President of Colombian holding company Grupo Aval Luis Carlos Sarmiento (left) agreed to bring the “Bank of the Villages” model, founded by Nobel Peace Prize laureate Muhammad Yanus, to Colombia, in Cartagena, 8 June 2009.

Bangladeshi Nobel Peace Prize laureate (2006) Muhammad Yunus founded the micro-credit Grameen Bank, or “Bank of the Villages”, in 1976 to provide economic help to those in need.

CARTAGENA, Colombia – Bangladeshi Nobel Peace Prize laureate Muhammad Yunus and the president of Colombian holding company Grupo Aval, Luis Carlos Sarmiento, agreed on 8 June to create Grameen Aval Colombia. The new subsidiary of the Grameen Bank, better known as the “Bank of the Villages”, will provide small loans to the country's poor.

Yunus said the charity would open its doors in the second half of 2009 and in its first three years, reported El Espectador, the bank would benefit 150,000 Colombians affected by local conflicts and without access to traditional forms of credit.

“We will continue investing in the revenue-generating activities of our humble and reliable borrowers,” Yunus said according to Dinero, during the third Regional Micro-credit Summit for Latin America held in Cartagena.

Consultants from the Grameen Bank advised Colombians on how to implement the financing system which provides loans of between US$100 and US$1,000 per person. According to EFE, Yunus plans to take his banking philosophy to Mexico, Paraguay and other Latin American countries after successful results in Costa Rica and Guatemala.

Colombian tycoon Luis Carlos Sarmiento announced that the foundation which bears his name provided US$5 million in seed money and was “grateful” for the support provided by Yunus in this project aimed at the underprivileged. Sarmiento told Portafolio, “We want to lend money to Colombia's neediest, those who do not qualify for traditional bank loans but have productive ideas, the energy and the willpower to prosper.

According to El Espectador, the Grameen Trust method employed by Grameen Aval Colombia consists of providing unsecured loans with minimal formalities which comply to sustainable economic programmes.

In 1989, Yunus founded the Grameen Trust as a subsidiary of the Grameen Bank in Bangladesh, a non-profit micro-finance organisation created to relieve poverty by supporting micro-credit projects. So far, this model has benefited over 7.5 million customers around the world.