Examples of Banking Alternatives

The Gramean Bank

The Gramean Bank is one of the best examples of how you can run something that is completely backwards to our current thinking and doing, but be amazingly successful.

“Grameen Bank has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. The bank provides credit to the poorest of the poor in rural Bangladesh, without any collateral.”

Basically, the bank gives money to the poor, banking on the fact that the people will use the money to start their own business or trade, then give back when they have created success. The founder believes that if you give someone the chance to do something with their life, they will sieze the opportunity and in turn generate business because money is essentially just production and labor.

The general principles behind the founding of the bank are the following:

  • extend banking facilities to poor men and women;
  • eliminate the exploitation of the poor by money lenders;
  • create opportunities for self-employment for the vast multitude of unemployed people in rural Bangladesh;
  • bring the disadvantaged, mostly the women from the poorest households, within the fold of an organizational format which they can understand and manage by themselves; and
  • reverse the age-old vicious circle of “low income, low saving & low investment”, into virtuous circle of “low income, injection of credit, investment, more income, more savings, more investment, more income”. “

“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.”