Nobel Prize winner tells MIT graduates to consider conventional practice and do the opposite:
Now, in hindsight, I can joke about it. When people ask me, "How did you figure out all the rules and procedures that is now known as Grameen system?" My answer is: "That was very simple and easy. Whenever I needed a rule or a procedure in our work, I just looked at the conventional banks to see what they do in a similar situation. Once I learned what they did, I just did the opposite. That's how I got our rules. Conventional banks go to the rich, we go to the poor; their rule is -- "the more you have, the more you get." So our rule became -- "the less you have higher attention you get. If you have nothing, you get the highest priority." They ask for collateral, we abandoned it, as if we had never heard of it. They need lawyers in their business, we don't. No lawyer is involved in any of our loan transactions. They are owned by the rich, ours is owned by the poorest, the poorest women to boot. I can go on adding more to this list to show how Grameen does things quite the opposite way.
Was it really a systematic policy—to do it the opposite way? No, it wasn't. But that's how it turned out ultimately, because our objective was different. I had not even noticed it until a senior banker admonished me by saying: Dr. Yunus, you are trying to put the banking system upside down." I quickly agreed with him. I said: "Yes, because the banking system is standing on its head."
I could not miss seeing the ruthlessness of moneylenders in the village. First I lent the money to replace the loan-sharks. Then I went to the local bank to request them to lend money to the poor. They refused.
After months of deadlock I persuaded them by offering myself as a guarantor. This is how microcredit was born in 1976. Today Grameen Bank lends money to 7.5 million borrowers, 97 per cent women. They own the bank. The bank has lent out over $ 7.0 billion in Bangladesh over the years. Globally 130 million poor families receive microcredit. Even then banks have not changed much. They do not mind writing off a trillion dollars in a sub-prime crisis, but they still stay away from lending US $ 100 to a poor woman despite the fact such loans have near 100 per cent repayment record globally.
The entire Commencement address is posted at:
‘The Upside Down Thinking of Muhammad Yunus, Stories for Speakers and Writers, 10 June 2008.
Muhammad Yunus on Poverty
Muhammad Yunus on Changing the World
Muhammad Yunus: Falling Back on Instinct
Dr Geoff Pound
Image: “I just did the opposite.”