Nobel laureate Muhammad Yunus says there should be banks to serve the poor

Muhammad Yunus termed the existing banking model as banks for the rich and suggested there should be banks for the poor.

Published: 22nd January 2018 08:52 PM  |   Last Updated: 22nd January 2018 08:52 PM   |  A+A-

Nobel laureate and micro-finance founder Muhammad Yunus (File | AP)

By IANS

KOLKATA: Nobel laureate and micro-finance founder Muhammad Yunus on Monday termed the existing banking model as "banks for the rich" and suggested there should be banks for the poor to boost the economic status of people.

"... The banks that exist today, how do you describe them? If our model of Grameen Bank (in Bangladesh) is called the bank for the poor, they should be called the bank for the rich," Yunus said during a session on his new book "World of Three Zeroes" at the Tata Steel Kolkata Literary Meet here.

"The traditional banks naturally do not lend money to the poor. But sometimes either because of the government or because of the politics, they are forced to do so. There should be banks for the poor," he said.

In 1983, Yunus formed the Grameen Bank, meaning 'village bank' to finance the poorest of the poor, like beggars. Grameen now has 2,564 branches, with 19,800 staff serving 8.29 million borrowers in 81,367 villages of Bangladesh.

He said the banks which traditionally cater to the rich, often compound the problem when they are asked to lend money to the poor, as "they do not know how to do that".

"So they make a mess of it. So to help the poor you should first create banks for the poor, which is a completely different system," the acclaimed economist said.

Terming as "dangerous" the present scenario of concentration of wealth in the hands of a small number of people, Yunus warned that people will not accept such a system in the long run that takes everything away from the poor and makes the rich richer.

"When we consider the wealth distribution in the world, people often talk about an imagery of the pyramid and say how the poor are at the bottom of the pyramid. But I do not see any pyramid.

"The best explanation of it would be a mushroom. The upper part of the mushroom keeps growing all the time, all the wealth of the world is reflected in the mushroom. That mushroom is owned by a dozen people and now the number is coming down to less than a dozen.

"So the number of owners is decreasing but the shape of the mushroom is increasing, and that is the dangerous part of wealth concentration. The stem part of the mushroom is becoming thinner and thinner. That is the 99.9 percent of the population," he pointed out.

Replying to a query, he said poverty is not created by the poor people themselves, but by the system "we built around us".

"You take the seed of a tall tree in the forest, and a good seed of that tree, and plant it in a flower pot, and let it grow. The seed will grow. But the tree will grow only two feet or two and half feet.

"Poor people are bonsai people. There is nothing wrong with the seed. But simply, society didn't give them space to grow as tall as everybody else."

He said the current economic system will explode if it is not changed completely to reverse the flow of wealth.

"This is like a ticking time bomb. It would explode anytime. When I am asked if the humans would survive, the consumers would survive for the next 100 years, I say no. If we keep the system functioning as it is, it will explode. People will kill each other. Because it is just not possible to accept a system that sucks everything from the bottom and pushes it to the top," he warned.

"The people at the top are not bad people, but the system has to be changed completely so that the system becomes reverse. Instead of the wealth moving to the mushroom, the wealth starts coming to the 99 percent people who are at the bottom," he added.

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