Buses and trucks barrel down Mirpur Road, in Dhaka, Bangladesh, blasting their horns and leaving trails of black smoke to settle on rickshaws and oxcarts. By the side of the road a high brick wall encircles four buildings in a compound, one of which is dominated by a tropical garden that opens to the sky. On many afternoons rain falls into the garden, and at their desks accountants can pause to listen to the sound of water slapping leaves. This is the head office of a bank that does its work in the countryside.
Thousands of visitors have traveled to Bangladesh to learn from this bank, and many arrive carrying tape recorders and note pads. When they enter the office, they find no receptionist, no carpets, no elevators, and few telephones. The rooms are equipped with ceiling fans, manual typewriters, paperweights, and stacks of ledgers. Only the computer room, on the fifth floor, is air-conditioned. Here programmers monitor operations and prepare reports, which they love to fill with wild-looking graphs depicting their organization's growth. The graphs all look basically the same: like ski hills, rising slowly at first, and then shooting up at impossibly steep angles toward the sky.
For two decades the Grameen ("Village") Bank has been extending small loans for self-employment purposes to some of the poorest people on earth—landless women in Bangladesh—and its financial performance has never been stronger. The bank's founder, the Bangladeshi economist Muhammad Yunus, continues to win international honors—the 1992 King Baudouin Development Prize, the 1993 CARE Humanitarian Award for Development, the 1994 World Food Prize—but his bank is hardly a one-man show. Grameen's loans are administered by more than 10,000 university and high school graduates scattered throughout Bangladesh—no small organizational feat in a country notorious for corruption and mismanagement, a country that since its birth, in 1971, has absorbed more than $25 billion in foreign aid and seen the majority of its citizens grow poorer.
The Grameen Bank, once dubbed the "barefoot bank," can no longer be described in quaint terms. With more than 1,050 branch offices that serve 35,000 villages and two million customers, 94 percent of them women, Grameen is the largest rural lender in Bangladesh, and the proportion of its loans that are repaid, 97 percent, is comparable to the repayment rate at Chase Manhattan Bank. Last year, after eighteen years of making small loans, Grameen had disbursed more than $1 billion; at the present rate the bank will cross the $2 billion mark sometime next year. "It's like McDonald's," Yunus says. "People know the quality of our service. Our job at head office is to make sure it doesn't deteriorate in any corner of the country."
Given that Grameen's banking system is based on trust and mutual accountability, that is quite a task. To qualify for a loan, a villager must demonstrate that her family assets fall below the bank's threshold. She will not be required to put up collateral; instead she must join a five-member group and a forty-member center and attend a meeting every week, and she must assume responsibility for the loans of her group's members. This is crucial, because it is the group—not the bank—that initially evaluates loan proposals. Defaulters spoil things for everybody else, so group members choose their partners wisely. If all five repay their loans promptly, each is guaranteed access to credit for the rest of her life—or as long as she elects to remain a customer. In this fashion Grameen is faithful to the Latin from which "credit" derives: credere —"to believe."
"The myth that credit is the privilege of a few fortunate people needs to be exploded," Yunus explains. "You look at the tiniest village, and the tiniest person in that village: a very capable person, a very intelligent person. You have only to create the proper environment to support these people so that they can change their own lives."
Pure idealism? Well, yes. Nonetheless, these words come from a man who has designed a bank that forces its borrowers to save money for emergencies, provides them with benefits in the event of death, and is in the process of instituting a village-based health-care and insurance program, which will be self-financing. Today, against the backdrop of two and a half decades of often-wasted international aid, Grameen's entrepreneurial approach stands out as singularly effective and sustainable. Up to 1994 the bank had revolved its loan capital more than five times. Along the way it helped millions of villagers to move from one or two meals a day to three, from one or two sets of clothing to three or four. Grameen members have borrowed money to pay for their children's education, to buy medicine, to build houses, to accumulate assets for old age, and—like the peddler Oirashibala Dhor—to pay for their daughters' weddings.
Inside, the mud walls were smooth to the touch. Above a table hung a framed birth certificate and a political-campaign poster featuring the party's logo—a riverboat. Another wall was decorated with yellowed pages from USA Today.
Oirashibala Dhor set her basket on the ground beside my translator. She appeared to be constructed entirely of angles—knees and elbows jutting sharply from beneath her plain white sari. Her hair was silver, her brow deeply creased, and she had only half her teeth. She was born, as she put it, "before the British-Japanese war of 1943."
Whispers could be heard from behind a bamboo screen. Two young sisters and an older woman emerged, and were joined by several neighbors and their children. Oirashi, as everyone calls her, took up a red capsule from her basket. "Lip gloss," she announced. "You put this over lipstick, your lips shine."
"How much is the lip gloss?" a young girl asked. "Give it to me for six takas."
Another girl, browsing through Oirashi's basket, inquired, "How much is this hair clip?"
"Don't be so extravagant," her mother said.
The girl dropped the hair clip and picked up a jar of Fair and Lovely beauty cream, which promised "noticeably fairer" skin in six to eight weeks.
"That's for older people," Oirashi said. She selected a glass bangle, polished it with her sari, and asked the girl if she liked the color. The girl nodded. Oirashi requested soap and water. She wet the girl's tiny wrist and then squeezed and twisted until the bangle slid on. The girl extended her arm to show her mother. Children at the door pressed forward to see.
"Stop blocking the door," an older woman yelled. "Let the breeze in."
"Nowadays children are so disrespectful."
"Please give me the lip gloss for three takas less," the first girl said, her final plea.
"Don't kill me," Oirashi replied.
Oirashi has been supporting herself and her two daughters since the death of her husband, twenty-five years ago. "He died of frozen Satan's gout," she told me on my recent visit to her village. "Nowadays the doctors call it pneumonia." Every morning except Sunday, when her Grameen Bank meeting is scheduled, she gets up with the sun, offers a prayer, places her basket on her head, and sets out to sell her wares. She walks for miles. Though she sells sandals, she never wears them. I asked her why.