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people often associate good works and
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worthwhile causes with nonprofit
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institutions but you have emphasized
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that your model is a for-profit one not
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a nonprofit one can you briefly describe
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that model and tell us why the
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distinction is so important to you well
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that's how we became I mean we are not
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trying to create a nonprofit that was
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not Our intention my intention was to
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persuade the bankers to lend money to
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the poor people so my struggle always
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with the bankers so uh initially I
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offered myself as a guaran and then uh
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took the money from the bank and gave it
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to people so it was an extension of
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bank's activity uh when we saw that it's
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working well and the bank Banks were not
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as enthusiastic as we were we thought
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maybe we should have a separate Bank
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created for this purpose and finally we
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did that in 1983 called gramine bank or
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a village bank so we became a bank
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because it is A bank's activity uh we
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lend money to the poor people and people
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sometimes uh refer to us as an NGO so we
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have to explain that we are not an NGO
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it's not that we are saying belittling
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NGO that they are not good I'm good it's
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not like that simply stating a fact that
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people get confused because we work with
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the poor people then it must be an NGO
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he said no we are a bank and it's owned
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by the poor people uh so the owners of
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the bank are the borrowers of the bank
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so that's the distinction that we want
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to make clarify what we are well
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obviously gramine bank has grown
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dramatically over the since the time
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that you founded it uh I've read that
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you now have operations in more than 100
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countries uh and uh you have 7 million
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borrowers in Bangladesh alone
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uh but your success with gramine has led
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to a lot of other people entering the
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microcredit area uh some of them are
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commercial Banks some are funded by
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Venture capitalists how has that changed
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the microc credit model and can you
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explain you know some of the issues that
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have come up as a result of that yeah
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just a little clarification uh we work
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uh or at least the gramine idea has been
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working in almost all the countries of
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the world because now not right to say
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100 countries uh there are microcredit
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progr so you're even more successful at
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least the idea has a spread that whether
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they are big or small successful or not
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that there are presences presence in all
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those countries uh and right now we are
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nearly 8 million borrowers within
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gramine Bank itself you so that way
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gramine Bank also has expanded within uh
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Bangladesh uh yes lots of organizations
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have come come in and we have encouraged
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them to come in to do the job NOS have
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done that and others have done that when
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the word becomes popular and the idea
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becomes popular many people want to join
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those kind of thing so the word
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microcredit became very popular micr
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Finance became very popular and those
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who were not using these words before
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suddenly they started using it like
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agricultural banks around the world
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saying that we do microc
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credit uh they never said that before so
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uh whatever they do whether they are
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microcredit or not this is a debatable
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subject because uh we Define microcredit
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micr Finance in a certain way like this
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is a credit and a financial service to
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the poorest people without collateral
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without
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guarantee uh and without any lawyers in
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this system uh so that has to be very
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clear in our work before we call it
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micro microc credit or micr finance and
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this is focused more on women poorest
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women so this these are the aspects if
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you look at the agricultural banks for
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example most of the Agricultural banks
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around the world require collateral you
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have to bring your land records or
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whatever it is uh similarly Savings and
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Loan Association saying that we do
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microc credit cooperatives are saying we
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do micro credit uh those who are giving
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agricultural loans commercial banks are
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saying we are M doing microc credit uh
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so we need to kind of clarify what is uh
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microcredit uh in it pure form uh rather
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than bring everything else and microc
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credit is always given to uh people for
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income generating activity so whatever
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money you are taking you're investing it
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uh to create an income source for
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yourself uh there are many programs
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which give loans for buying consumer
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goods and they say we are doing
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microcredit they're giving money to buy
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refrigerator or buy television we say we
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do microc credit we say no sorry that's
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not microc credit uh so we have to sort
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this out and another aspect that I want
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to draw attention to there are many uh
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microcredit programs uh going around and
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they're advertising themselves saying oh
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this is a great opportunity to make
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money there is a huge big field out
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there a lot of people and you give money
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and you make a lot of money uh and they
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encourage people who want to make money
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to join in and do that again we said
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look our purpose is not to uh uh excite
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people about making money uh and getting
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excited about that our purpose is to
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help people get out of poverty so
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everything you do uh the focus is not on
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profit making focus is on helping people
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to get out of poverty uh so those who
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are taking this as an opportunity to
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make money have to uh raise their
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interest rate to the extent that they
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make a lot of money uh so interest rate
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issue becomes a sensitive issue uh we
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are saying interest rate should be kept
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down as low as possible preferably to
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cover cost and if you want to make a
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little profit on top of it it should be
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very modest profit so that uh it doesn't
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look like this was your uh intention so
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those who were doing that uh using
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microcredit micro Finance uh for uh
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making a lot of money uh we kept saying
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that these are not microc Credit in the
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sense that we do it uh because we came
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here to fight out the lone sharks not
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become lone sharks ourselves
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so this is they are moving into the
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direction of lone sharks so we want to
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dis dissociate ourselves from them so
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how do you tackle that does uh some
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regulation is that some regulation
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required and what kind of Regulation
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should there be within Bangladesh we
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have been uh talking about regulation we
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have created a within Bangladesh
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government has created a microed
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regulary Authority uh with our
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suggestions they have done that so they
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will be looking into the interest rate
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issue transparency issue many people
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Court their interest rate in many many
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ways hiding the actual fact how much
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they're charging we said it has to be
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very transparent uh all interest rates
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should be expressed in an standardized
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form so that we can compare A and B who
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charges more or not uh or less this is
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something that they have to clarify
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right away uh and also to keep the
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interest rate as low as possible this is
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an encouragement regulatory Authority
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should be putting in and for personally
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I have been uh promoting the idea that
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true micro credit interest rate should
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be within a particular range I said cost
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of fund at the market price plus 10%
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this is the green zone of microcredit
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interest rate you are legitimate you're
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doing excellent work if it is cost of
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fund at the market price plus 10 to 15%
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we say your interest rate is in the
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yellow zone you're on the high side but
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still we'll consider you genuine micro
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credit program I we encourage you to
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push yourself back into the green zone
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and the other one the cost of fund at
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the market price plus 15% and above then
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we say you are in the Red Zone meaning
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that you are too high and you are on the
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wrong side of microc credit you're
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moving into the lone Shark Zone
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