Imagine for a minute that you are a loan officer at a lending institution. Now imagine that one morning a Bangladeshi woman walked into your office asking for a loan. You ask her for a list of her savings and investments, and she tells you she has none. You ask where she works, and she replies that she is unemployed. You ask her where she lives, and she tells you she lives in a broken-down car in a ditch down the road. Then, you begin to draw up papers for her loan. She has no job and no collateral. She would never repay the money, and you’d be crazy to give her the loan, right?

Yes, you would be crazy, unless you worked for a microcredit lender like Bangladesh’s Grameen Bank. Since 1983, the Grameen Bank has believed that everyone, regardless of financial status, has a right to credit. Furthermore, the Grameen Bank believes that access to credit is essential to the poor as they try to rise out of poverty. So the Grameen Bank has been making small loans to the poorest people in Bangladesh for the last 20 years to help them start small enterprises ranging from purchasing milk cows for starting a dairy to repairing a used rickshaw for starting a taxi service. These loans have had a significant impact on Bangladeshi society while also returning significant financial gains for the bank.

When the Grameen Bank Project started in 1976, it only served one small village. Since it became an official bank in 1983, the lender has expanded to have 1,176 branches and serves 41,187 villages in Bangladesh. The bank now employs 11,777 employees, many of which are former borrowers. Since 1983, the Grameen Bank has returned a profit in all but three years. Last year, the bank made a profit of 58,000,000 Taka ($1 million). In 1994, Grameen Bank activity accounted for 1.5 percent of Bangladesh’s GDP. Since the bank’s inception, 42 percent of its 2.4 million borrowers have crossed the poverty line with the remaining 58 percent well on their way. But perhaps the most astounding statistic is that the Grameen Bank has a 98 percent recovery rate of its loans.

The secret to the recovery rate is the bank’s dedication to its borrowers. To ensure repayment and the success of the loan holders, the Grameen Bank has developed a proactive training program for its borrowers. The bank sets up solidarity groups in each village to give borrowers the opportunity to support and help each other make sound financial decisions.

Since future loans in each village are dependent on the repayment performance of each solidarity group, every village member has an interest in checking up on each of his or her neighbors to make sure they are meeting their payment schedules. The result is that borrowers are so dedicated to fulfilling their loan responsibilities that making these loans is almost a risk-free venture.

The Grameen Bank serves as an excellent example of how “thinking outside the box” can lead to a successful enterprise. By going against accepted theories and believing that the poor not only deserved credit but could repay it as well, the Grameen Bank has improved Bangladeshi society while producing significant financial gains at the same time. Perhaps this is the essence of the success of the Grameen Bank.

By making investments that are not only financial, but social as well, the Grameen Bank returns profits so valuable that it cannot be recorded on a balance sheet. These are the profits of an improved standard of living for many Bangladeshi people.