Muhammad Yunus's Grameen Bank

Grameen bank finds its root in Bangladesh. The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus, Head of the Rural Economics Program at the University of Chittagong, launched an action research project to examine the possibility of designing a credit delivery system to provide banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural" or "village" in Bangla language) came into operation with the following objectives: 

1. extend banking facility to poor men and women
2. eliminate the exploitation of the poor by money launders
3. create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh
4. bring the disadvantaged, mostly the women from the poorest household, within the fold of an organizational format which they can understand and manage by themselves and
5. reverse the age-old vicious cycle of "low income, low saving and low investment", into virtuous cycle of "low income, injection of credit, investment, more income, more savings, more investments, more income". 

In October 1983, the Grameen Bank Project was transformed into an independent bank by government legislation. Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the government. 

A group-based credit approach is applied to use peer-pressure within a group to ensure the borrowers follow through and conduct their financial affairs with discipline, ensuring repayment and allowing the borrowers to develop good credit standing. The bank also accepts deposits, provides other services, and runs several development-oriented businesses including fabric, telephone and energy companies. The bank's credit policy to support under-served populations has led to the overwhelming majority (98%) of its borrowers being women.

GRAMEEN BANK	CONVENTIONAL BANK
To bring economic and social change to the poor.	To make profit
Based on trust	Based on collateral
For poor people	For businessman
Small amount	Large amount
In Rural area	In Developed area
Flexible payment scheme	Strict payment scheme
Simple interest	Compound interest
Loans for productive activity	Loans could be used for consumption or other activities

The bank has diversified among different applications of micro-credit. In the Village Phone program, women entrepreneurs can start businesses to provide wireless payphone service in rural areas. This program earned the bank the 2004 Petersburg Prize worth EUR 100,000, for its contribution of Technology to Development.

The Nobel Committee awarded Grameen Bank and its founder, Muhammad Yunus, the 2006 Nobel Peace Prize "for their efforts to create economic and social development from below”.

Here is the video of Muhammad Yunus which we were asked to watch.

We can link Management By Objective and Organizational Culture management concepts with the functioning of Grameen Bank. It is the Organisation Culture that affects the way people and groups interact with each other, with clients, and with stakeholders. The basis of this type of management is trust, community and meaning. The managerial orientation is caring and compassion while the employee orientation is psychological ownership which leads to the passion and commitment to organisation goals in more effective manner. This model reflects the values underlying positive organisational behaviour, where managers focus their attention on helping employees develop feelings of hope, optimism, self-confidence and courage.