The Grameen Bank, founded in Bangladesh by Nobel Peace Prize Laureate

Question

The Grameen Bank, founded in Bangladesh by Nobel Peace Prize Laureate, Dr. Muhammad Yunus, who is also credited for giving life to the concept of microcredit/microfinance, is one of the most popular models of social business, a business that operates primarily for addressing social needs and not for-profit. Based on the concept of microfinance, Grameen provides microloans, small loans, to the poor and those living beyond the reach of traditional finance, in order to promote income generating activities, avoiding the more traditional form of poverty alleviation - aid donations. The original focus of the Grameen Bank was on rural people with no credit history and no collateral. However, the bank rapidly expanded, giving the illusion of a win-win situation that yielded both profits for Grameen Bank and huge improvements in development for Bangladesh. Private, for-profit organizations around the world wrongly judged the situation, thinking that they could first and foremost profit from this type of venture while developing the country in the process. This view was indeed tainted since Grameen’s goal was development and any profits were an added bonus. Because of these wrong expectations, the Grameen model has achieved limited success in countries other than those in South-East Asia, though the concept of microfinance has had better luck, with many countries now running profitable microfinance institutions that typically charge considerably higher interest rates for zero collateral loans than Grameen ever would.   1 
 1. Which of the following best captures the main idea of the passage?

A. To explain a model and a reason behind its limited success in some countries
B. To show how the focus of a concept changed as it achieved success with time 
C. To explain the reason behind the success of a concept in South East Asian countries
D. To highlight how a model is a not very ideal one for-profit oriented microfinance oriented organizations
E. To discuss the various models of microfinance operational in countries within and outside South East Asia

2 
 2. Which one of the following statements can be inferred about the for-profit microfinance institutions?

A. The coexistence of profit and development under the Grameen model was not interpreted correctly by such institutions
B. They are profitable models of social business.
C. They were responsible for the complete failure of Grameen as a model of microfinance.
D. Such institutions are not operational in Bangladesh.
E. Such institutions are not likely to offer loans to applicants who do not have any collateral security to offer.

3 
 3. According to the passage, which one of the following statements is true?

A. When Grameen started functioning, there were fewer people in the urban areas of Bangladesh who applied for a loan from it than there were when it became more successful
B. There is a limited scope of Grameen’s success in countries outside South East Asia.
C. Microfinance as a concept is more successful for for-profit oriented microfinance institutions than for Grameen.
D. Granting a sum of money as charity to the poor is not a part of Grameen’s operations.
E. Institutions offering traditional loans charge much higher interest rates than Grameen does.

Kurtosis · Answer

Summary: Grameen Bank is a model of social business and not for profit.
It expanded, reported profits and contributed to the development of Bangladesh.
Other countries tried to replicate the success of Grameen Bank but failed to do so.

1. Which of the following best captures the main idea of the passage?

A.To explain a model and a reason behind its limited success in some countries - Correct
B.To show how the focus of a concept changed as it achieved success with time - The focus of Grameen Bank as a concept did not change.
C.To explain the reason behind the success of a concept in South East Asian countries - Opposite. 
D.To highlight how a model is a not very ideal one for-profit oriented microfinance oriented organizations - Partial scope.
E.To discuss the various models of microfinance operational in countries within and outside South East Asia - Not relevant

Answer: A

2. Which one of the following statements can be inferred about the for-profit microfinance institutions?
A.The coexistence of profit and development under the Grameen model was not interpreted correctly by such institutions - Correct
B.They are profitable models of social business. - Opposite. They were not started with the intentions of profit
C.They were responsible for the complete failure of Grameen as a model of microfinance. - Not stated. 
D.Such institutions are not operational in Bangladesh. - Not stated
E.Such institutions are not likely to offer loans to applicants who do not have any collateral security to offer. - Opposite. They offer no collateral loans at high interest .

Answer: A

3.According to the passage, which one of the following statements is true?
A.When Grameen started functioning, there were fewer people in the urban areas of Bangladesh who applied for a loan from it than there were when it became more successful - No information on the number of people who applied for loan in the urban areas before and after it became popular.
B.There is a limited scope of Grameen’s success in countries outside South East Asia. - There may be scope but the intention was different in countries outside South East Asia.
C.Microfinance as a concept is more successful for for-profit oriented microfinance institutions than for Grameen. - Not stated.
D.Granting a sum of money as charity to the poor is not a part of Grameen’s operations. - Correct. Grameen gave out loans and did not grant money as charity to the poor.
E.Institutions offering traditional loans charge much higher interest rates than Grameen does. - Not stated.

Answer: D

pandeyashwin · Answer

Q1 A
Q2 A
"Private, for-profit organizations around the world wrongly judged the situation, thinking that they could first and foremost profit from this type of venture while developing the country in the process"

Q3 D
"Grameen provides microloans, small loans, to the poor and those living beyond the reach of traditional finance, in order to promote income generating activities, avoiding the more traditional form of poverty alleviation - aid donations"

OC2910 · Answer

para: micro-finance concept 
its intention 
effect on Bangladesh and others 
limited success

Q1: A  
the purpose is to explain the model and its limited success

Q2 : A 
apply POE 
A.The coexistence of profit and development under the Grameen model was not interpreted correctly by such institutions - hold 
B.They are profitable models of social business. - 180 : non profit is moto
C.They were responsible for the complete failure of Grameen as a model of micro-finance. - no mention of failure 
D.Such institutions are not operational in Bangladesh. - no mention of such thing 
E.Such institutions are not likely to offer loans to applicants who do not have any collateral security to offer. - 180 : they grant people with no collateral

so A is best

Q3 D 
apply POE 
A.When Grameen started functioning, there were fewer people in the urban areas of Bangladesh who applied for a loan from it than there were when it became more successful : number of people has no mention 
B.There is a limited scope of Grameen’s success in countries outside South East Asia. : wrap :limited success is there but scope limited is not mentioned 
C.Microfinance as a concept is more successful for for-profit oriented microfinance institutions than for Grameen. comparison of the success is not mentioned 
D.Granting a sum of money as charity to the poor is not a part of Grameen’s operations. refer to line 4 and 5 : gb provides microloans so charity is nowhere mentioned (hold)
E.Institutions offering traditional loans charge much higher interest rates than Grameen does: we cant say that no collateral is there but interest rate also low is superficial

D wins

gmat1393 · Answer

1.Which of the following best captures the main idea of the passage?
 
Passage introduces the concept of Micro Finance and mentioned it effect on Bangladesh and Other countries,which tried to replicate this but failed.

Option A captures this and is the right answer.

2. Which one of the following statements can be inferred about the for-profit microfinance institutions?
 
Based on this excerpt from passage, we can clearly infer option A

3.According to the passage, which one of the following statements is true?
 
A.When Grameen started functioning, there were fewer people in the urban areas of Bangladesh who applied for a loan from it than there were when it became more successful  -- no info about this in the passage 
B.There is a limited scope of Grameen’s success in countries outside South East Asia.  -- inconsistent with the info from passage 
C.Microfinance as a concept is more successful for for-profit oriented microfinance institutions than for Grameen.  -- never stated 
D.Granting a sum of money as charity to the poor is not a part of Grameen’s operations.  --hold 
E.Institutions offering traditional loans charge much higher interest rates than Grameen does.  --never stated

so, option D is the best choice.

NandishSS · Answer

HI  workout  ,  u1983  ,  dave13

Does it not mean E?

3.According to the passage, which one of the following statements is true?
A.When Grameen started functioning, there were fewer people in the urban areas of Bangladesh who applied for a loan from it than there were when it became more successful
B.There is a limited scope of Grameen’s success in countries outside South East Asia.
C.Microfinance as a concept is more successful for for-profit oriented microfinance institutions than for Grameen.
D.Granting a sum of money as charity to the poor is not a part of Grameen’s operations.
E.Institutions offering traditional loans charge much higher interest rates than Grameen does.

u1983 · Answer

Hello NandishSS ....... I would look at the part of the passage below : Based on the concept of microfinance, Grameen provides microloans , small loans, to the poor and those living beyond the reach of traditional finance, in order to promote income generating activities, avoiding the more traditional form of poverty alleviation - aid donations. The aforementioned prompted me to choose D . ( Of course , as always ... I would like to have experts' views

)

dave13 · Answer

hello NandishSS

the last sentence of the passage says following: "Profitable microfinance institutions that typically charge considerably higher interest rates for zero collateral " i.e. higher interest rates for zero collateral Now read E below: E. Institutions offering traditional loans charge much higher interest rates than Grameen does. E in general says they charge higher interest rates, whereas in the passage it says that they charge higher interest rates for zero collateral have a great day

blueshores · Answer

Hi,

Can you please explain the 3 question because I understand answer d is correct but what is wrong with b. In the 7th last line of the summary it is clearly mentioned that Grameen has limited success outside SE asia

Posted from my mobile device

NoMatterWhat · Answer

it is just a trap ..if you re-read it , you will find a trap

let me show you how

"Grameen has limited success outside SE Asia": indeed stated in the seventh line, but Option B stated "In SE Asia there was limited scope"

Please do not confuse b/w limited scope and limited success.....Re-read it and you will surely get the point.

Hope it Helps

Thanks = KUDOS

The Grameen Bank, founded in Bangladesh by Nobel Peace Prize Laureate

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The Grameen Bank, founded in Bangladesh by Nobel Peace Prize Laureate

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