Nobel Peace Prize Gets It Right!

Banker for the poor wins Nobel Peace Prize
The Norwegian Nobel Committee awarded this year's Nobel Peace Prize on Friday to Muhammad Yunus and the Grameen Bank he started 30 years ago, citing their efforts to create economic and social development from the lowest grass-roots levels.

Over the years The Nobel Peace Prize has been awarded to some surprising people. They include MIKHAIL SERGEYEVICH GORBACHEV, JIMMY CARTER JR., and YASSER ARAFAT. I have a hard time deciding which is the worse choice of that three. I guess I’ll give Carter the edge, because at least the other two realize they did not deserve it.

This year is different. The Nobel Prize goes for a small, charming powerful idea and ideal. Loan simple impoverished people a pittance, require them to pay it back, and let them use their innate entrepreneurial skills to improve their life. Compare that to the liberal giveaway programs that have impoverished millions in the US and caused untold social corrosion. This is a little background on the people and program.

The Hindu, May 25,2005

BIDAR: Surekha Sangappa is making a speech about the Reserve Bank of India (RBI) guidelines on interest rates on loans, using a power point presentation. The setting is not a corporate office, but an Ashraya house at Sastapur in Basavakalyan taluk. And members of the audience are not chief executive officers but unschooled women.
Ms. Sangappa is the president of Grameena Mahila Arthik Souharda Sahakari, the first micro bank in the district, formed by a federation of self-help groups (SHG). Ms. Sangappa has studied up to seventh standard. All other members of the board of directors never went to school. Stella, who keeps the bank's accounts, reads out newspapers to them. Promoted by Prawarda, the sahakari has lent over Rs. 25 lakhs to its members in one year. Recovery has been 100 per cent. Reasons for availing loans vary from treatment for dog bite to setting up cable television business. The interest on loans varies between 10 and 12 per cent. The sahakari gives loans to SHGs. This support has resulted in some SHGs reducing the interest on loans given to their members.
The sahakari was established with a contribution of Rs. 100 from each member as share capital. "Regular savings by members has contributed Rs. 3.5 lakhs to the bank. They have obtained loans from banks, which we have refinanced. Their internal lending has exceeded Rs. 27 lakhs," said H.N. Ranganatha Rao, Assistant General Manager of the NABARD. There were 15 persons in Sastpur and nearby villages whose profession was money lending till a year ago. But now, most of them have closed shop and are into other business, says secretary Basamma Sangamnath. Inspired by its success, members of SHGs in other taluks have approached the sahakari for guidance to start similar micro banks, she said.
Manohar Maski, president of the Karnataka State Souharda Federal Co-operative, feels that micro banking has advantages over the SHG system. "SHGs are not legal entities and therefore have limitations. They cannot give unlimited amounts of loans. They cannot extend mortgage loans. Most importantly, recovery in SHGs is based on peer pressure and there is no provision to take action against defaulters. But micro banks are registered bodies. They have the flexibility of an SHG and advantages of a bank." "Members of micro-banks, who are mostly farmers or farm labourers, can save during sowing or harvesting seasons. But SHG members do not have this advantage. Under a World Bank-aided programme, the Department of Women and Child Welfare is promoting micro banks. Over 80 micro banks have been established in the State and we plan to increase this number to at least 500 by 2007," Mr. Maski said.