In defence of an institution

Still, I traveled across the Pacific Ocean from my home on the east coast of the United States to experience firsthand what I consider to be Bangladesh's greatest gift to the world: the Grameen Bank, and unfortunately, in numerous conversations with friends and peers in Bangladesh, I encounter perpetual confusion and distrust of Grameen Bank's legitimacy.

This organization is redefining the world's perception of poverty alleviation, capitalist development theory, and micro-finance, and has already raised Bangladesh's international profile in economic and development circles.

As I leave Bangladesh filled with inspiration derived from this unique institution, I hope those of you who doubt Grameen's banking system and success will read on.

I spent the last three months studying with the Grameen Bank, including countless nights in the villages visiting with the owners of the bank: the poor, rural women of Bangladesh.

In my experience, I find that skeptics have three main concerns: (a) that Grameen is an NGO, catering to its own profits; (b) that Grameen is exploiting the poor through high interest rates; and (c) that Grameen leaves borrowers worse off than when they began. All of these fears, while legitimate, do not pertain to the Grameen Bank.

To begin, Grameen is not an NGO (non-government organization); it is a special bank, created under a specific ordinance by the government of Bangladesh in 1983. The village members of the bank own 94 percent of the Bank's equity; the government owns the remaining 6 percent. This fact, the borrowers' ownership of the bank, separates Grameen from any other development institutions working in Bangladesh.

Grameen offers four main loan options to its clients, with flexible repayment schedules and rates depending on their ability: (1) the Basic Loan, at 20 percent declining simple interest; (2) the Housing Loan at 8 percent declining simple interest; (3) the Higher Education Loan at 5 percent declining simple interest; and (4) the Struggling Member Loan at zero percent interest.

While some rates appears higher compared with conventional banks, these loans include incentive-based packages ensuring the borrowers' progress. Commercial bank loans require collateral, excluding the poor, and include punishing legal frameworks. In the absence of these requirements, Grameen disburses loans on trust, engaging with personal support and adaptable programmes.

Furthermore, with the success of its members entrepreneurial endeavours, Grameen Bank redistributes its profits to subsidize low interest rates on Housing and Education Loans, offering generous savings options, managing loan and life insurance funds, and creating more than 7,000 annual scholarships to rural children.

The most recent addition, the Struggling Member programme, provides small, interest-free loans to the poorest of Bangladesh, the beggars, who can slowly change their lives by introducing income-generating activities to their begging, like selling candies.

Based on the 10 indicators of poverty, since initiation in 1983, the Grameen Bank has elevated over 973,000 people above the poverty line; people that before were eating less than three meals a day, could not afford the necessary protection from winter, or arsenic-free water.

You do not, however, have to take my word for it. Unlike my journey halfway around the world, you have only to travel home, to your village. Grameen has nearly 1400 branches around Bangladesh, some within a two-hour drive of Dhaka. If you remain in doubt, ask a borrower yourself; ask her what life was like before Grameen; ask her for what she took her loan; and most importantly, ask her what she thinks of the Grameen Bank.

I guarantee she will stand behind this institution as I do, not to mention countless international leaders (President Clinton and Senator Clinton of the US and Queen Sofia of Spain, to mention three).

The Grameen Bank is changing the world, aiming to eventually remove the face of poverty from Bangladesh and making Bnagladesh a model for other developing countries, worthy of international praise and recognition. Like many others before me, I stand in absolute admiration of this organization and its motherland. Thank you Grameen and thank you Bangladesh, both for these amazing three months and for your gift to the future of our worldwide community, when poverty will sit on the shelves of museums.

Jamey Mavis Lowdermilk of University of the South Sewanee, TN, USA has spent the past three months studying with the Grameen Bank.