“Banks of the poor” and true development


courtesy of: Alphonsian Academy

Last August, the national press reported the death, on 11 August, of Father Giulio Berutti, 77 years old, a PIME missionary priest in Dinajpur, Bangladesh, who is remembered as the “founder of the ‘banks of the poor’, following the example of Muhammad Yunus” (La Repubblica). Muhammad Yunus, the founder of the Grameen Bank, which since 1976 has spread microcredit to millions of low-income families in Bangladesh, undoubtedly deserved the 2006 Nobel Peace Prize. Still, microcredit in Bangladesh was started by Catholic and Protestant missionaries at the beginning of the 20th century, before Yunus and the Grameen Bank.

The “banks of the poor”, or rather the “Credit Unions” of Father Berutti, are in fact Credit Cooperatives that offer their services mainly, if not exclusively, to the mistrustful tribal population and, thanks to them, many people have managed to start a small business, buy a house or pay for their children’s higher education, avoiding falling into the net of usury.

The similarity between Credit Unions and the Grameen Bank of Yunus is limited to the fact that both initiatives operate in the field of microcredit. In fact, Credit Unions draw their inspiration from the reality of cooperation, which started in Rochedale, England, in 1844 with the “Probi Pionieri”, and then developed decisively within that social Catholicism which was the precursor of the Rerum Novarum, in Germany with Friedrich Wilhelm Raiffeisen (1818-1888), France and Italy, giving life to the first experiences of Cooperative Credit.

The first Credit Union, the “Chotanagpur Catholic Mission Co-operative Credit Society”, was founded in Chotanagpur in 1909, in the diocese of Ranchi, in the present state of Bihar, northern India, and is still active today with thousands of members, thanks to the initiative of the German Jesuit Father John-Baptist Hoffmann (1857-1928), who had had the opportunity to deepen his knowledge of the mechanisms of cooperation during his return to his homeland. His example was later followed in what is now Bangladesh since the 1930s. In particular, the Credit Unions movement was consolidated and developed further in the 1950s in the diocese of Dhaka by Father Charles Young (1904-1988), an American missionary of the Congregation of the Holy Cross.

In the diocese of Dinajpur entrusted to PIME, in the northwest of Bangladesh, this movement took hold in the 1960s, with success among the Christians of Bengali ethnicity, but with ups and downs among the tribal community. Fr Berutti joined this experience in 1993, with the mission of addressing mainly the complex tribal environment and with a substantially different approach from that of Grameen Bank and more than a thousand NGOs, which have thrown themselves into the micro-credit method as a magic word to attract funds from abroad with the intention of development and solving the problem of poverty with a blanket distribution of loans. However, this is a quantitative development, which assumes that the lack of capital is the primary cause of poverty and repeats the pattern whereby there are givers and receivers, the ‘poor’ are the beneficiaries and the ‘rich’ think they are actors or agents of development (p. Berutti).

Among other things, the purpose of the Grameen Bank is to make a profit and distribute dividends to its members, while the purpose of Credit Unions is to help the poor by encouraging them to save and use their savings to produce more wealth. Father Giulio explained in a 2009 interview with Father Gheddo that: “The small loans made by the Credit Unions are returned with the modest interest of 12% per year, much lower than that made by the banks (22-24%) and less than half of that made by the famous Grameen Bank of Yunus, which claims 28% per year interest on loans. Yunus is criticised in Bangladesh for his excessive rigidity and harshness towards families who cannot repay loans at that very high interest rate (however lower than that of usurers!) and thus throwing the most incapable poor into despair and human degradation. However, the Grameen Bank, in the Bengali context, has many merits even though it is a bank of pure capitalism”.

On the contrary, the Christian credit unions want to educate the poorest people to save. In fact, in continuity with the typical values of tribal culture, but also of the Christian tradition, of solidarity, equality among all, patience, the ability to enjoy with little, the modality of the “Credit Unions” aims to make the same poor people agents of their development. They are encouraged to manage their resources by helping each other, providing for each other, and working themselves as a group. In particular, they are guided to save to create their own capital, help them free themselves from any external power and affirm their dignity, and ensure continuity over time in the quality of human relations and the quantity of financial interventions. It is undoubtedly a longer road than many NGOs offer, but it is the safest because development is like natural growth, which requires time and experience and does not create imbalances (Fr Berutti).

We align with what St. Paul VI teaches in Populorum Progressio when he recalls that true development is the passage from less human to more human conditions:

“What are less than human conditions? The material poverty of those who lack the bare necessities of life, and the moral poverty of those who are crushed under the weight of their own self-love; oppressive political structures resulting from the abuse of ownership or the improper exercise of power, from the exploitation of the worker or unjust transactions. 

What are truly human conditions? The rise from poverty to the acquisition of life’s necessities; the elimination of social ills; broadening the horizons of knowledge; acquiring refinement and culture. From there one can go on to acquire a growing awareness of other people’s dignity, a taste for the spirit of poverty, (l8) an active interest in the common good, and a desire for peace. Then man can acknowledge the highest values and God Himself, their author and end. Finally and above all, there is faith—God’s gift to men of good will—and our loving unity in Christ, who calls all men to share God’s life as sons of the living God, the Father of all men.” (PP, n. 21).

Leonardo Salutati

original text: Italian / Alphonsian Academy Blog

Source: https://www.ilmantellodellagiustizia.it/settembre-2021/le-banche-dei-poveri-e-il-vero-sviluppo