Banking for the Poor: A Philosophy

“Give a man a fish and he will eat for a day.  Teach a man to fish and he will eat for a lifetime.”  This is philosophy behind the Grameen Bank and NSCAPF.  Grameen (I am not sure how NSCAPF started, so I will give you a brief synopsis of Grameen only) was formulated not as a charitable organization (as some view it), but as a bank that just so happens to be a not-for-profit.  You see, Grameen charges interest on it’s loans and earns its income and the payment of its operating expenses and growth based on this interest charged.  So, in essence, Grameen borrowers are investing in the growth of their own communities!

So, Grameen does not want to be seen as a charity because charity is a hand out and financial handouts do not improve peoples long-term positions as well as giving them credit to start something that they can grow.  Sure, this can be done by giving people money just the same, can it not?  There is one thing that you may be forgetting, if you are given money with no recourse or consequence, odds are you are going to “consume” the money.  In other words, you will spend the money on consumable product such as food or more luxury items, not in order to maintain or improve your business.  When you have a loan however, whoever you are, you must maintain your income and improve upon it in order to pay the principle an interest.  This gives you accountability to improve upon your position, not just consume your loans.  This is the philosophy of Grameen.  Give a person some responsibility and they will become responsible, and they may even surprise you.  

Grameen Bank borrowers did not surprise Yunus when he started Grameen, they did exactly what he thought poor people would do... everything they could to improve their livelihood.  It is exactly that for these borrowers... their livelihood, not just an additional business or another stream of income, but their one source to get out of extreme poverty.