-’06 … ’92-’06Brand YouBrand You … ’94-’00 … ’94-’00DesignDesign … ’94-’06 … ’94-’06WomenWomen … ’96-’06 … ’96-’06Excellence IIExcellence II … ’06-?? … ’06-??HealthcareHealthcare … ’06-?? … ’06-??Exuberance (Soft is hard!)Exuberance (Soft is hard!) … ’42-’06 … ’42-’06