Granting loans to beggars, Yunus style
Imagine granting loan to a beggar and converting them into entrepreneurs. While commercial banks seeks a collateral before granting a loan and imposes scores of conditions, here at the Grameen Bank founded by Nobel Laureate Muhammad Yunus, the bank arrives at the doorstep of the beggar and offers a loan without any collaterals or preconditions.
Sounds incredulous, but that is precisely what is happening. “The idea is that when a beggar goes from house to house begging, he/she also carries some merchandise along with – cookies, candies and the like”. The beggar can sell the merchandise to those very houses where they went. This way, the beggar has a chance to earn money and become an entrepreneur.
“This demonstrates that even a beggar can run business – forget about entrepreneurial people,” laughs Prof Muhammad Yunus, founder of the Grameen Bank.
Beggars have been quick to inform the Grameen Bank that they have already identified houses which donate money for charity and houses which buy merchandise from them. “Without having gone to a business school, they have discovered market segmentation”, Yunus says with a smile.
We have nothing to lose, he says since if a $ 15 loan can help a person come out of poverty, it is worth a try. Since the loan does not carry any interest. So in the eyes of the world, the beggar can never be a defaulter. Ninety seven per cent of the borrowers of Grameen Bank are women.
His faith that every individual has entrepreneurial skills has been reaffirmed.When the Grameen Bank launched the loan for beggars program, they had thought only about 2-3,000 beggars would seek loans. Today 120,000 beggars (mostly women) have benefitted from this program and 16,000 of them have stopped begging. “In fact they have come back for their second, third and even fourth loans,” Prof. Yunus reveals.
“People ask me what happened to the other beggars and I respond by saying that they are part time beggars and part time businesspeople”, Prof Yunus says. “After all it takes time for someone to quit his or her core business where he has to shut the begging division and build the sales division”, Prof Yunus laughs again.
