It’s become an often-repeated story: Muhammad Yunus, an economics professor at Chittagong University in Bangladesh, gave 27 dollars to a stool maker in the village of Jobra. This was three years after the Concert for Bangladesh, when a famine, a war, and a cyclone had all but devastated the country. Some would say stupidly, Yunus then leant a small amount of money to 42 people who were in no way creditworthy. The poor weren’t creditworthy; they had little collateral and asked for loans smaller than banks could give out. Yunus knew he was taking a gamble, but to his surprise, each of the loans was repaid. Stunned by that success, he set up a bank.

The story jumps. It’s December 2006 and Yunus is in Olso, Norway receiving the Nobel Peace Prize. The derivative of the bank he started on the success of those first loans, The Grameen Trust, has 7 million borrowers and branches on nearly every continent. Through it, Yunus has lent a cumulative 6 billion dollars, with a 99% repayment rate. The simple idea of extending small loans to poor people has been dubbed “microcredit,” and journalists covering Yunus and Grameen in the days leading up to his acceptance lecture in Norway use grand words to accompany it…words like “movement” and “revolution.” Yunus’ face is everywhere. In Oslo, he describes the experience as a dream come true.

Sandip Banerjee wasn’t there.

While Muhammad Yunus was in Oslo, Sandip Banerjee was in the Japaiguri District of West Bengal, extending loans to poultry farmers. In 2000, with the help of an economist and several others, Dr. Banerjee set up the Santalpur Deshbandhu club, an Indian NGO, to distribute microcredit to the rural poor. He’s one of the many in recent years to set up a replica of The Grameen Trust in his own area and has tweaked the model slightly. Microcredit has attracted international attention, but while Yunus remains its central figure, his story its focal tale, through the replica banks, microcredit is evolving from the tenet of one organization into its own force.

There are two times of day I can I call Dr. Banrejee: early in the morning and late at night. I call him in the morning. His voice comes fast and loud over the phone.

When it comes to the actual loans, Dr. Banerjee hasn’t changed that much. The system Yunus invented has largely worked—a small loan, given not to an individual but to a group, a self-help group (SHG). The idea is that each member of the group will exert her own moral and social pressure on other members, ensuring loan payments are made on time. Each member will exert specifically her social pressure; loans are made to women, not men. The idea behind a gender qualification for the loans is that women control the household, and are therefore better suited to improve it.  Read More...