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