(banking) Literally, Bank of the Villages. A bank founded in 1976 by Muhammad Yunus, a US-educated professor of economics, to test his methodology for providing credit and other banking services to the rural poor (especially women) of Bangladesh. Since that time the Grameen Bank and its many subsidiaries have grown and made a reputation for both themselves and the concept of microcredit. Some interesting facts about the bank: the bank is 94% owned by its borrowers and 6% by the Government of Bangladesh; total borrowers: 6.39 million; women borrowers: 96%; loan recovery rate: 98.45%.
Features of the loan methodology include: 1) Loans are made without collateral and without legally enforceable contracts. 2) Loans are made to promote self employment, housing and education, not consumption. 3) Borrowers must join a group of borrowers and attend weekly meetings. 4) Borrowers must agree to both obligatory and voluntary savings programs. 5) Although the loans are very small, the interest rates charged are very close to market rate. In 2006, Yunus and Grameen received the Nobel Prize for Peace. See microcredit.