A
bank in Bangladesh that pioneered modern
microfinance. Grameen Bank makes very small
loans to extremely impoverished persons to help them achieve
self-employment so they are able to lift themselves out of poverty. Borrowers belong to five member groups; members encourage each other to
repay the loan.
Borrowers must agree to abide by 16 rules for social betterment. While critics contend that too many of Grameen's loans extract high
interest rates, some are
interest-free. Historically, Grameen has had very low
default rates, though many borrowers pay late. It was founded in 1983 by Muhammad Yunus.