Trust

Something simple can be used to stop poverty, trust. Muhammad Yunus says that if you trust the people in poverty, they can pull themselves out of it.

From this Opinion piece found at Thailand's The Nation, Supalak Ganjanakhundee has Yunus describe how trust is used at his Grameen Bank.

The interesting thing about Grameen, which in Bengali means "village", is that it runs contrary to conventional banking rules. The borrowers don't need to mortgage their houses, land or other valuables as collateral for the loan.

As a result, no legal instruments are needed and no legal papers are signed between the lenders and the borrowers.

"Since there are no legal papers, we don't need a lawyer. Everything is based on trust," he said.

Loaning to the poor can become problematic for conventional banks because the debt eventually becomes a non-performing loan.

Perhaps such rhetoric is only a stereotypical negative attitude toward the poor, because there are few bad loans at the Grameen Bank. In fact, repayment levels are high at 90 to 95 per cent of the total debt.

"We lend money. They pay back. It has been working [like this] for the last 32 years", he said.

Professor Yunus said it was not just in Bangladesh that micro-credit had been doing well: it's working in other countries too.

However, it is not that easy to have such high-performing loans in the banking system, he said. The key of the success is that "the people don't come to the bank, but the bank goes to the people. That way, we know them very well. We become a part of their families," he explained.