My Favorite Mistake

In 1976 I started Grameen Bank with $27 and a desire to help the poor. Doing this required giving out small, noncollateral loans so poor entrepreneurs could start their own businesses.

The excitement Grameen created encouraged me to expand, so I went to Bangladesh’s central bank to ask for the legal authority to create a bank for the poor. The government agreed, eventually passing a law that did just that. But the law included a stipulation: the bank could not operate in urban areas.

I was actually the one who proposed this provision. I was a professor. I thought the board would hire a banker who lived in the city to run Grameen, and that he or she might be tempted to shift the bank’s focus away from the rural poor. In Bangladesh, only about 15 percent of the poor live in cities; the rest live in rural settings, and I did not want the people in the countryside to be forgotten. (The word grameen, after all, means “rural.”)

Once we grew, I realized I had made a mistake. There were many people who needed our help but couldn’t get it. We tried to go back and change the law, and in 2007 the government agreed. Yet the next administration reversed the decision.

What makes matters worse is that Bangladesh now has more cities than it did when I started Grameen, so helping people who live there is more important than ever.

I’m no longer running Grameen Bank; the government forced me to step down earlier this year on the grounds that I was 11 years past retirement age. (In agreeing to the law that created the bank, we gave the government the authority to approve our managing director, which was my former title. That was another big mistake.)

I have, however, learned my lesson. Though Grameen Bank in Bangladesh is still banned from helping the urban poor, I’ve since started a number of similar projects around the world.

This time around, we’re not restricting ourselves. In 2008, for instance, we set up a program in Queens, N.Y. As Gayle Ferraro documents in her film i, which opens in theaters this week, we managed to help a lot of people in the city, despite the financial crisis.

Ultimately, that’s what Grameen is about.

Interview by R. M. Schneiderman