Traditionally the poor of the world have not had access to banking as they are deemed not credit worthy. This presents a problem as one cannot make money without having any in the first place especially in areas where jobs are scarce. Those who have no choice but to take out a loan are forced to use loan sharks who charge exorbitant interest rates which most cannot repay, thus enslaving and sending those who took out the loan further into poverty.

A viable alternative to loan sharking and traditional banking is what is called microcredit. The idea of this loan system is to give small amounts of money to groups of people in need. This group based credit approach ensures loans are repaid due to the peer-pressure of the group. The idea of this system originally came about when Professor Muhammad Yunus was teaching economics at Chittagong University in Bangladesh. He felt useless teaching those who could barely afford to eat economics in the classroom, therefore he set off into the streets of Dhaka to see how he could be instead helpful. While conversing with those in the street he found that many people were enslaved to loan sharks, of those he talked to, 42 people were unable to get out of this situation. He decided to give them the money to free themselves and as soon as they were able to do so, they repaid Yunus.(1) This anecdote is the foundation for Grameen Bank.

The goal of Grameen Bank, founded by Professor Muhammad Yunus, is to break the cycle of poor generation after generation by allowing the them to borrow small amounts of money to invest in either a business or agriculture. This process is called microcredit and as Muhammad Yunus states it “is intended to help poor people work their way out of poverty.” (1) In contrast to Grameen bank, the traditional banking system and loan sharks, only push those in poverty further down. These business models are focused on making a profit rather than aiding those in need. The interest earned by Grameen bank as opposed to typical banks is that it only uses interest to allow new loans to occur so that other members of the community are aided. Grameen bank focuses on elevating the poor and the community as a whole by allowing them through their loans a means to lift themselves out of poverty.

Throughout time the microcredit method has helped many poor families in Bangladesh and has since been transferred to other poor areas of the world. In addition to this expansion, the idea of microcredit has also been re-imagined as a means of aiding those who find themselves unable to afford healthcare or in situations of natural disasters. During times of natural disaster Grameen Bank dedicates itself to the welfare of its members by acting as a humanitarian organization to those affected.(1) On the healthcare front, Grameen Healthcare was founded upon the same principles as Grameen Bank. At Grameen healthcare no one will be turned away from receiving the care that they need. Payment is negotiable and can be done when you have the ability to do so, taking the stress out of healthcare.(1)

The ideas established by Professor Muhammad Yunus understands the necessity of the poor to get loans and repay, not by fear but by trust. The idea of microcredit allows those who take out loans the ability to get the money they need without much stress and in addition keeping their dignity in the process. This allows those getting loans the ability to elevate themselves by their own talents.

(1) SMA News: Interview with Professor Muhammad Yunus: Edited by: Dr. Toh Han Chong