Tangail and other districts follow Jobra example

"The Experimental Grameen Branch of the Krishi (Agriculture) Bank"

As 1977 progressed, meetings were held regularly and were well attended, and new loan proposals were coming in at an accelerating rate. However, Janata Bank had to send each proposal to Dhaka for approval, regardless of how small they were, where it competed for the attention of bank officials who were also dealing with loans that were thousands of time larger. This proved a fruitless task. During whole of 1977, only 65 people were able to take out loans, and hundreds of others to whom Dr Yunus had promised loans were becoming restless https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false. Dr Yunus concluded he needed to find a more flexible sponsor than Janata.

In October 1977, on a trip to the capital Dhaka, Dr Yunus had a chance meeting which radically altered his efforts to bring credit to the poor villagers of Jobra. He went to the Bangladesh Krishi ("Agriculture") Bank (BKB) for personal reasons that had nothing to do with Grameen, and bumped into the managing director A. M. Anisuzzaman https://books.google.co.uk/books?id=41sGGHUE5N4C&pg=PA98&lpg=PA98&source=bl&ots=ge_cNhSmyn&sig=J1RVIESdr3OmP6lDJNsQAkdJvUs&hl=en&sa=X&ved=0ahUKEwia0JivrJ_JAhVHDxoKHTIDDDMQ6AEIJjAC#v=onepage&f=false. Seeing Dr. Yunus, Anisuzzaman launched into a blistering attack against academics for not doing enough for Bangladesh.

You academics are failing us. You are failing in your social duties. And the banking system of this country stinks. It is all corruption and embezzlement and filth. Millions of taka are stolen every year from the BKB bank without any trace. No one is accountable to anyone for anything. Certainly not you lily-white-handed academics with your cushy jobs and your jaunts abroad. You are useless all of you. Utterly useless! I am absolutely disgusted by what I see in this society. No one thinks of the poor. I tell you this country is a disgrace, and it deserves all the problem it has.

A. M. Anisuzzaman's tirade

Anisuzzaman went on and on. Once he began to slow down, Dr Yunus countered that he did have a practical proposal which may interest him.

Dr Yunus recommended that Krishi Bank should expand its services and become an all-encompassing rural bank or village since many of the people in rural areas, particularly the landless, were not involved in agriculture, or at least not the whole year round. By becoming a village bank this would make loans for all of the productive activities in which villagers were involved, instead of simply for agriculture.

Dr Yunus spelled out his specific proposal: Krishi Bank should put an entire branch at his disposal, where he could make the rules, decision on who borrows and on what terms.

Dr Yunus informed Anisuzzaman of his works with Janata Bank. Anisuzzaman was very excited by the young professor's vision and passion. The two men put together plans for Prof. Yunus to run his own bank branch. Prof. Yunus would remain as a professor but oversaw the branch, which would be staffed with his former students.

Anisuzzaman rang the Chittagong regional manager and instructed him to cooperate fully with Dr Yunus. Upon his return to Chittagong Dr Yunus worked with the regional manager and his acquintainces to draft his proposal. He suggested another name for the branch. Instead of calling it Krishi Bank, since farmers were not the poorest people of Bangladesh - that burden was carried by the destitute landless labourers, Dr Yunus suggested a more inclusive term to cover all rural folks: "Grameen".

Few months later, Anisuzzaman called him for another meeting in his Dhaka office. After Dr Yunus declined his offer to leave his teaching post and work for the bank, Anisuzzaman recommended that Dr Yunus's students be employed by the bank and he could oversee everything in an unofficial capacity. Dr Yunus agreed. Anisuzzaman then renamed the branch to "The Experimental Grameen Branch of the Agriculture Bank" https://books.google.co.uk/books?id=41sGGHUE5N4C&pg=PA98&lpg=PA98&source=bl&ots=ge_cNhSmyn&sig=J1RVIESdr3OmP6lDJNsQAkdJvUs&hl=en&sa=X&ved=0ahUKEwia0JivrJ_JAhVHDxoKHTIDDDMQ6AEIJjAC#v=onepage&f=false.

We were both smiling now. He got up. We stood by the window. Outside, the chaos of the city streamed by. I saw barefoot beggars with babies, women asleep on the sidewalk, children with deformed limbs and emaciated bodies.

"The urban poor are another problem," Anisuzzaman said with a loud sigh.

"If we alleviate suffering in the countryside, that will reduce the pressure on the poor to rush to Dhaka and clog the streets," I said.

He nodded slowly. "Good luck, Professor."


Once the Jobra branch of the Agriculture Bank opened, Prof. Yunus combined his dual role as full-time university professor and branch manager. Though the speed of work was now faster as compared to Janata Bank, and he no longer needed to guarantee each loan personally, widespread success was slow. There were many individual successes but they won't still able to make "much of a dent in the chronic poverty of the villages".

Prof. Yunus accepts challenge - and 1.3 million taka - to prove his plan works across a district, not just an area

In 1978, as the project neared completion of its second year, Dr Yunus attended a prestigious seminar on "Financing the Rural Poor" held by Bangladesh Bank, the nation's central bank. Dr Yunus presented a two-page paper about the Experimental Grameen Branch, followed by nearly 15 pages https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false of tables and charts detailing how much money had been taken out and paid back, who had taken it out and for what purposes.

The audience were skeptical. They argued the interest rate of 13% was not profitable and should be much higher. However, Dr Yunus argued the main thing was the recovery rate, not the interest rate. If a program charged negative 5% interest and actually got repaid 95 taka for every 100 taka it lent, that would be better than charging 36% interest for example and failing to get back even half of the loan https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false.

At the end of the day, Dr Yunus was challenged by a banker to demonstrate that his methodology could work over an entire district - a challenge that he accepted on the spot. All that was required now was for him to find a sponsor who would provide him with the resources necessary to do the work.

Luck was on his side. Among the dignitaries attending the seminar was A. K. M. Gangopadaya, the deputy governor of Bangladesh Bank, a widely admired figure in financial circles. Gangopadaya was impressed by the young professor and extended his support. He raised the issue at a Bangladesh Bank board meeting where Mafazul Huq, a former minister of the central government of Pakistan, spoke up in support of the idea and suggested that the board members take a field trip to Jobra to visit the project https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false.

Huq and several board members, along with managing directors of Janata, Krishi, and Sonali banks made a trip to Jobra in December 1978. All of them were very impressed and expressed interest in getting involved. But Bangladesh Bank took the lead and Gangopadaya began formalising the role it would play in the project's expansion. He approved a budget of 1.3 million taka for the expense of expanding the project, just a quarter of what Yunus asked for but enough to get started https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false. The site of the project was identified - the troubled district of Tangail, a poor areas of Bangladesh some 70 miles north of the capital Dhaka.

Branch in war-torn Tangail District

Prof. Yunus took a leave of absence from teaching and on 8 June 1979, along with two former students, Assad and Dipal, officially began work for Bangladesh Bank. After completing the formalities in Dhaka, the three young men moved to Tangail.

Tangail District was littered with arms and ammunition left over from 1971 Muktijuddho (Liberation War). Armed gangs called Gonobahini (The People's Army), an underground Marxist dissident movement, was terrorizing the countryside.

These guerrillas killed with little compunction. They simply pointed a gun and fired. In every village we came across dead bodies lying in the middle of the road, hanging from trees, or shot by a wall. The countryside was awash with arms and ammunition left over from the War of Liberation. To save their lives, most of the local community leaders had run away, hidden with neighbours, or moved into hotels in Tangail City. There was neither law nor order.


It was finally agreed that Grameen Bank Project (GBP) would need 19 project offices throughout the district https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false with Prof. Yunus's star pupils being project officers and overseeing the day-to-day operations of the project. Later three more people came on board the project: Sheikh Abdud Daiyan, a young statistician appointed as a research officer, and Nurjahan and Jannat from the Jobra branch who were assigned the responsibility for designing a series of social development workshops for female borrowers. Nurjahan later married Assad. Her and Jannat's salaries were paid by UNICEF and not Bangladesh Bank https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false.

Prof. Yunus then began hiring more project workers, many of whom had been members of Gonobahini. He reminded the passionate, but volatile muktijuddhas (freedom fighters) that the war was over, and that now it was time for the liberators to do work for a living and build up their country.

In addition to these serious difficulties and challenges, Prof. Yunus and his team had to confront the resentment of staff at the traditional banks. They were supposed to cooperate but refused to since they were not convinced by the financial model of Grameen. On one occasion, the situation became so bad that an officer of Grameen pointed his gun at the manager of a local commercial bank and threatened to kill him if he refused to make funds available to Grameen's borrowers.

At one branch, this volatile mix of politics, action-research, and guns boiled over. The local Krishi Bank manager, like many of his colleagues, annoyed at having to take on additional responsibilities serving the GBP without an increase in salary or even bribes, continually tried to humilate Yunus's local staff. One evening, as the manager was returning home, he was ambushed by the local field manager and a bank worker. He was pinned to the ground, nearly suffocating as one gun was pressed against his throat and the barrel of another pointed at his chest. Before they let him go, the bank manager was forced to promise that he would treat the GBP staff with more respect.

Despite Yunus's ministrations, the manager, fearing another encounter with the GBP staff, left his branch. Yunus quickly fired the bank worker and demoted the field manager, who subsequently quit. But the damage had been done. Rumours circulated among the government bank staff in Tangail about GBP workers being terrorist. Relations with Krishi Bank, historically the most cooperative of the banks with which GBP worked, too months, even years, to heal.


Under such dangerous and hopeless situation, Prof. Yunus and his young staff worked diligently to improve people's lives. Some of his workers were ex-Gonobahini fighters who just needed a more constructive path to channel their energy other than "terrorism". Their spirit was kept high by the generiosity of the locals who, even in the depravity, still offered to share of the belongings they had. But Grameen had made it a rule not to accept food or gifts from any borrower or villager. So reluctantly, they refused the various offers https://books.google.co.uk/books?id=41sGGHUE5N4C&pg=PA98&lpg=PA98&source=bl&ots=ge_cNhSmyn&sig=J1RVIESdr3OmP6lDJNsQAkdJvUs&hl=en&sa=X&ved=0ahUKEwia0JivrJ_JAhVHDxoKHTIDDDMQ6AEIJjAC#v=onepage&f=false.

Dr Yunus marries a Bengali woman

After three painful years as divorcee, Dr Yunus decided to remarry. In 1980 he married Afrozi Begum, a Bengali teacher and researcher in advance physics who was working at University of Manchester in England. Afrozi shared Dr Yunus' ability to be "comfortable...in the eastern and western worlds".

Their marriage was a lavish affair. It was a big ceremony held in Dhaka attended by many of the ministers whom Dr Yunus knew and bankers with whom he worked with. Following their marriage, Afrozi went back to England to continue her research for few months and then returned. They lived in on the third floor of Dr Yunus' office in Tangail. Their one and only child, daughter Deena Afroz Yunus was born six years later in 1986.

Rapid expansion into five widely separated districts after receiving big financial backing from Ford Foundation, IFAD, and Bangladesh's Central Bank

Amid all the chaos, the work of forming bank repayment groups and disbursing loans was progressing well. Dr Yunus spent most of his days moving from branch to branch, sitting in on centre meetings and group training sessions or simply talking to borrowers in their homes about the progress they were making.

When his staff learned of his personal sacrifices - eating in a communal mess, living alone in a dingy apartment, forgoing a pay increase - many were willing to put in the long hours needed to ensure that the project worked.

The diversity of skills that the poor could capitalise on with loans from GBP (Grameen Bank Project) impressed Yunus and his staff. There were the weavers of Deojan Delduar, the confectionery makers of Rokkhitbelta, the puffed rice fryers of Narandia, and the mustard oil crushers of Ghatail. More than ever, he was becoming confident that the approach worked. The effect on people's lives were often dramatic.


Despite the project's success, there were concerns about how much it was costing to run. In 1981 Sonali Bank claimed that its new Sonali Bank - Krishi Shakha (Golden Bank - Agriculture Bank) accomplished the same objectives as the Grameen Bank Project at considerably lower cost. However, a closer inspection proved that this claim was false and misleading https://books.google.co.uk/books?id=ovrsdJBMTTAC&pg=PA38&hl=en&sa=X&ved=0ahUKEwi9lsSCpqXJAhVDQBoKHX-dDBUQ6AEIHzAA#v=onepage&f=false.

The bank continued to flourish and its services were extended to several other districts of Bangladesh. From initial group of 42 stool makers to whom Prof. Yunus loaned $27 from his own pocket to the 500 Jobra members Grameen had in 1979 https://books.google.co.uk/books?id=A8yK3zLqARAC&pg=PA157&hl=en&sa=X&ved=0ahUKEwiekOmp7qbJAhXEvhQKHevFB5IQ6AEIHzAA#v=onepage&f=false, membership of Grameen had grown to 28,000 by November 1982, of whch fewer than half were women https://books.google.co.uk/books?id=iL0vtijwaksC&pg=PA493&hl=en&sa=X&ved=0ahUKEwitt9r5nKrJAhUBXQ8KHSeyCsgQ6AEIMjAC#v=onepage&f=false. Such a jump was the result of the hard work and dedication of the workers and managers of Grameen.

The success of the Tangail project gave Prof. Yunus the confidence to outline a 5-year expansion plan. By the end of 1981 Grameen Bank Project had disembursed total loan of $13.4 million https://books.google.co.uk/books?id=iL0vtijwaksC&pg=PA493&hl=en&sa=X&ved=0ahUKEwitt9r5nKrJAhUBXQ8KHSeyCsgQ6AEIMjAC#v=onepage&f=false. In 1982 Prof Yunus contacted the Ford Foundation in America and asked them if they could find some sympathetic bankers he could talk to in India or the United States. Soon, two American bankers, Ron Grzywinski and Mary Houghton from Chicago's South Shore Bank (later ShoreBank), arrived. The pair had founded South Shore Bank few years earlier in 1973 with Milton Davis and James Fletcher. It was the United States' first community bank and proved that a bank could make money serving poor customers http://www.microcapital.org/pioneers-in-microfinance-ron-grzywinski-and-mary-houghton/. The bank was renamed to ShoreBank with a view to serving the wider community around the globe.

Ron and Mary gave the Grameen Bank Project a thorough assessment, making fifteen "technical visits" https://books.google.co.uk/books?id=RtHauhXQ-UYC&pg=PA196&hl=en&sa=X&ved=0ahUKEwj88ZHipsjJAhVGWxQKHcaZBNEQ6AEINDAB#v=onepage&f=false. Based on their recommendations, Ford gave Prof. Yunus $800,000 as a guarantee fund https://books.google.co.uk/books?id=RtHauhXQ-UYC&pg=PA196&hl=en&sa=X&ved=0ahUKEwj88ZHipsjJAhVGWxQKHcaZBNEQ6AEINDAB#v=onepage&f=false. With this, he was able to negotiate a loan of $3.4 million at 2% rate of interest https://books.google.co.uk/books?id=RtHauhXQ-UYC&pg=PA196&hl=en&sa=X&ved=0ahUKEwj88ZHipsjJAhVGWxQKHcaZBNEQ6AEINDAB#v=onepage&f=false from the International Fund for Agricultural Development (IFAD), based in Rome. The Central Bank of Bangladesh matched this fund https://books.google.co.uk/books?id=RtHauhXQ-UYC&pg=PA196&hl=en&sa=X&ved=0ahUKEwj88ZHipsjJAhVGWxQKHcaZBNEQ6AEINDAB#v=onepage&f=false. Grameen was on its way.

We helped Yunus a lot.

Mary Houghton recalling trips to Bangladesh, where she assisted Yunus, who had no formal banking experience, in refining his business plan and raising money from investors

Even before Grameen existed, ShoreBank's founders had the idea that a bank could be socially responsible.


Financial backing secured, GBP launched the expansion program across the country. They moved into five more widely separated districts to become accessible to more people around Bangladesh. These were Dhaka in the centre of the country, Chittagong in the south-east, Rangpur in the north-east, Patuakhali in the south, and Tangail in the north. By the end of 1982 they were able to loan out an additional $10.5 million https://books.google.co.uk/books?id=iL0vtijwaksC&pg=PA493&hl=en&sa=X&ved=0ahUKEwitt9r5nKrJAhUBXQ8KHSeyCsgQ6AEIMjAC#v=onepage&f=false.

Yunus is a vocal critic of foreign aid. He has rightly pointed out that "donors and consultants tend to become overbearing in their attitudes towards the countries they help". But he goes farther than that, accusing donors of mismanagement and even corruption.

Without donors, 15 technical visits from Ron Grzwinski and Mary Houghton, the guarantee fund from the Ford Foundation, and the loan from IFAD, Grameen might never have grown beyond project status.


But Prof. Yunus still vexed under the authority of the Central Bank, and he lobbied for the transformation of Grameen from a project into an independent bank with its own charter. The opportunity was to arose very soon.