Grameen Bank takes a proactive approach by reaching out to the poor to offer loans, which results in significant life changes for borrowers, says Grameen Bank Managing Director Nur Mohammad. Nur, who began working for Grameen Bank as an education officer in 1989 and was promoted to managing director in January this year, discussed the bank’s outstanding efforts in changing the lives of marginalised people through SME loans in an interview with The Business Post’s ASM Saad recently.
How is Grameen Bank different?
Grameen Bank is a specialised bank focused on small and medium enterprises (SMEs). When Grameen Bank began disbursing loans to the SME sector, other banks had not yet entered this market. By targeting SMEs, Grameen Bank provides loans to poor individuals, helping them improve their lives.
The bank's SME programme is highly successful in Bangladesh, boasting a loan recovery rate of 98 per cent since inception. Nearly 20 million people have received SME loans from Grameen Bank. The bank has disbursed over Tk 70,000 crore in the SME sector and recovered Tk 67,000 crore by December 2023.
What makes it easy for the poor to get loans from Grameen Bank?
Grameen Bank takes a proactive approach by reaching out to the poor to offer loans, resulting in significant life changes for borrowers. Unlike traditional banks that wait for borrowers to come to them, Grameen Bank goes directly to the borrowers.
Our management meets with potential borrowers in villages, and if they have a solid investment plan, we provide loans. We also maintain regular contact with them post-disbursement to ensure proper utilisation of the funds.
How are Grameen Bank loans distributed and in what amounts?
The mission of Grameen Bank is to train landless and poor individuals. The bank assesses their financial needs and provides appropriate loans. Additionally, Grameen Bank offers scholarships to the children of its borrowers.
Loans ranging from Tk 50,000 to Tk 500,000 are provided to small businesses at a 20 per cent interest rate without collateral, contributing to the country's economic growth. Loans are disbursed gradually rather than in large sums at once.
What has been Grameen Bank's profit over the last five years?
Our profits were Tk 318 crore in 2018, Tk 472 crore in 2019, Tk 348 crore in 2020, Tk 172 crore in 2021, Tk 236 crore in 2022, and Tk 190 crore in 2023. We have government support, with the government holding a 25 per cent share. We have also established our own IT department, reducing our reliance on third-party services. Our non-performing loan (NPL) rate is just 1 per cent.
Has the board ever pressured Grameen Bank to distribute loans?
We have not faced any pressure from the board to distribute loans. Our management operates independently. With 23,000 employees, Grameen Bank is committed to serving poor individuals without facing significant problems.
