Microfinance is one of the approaches used to tackle poverty. There are many debates over whether it is an effective scheme or not. An example of microfinance is seen being implemented by Grameen Bank (GB); it targets the rural areas of Bangladesh where women are the main beneficiary. Thus, the purpose of this research is to answer this question, what are the effects of GB’s microfinance initiative on women’s social capital in the rural areas of Bangladesh since its establishment in 1976? The information that will be analysed relating to the case study (women in the rural areas of Bangladesh) in this paper comes mainly from a study by Lamia Karim.
It is revealed that the GB’s scheme has not only negatively affected women’s social capital but also the community fabric has been seen to disintegrate. As a result of the program, many women have been seeking their self-interest and have become more individualistic. Indeed, due to the high rate of GB’s interest and other factors, many women (the beneficiaries) have become poorer and are suffering. This paper provides evidence that the GB microfinance scheme is not the right approach to tackle poverty. The review will show that encouraging strong social capital can be an asset for poverty reduction, thus, when implementing any poverty reduction initiative this should be considered.
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