Page 10 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 2, 2016, pp. 4-20

through conventional financial institutions. These financial institutions are built on
principles and mode of operation which promote financial exclusion. Their DNA
will not allow them to work for inclusion. If we wish to reach the poor, we need to
build separate institutions with completely different architecture. Rich people's
banks are not designed to serve the poor. They may take some token actions through
NGOs, under pressure from above, but that won't constitute even a fraction of one
percent of their business. The unbanked of the world need real banking, not some
"let-us-look-good" actions.
Through my work with microcredit I questioned the very basics of the banking
system. I kept pointing out that real human beings are much bigger than the human
beings assumed in the theory on which banking system is designed. Story of
Grameen Bank is a living proof of that. Grameen Bank's microcredit idea flourished
globally because NGOs took it up. But NGOs are not the answer to fill the vacuum
left by existing financial institutions. I have been arguing that one easy way would
be to give banking licenses, with some restrictions, to the microcredit NGOs, to
operate as banks and take deposits, so that they can become self-reliant institutions. I
am very happy to see that after many years of bringing it up, now Reserve Bank of
India is issuing licenses to microcredit NGOs in India to become microcredit banks.
This is the beginning of the right steps towards inclusive financing. But there is still
a long way to go. There is an empty space for providing varieties of essential
financial services to the unbanked, exclusively designed for them, not just offering
them nano-versions of what is being done by the conventional institutions for their
regular clients.
I have been arguing for years that credit should be recognized as a human
right, so that it can be addressed seriously, and be given the importance it deserves.
We can establish this human right only by creating complete financial system for the
poor.
Critics of GB always pointed out that the loan it gives is actually wasted
because the poor don't know how to use the money. It only adds to their debt burden.
The reality turned out to be far from that. Instead of accumulating debt burden they
accumulated large savings, now bigger than their outstanding loans. GB helped them
to prove themselves to be excellent savers, proud owners of investment capital, and
owners of a financially robust nation-wide bank. I have been arguing that all human
beings are born with unlimited creative power. If the society gives them the chance
to unleash this power it will surprise everyone.
Critics argue the opposite. They warned us not to waste our money by giving it
to the poor people, rather to give it to people who can employ them in large
numbers. I did not see it their way. I wanted to turn the poorest women into

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