Q&A with Nobel Laureate Muhammad Yunus: Banking for the poor

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Nobel Laureate, Grameen Bank founder, social entrepreneur and microfinance pioneer, Muhammad Yunus tells Nikhil Inamdar of TRENDS why the current financial system needs to be reversed in order to make the poorest our top priority. 

You have spoken about the banking system being fully rigged in favor of the rich. Why do you believe so? 

What we call banks are actually banks for the rich. They serve the rich. The richer you are, the more favor you find with the banks. If a common person goes to a bank, they are not interested in servicing him. So, the entire system is biased. We need a different kind of financial system, which can work with the poorest in mind. We need to reverse the present system, so that the poorer you are, the more welcome you are. If you are absolutely the poorest, then you are the highest priority. This is the system that needs to be developed.

Is this practically possible in a capitalistic society? Or is it merely a utopian idea? 

We have actually demonstrated it. These are not just words. We have shown at Grameen Bank that this is possible and we have been up and running for the past 40 years. It has been proven again and again that poor people are creditworthy and that they can change their lives with their own efforts.

You have also said that the rich have a higher risk profile and this was veritably demonstrated when Wall Street precipitated the 2008 financial crisis. 

Compared to the risk profile of the rich banks, poor people’s banks are safer,
because, even in a financial crisis, they’ve never given negative returns. Our NPAs (non-performing assets) are under one percent.

You carried out a landmark project in Bangladesh with beggars. What was the idea behind that? 

We focused specifically on the beggars in one of our programs. We asked them whether they would, as they went from house to house begging, carry some merchandise – such as cookies, candies, toys, food, water, etc. – and give people an option to either give them something for free, or buy something from them. They loved the idea. So, they took a loan from us – $12 to $15 – and began successfully vending goods. Today, there are hundreds of thousands of beggars that we have [invested in]. It is amazing to see what they are doing. They’ve all paid us back and moved on.

So, you’ve turned them into entrepreneurs. That’s a hot topic in this region – particularly the lack of access to finance for entrepreneurs. Is that a real problem for small people wanting to start businesses, globally? 

Firstly, banks are made for people. People are not made for banks. Saying “you are risky and I cannot do business with you” is not an answer. You change yourself to deal with me. I do not change. I am the way I am. You created your institution to serve me, so do not tell me that I am risky.

This is what they have done to poor people. Banks dismissed them. An institution has to fit to the needs of people. If I go shopping to buy a dress, I buy something that fits me; I don’t grow fat or thin because the market thinks I should fit a certain size.

But profit is the foremost driving motive for most banks. How do you reconcile that with what you are suggesting? 

There is selfishness and selflessness. If you want to run a selfish business, I am not objecting to it. But I said you have also to show selflessness. Would you care to start a business on the basis of selflessness? I am not excluding anything. I am saying this is an addition. It is much more pleasurable to do it than just making money.

Money does not make any sense unless you use it for the cause of people. Only then does it become meaningful. Otherwise, money is just paper.

But we live in a large capitalist construct where money is everything. What you are suggesting seems to be a completely radical way of thinking.

No, it is not radical. It is reasonable and everybody agrees, in principle, with what I say. I am not imposing anything; I am giving you an option. Today, in the business world, there is no option. You have to be selfish. That is what I am objecting to. Ironically, the capitalist system prides itself on offering options.

So, should we bring about change through regulation? 

No, it is not regulation, it is people. We have to be the change, not the government. I don’t want to impose change. I am giving people an option. Making money gives you happiness, but making other people happy is super happiness. So, try that.