Creating a World Without Poverty:Yunus Principles

          

      Grameen Bank founder and CEO, Muhammad Yunus has succeeded in his current fascination with individualistic myths of wealth and poverty. Many policy-makers believe that poverty is "simply" a problem of individual behavior. By rejecting the notion that poverty has structural causes, they deny the need for collective responses. Helping the poor is pernicious because such aid undermines the incentive for hard work. This ideology is part and parcel of neoliberalism.

           

              For neoliberals the solution to poverty is getting the poor to work harder, get educated, have fewer children, and act more responsibly. Markets reward those who help themselves, and women, who comprise the vast majority of micro-credit borrowers, are no exception. Neoliberals champion the Grameen Bank and similar efforts precisely because micro-credit programs do not change the structural conditions of globalization—such as loss of land rights, privatization of essential public services, or cutbacks in health and education spending—that reproduce poverty among women in developing nations.


Micro-credit:
               Yunus, a Bangladeshi banker and economist, pioneered the idea of setting up a bank to make loans to the "poorest of the poor." The term "micro-credit" reflects the very small size of the loans, often less than $100. Recognizing that the lack of collateral was often a barrier to borrowing by the poor, Yunus founded the Grameen Bank in the 1970s to make loans in areas of severe rural poverty where there were often no alternatives.

                 The concept of micro-credit started gaining popularity after Muhammad Yunus. The success of Grameen Bank’s micro-credit model, of which rural women and Self Help Groups (SHGs) formed more than 94% of clientele, incited an ontogeny that culminated in the arrival of many such institutions around the world in the last decade.

The Grameen Bank toasts its successes:
             Micro-credit advocates see these programs as a solution to poverty because poor women can generate income by using the borrowed funds to start small-scale enterprises, often home based handicraft production. But these enterprises are almost all in the informal sector, which is fiercely competitive and typically unregulated, in other words, outside the range of any laws that protect workers or ensure their rights. Not surprisingly, women comprise the majority of workers in the informal economy and are heavily represented at the bottom of its already-low income scale.

             Micro-credit programs do nothing to change the structural conditions that create poverty. But micro-credit has been a success for the many banks that have adopted it. Of course, lending to the poor has long been a lucrative enterprise.payday loan operations, and loan sharks charge high interest rates precisely because poor people are often desperate for cash and lack access to formal credit networks. According to Sheryl Nance-Nash, a correspondent for Women's e-News, "the interest rates on micro-finance vary between 25% to 50%." She notes that these rates "are much lower than informal money lenders, where rates may exceed 10% per month." It is important for the poor to have access to credit on relatively reasonable terms.

            However large or small their income gains, poor women are widely believed to find empowerment in access to micro-credit loans. According to the World Bank, for instance, micro-credit empowers women by giving them more control over household assets and resources, more autonomy and decision-making power, and greater access to participation in public life. This defense of micro-credit stands or falls with individual success stories featuring beggars using their loans to start some sort of mini small-scale enterprise, perhaps renting a stall in the local market or buying a set of cookies.
            Grameen Bank founder Muhammad Yunus won his approach towards his principles of management to banking, reinforces the neoliberal view that individual behavior is the source of poverty and the neoliberal agenda of restricting state aid to the most vulnerable when and where the need for government assistance is most acute. Expanding the state sector to provide the rudiments of a working social infrastructure is, therefore, a far more effective way to help people escape or avoid poverty.

Learnings:
                    
         -  Yunus approached where there were opportunity(market segmentation),for example when conventional banks approached the rich but he went to the poor people and created an opportunity to generate business. in the same way when project is done one must know where the opportunities are and penetrate it and generate business.

       -    In a team when a risk has to be taken it must be calculative and within limits.Yunus did this by lending a loan in a particular limit.

       -     In a product marketing unique points are to be followed which stands unique from others so that business is done.For example: yunus used usp which differenciated them from competitors(conventional banks) as follows:

        a)many banks (99%) reached only men while yunus approached women

        b)many banks asked for collateral where yunus dint ask for collateral .