Micro-finance pioneer outlines bank philosophy on helping the poor help themselves at the International Islamic Finance Forum
The philosophy of a bank that rejects the rich and seeks out the poor to become its customers – including over 100,000 beggars – was outlined yesterday (13 April 2008) as micro-financing came under examination at the premier event in Islamic finance.
While the $1 trillion sub-prime crisis is causing turmoil in the conventional financial world, Bangladesh’s Grameen Bank continues to give interest-free loans of $15 dollars with no time limit for repayment even to beggars.
“When it comes to sub-prime, you can’t get more sub-prime than our customers,” Professor Muhammad Yunus told the International Islamic Finance Forum which opened yesterday at the Jumeirah Beach Hotel, Dubai, under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai.
“Banker to the poor” Professor Yunus, the founder and Managing Director of Grameen Bank. Professor Yunus, along with the bank, were jointly awarded the Nobel Peace Prize in 2006 “for their efforts to create economic and social development from below.”
Explaining how the bank operates, Professor Yunus said: “Conventional bankers look for the richest person as their customer, we are looking for the poorest persons and we have a check list. If there is any furniture in their house, they will have to wait; if the roof of their home is solid, they will have to wait; if there is more than one room in their house, they will have to wait. Priority is given to the poorest customers.”
The Grameen Bank has issued more than $5.1 billion in loans to 5.3 million borrowers, maintaining a hugely successful repayment rate of 99%. The bank, whose 7.5 million customers are also its shareholders, is a model that has inspired similar efforts across five continents.
The bank began with a policy that 50% of its customers must be women but has gradually increased the ratio and now 97% are women. The bank is also profitable, employing 27,500 staff who deal directly with customers on their own doorsteps rather than through offices. “When it comes to how we operate, think of a conventional bank and we do just the opposite,” Professor Yunus said.
On the programme for beggars, the bank simply asks them to repay loans as best they can and helps them by arranging small items such as toys to sell instead of, or in addition, to begging. Of the 100,000 beggars who have become part of the programme, more than 11,000 have now stopped begging and have been successful in selling items.
The International Islamic Finance Forum - with participants from around 50 countries - tracks the latest developments in the world's fastest growing financial sector. Over the next two days the forum will discuss the harmonisation of Islamic finance; the growth of Sukuk; the potential of Takaful; accounting standards; social responsibility; alternative asset classes; treasury management; hedge and electronic trading funds.
The forum speaker faculty includes more than 35 of the world's leading Shari'ah scholars; CEOs and CFOs of the Islamic finance world; senior corporate, investment and retail bankers; conventional and Islamic lawyers and legal consultants; fund and index managers; university academics and financial trainers; commodity traders and media specialists.
The International Islamic Finance Awards will also be announced today (14 April 2008) recognising significant contributions and important developments in the sector.
The forum is supported by DLA Piper as headline sponsor, Dubai Bank as diamond sponsor, ITS as platinum sponsor, Path Solutions and Anwar Global Properties as gold sponsors and Oracle as silver sponsor.
For more details about the 2008 International Islamic Finance Forum, please visit: www.iiff.com
