Nobel laureate and founder of microfinance organization Grameen Bank Muhammad Yunus says reforms are needed in the global banking sector in order to handle social problems. Addressing an event in Dubai, he said social issues can be solved only through financially self-sustainable models. The global financial crisis had brought out serious shortcomings in the global banking system, including irresponsible behaviour by individuals who influenced the marketplace, he added. It is imperative that the mistakes are corrected and the global financial system is redesigned, he said, emphasizing that the answer to the global challenge is through ‘social business’, which he defined as a company with the sole purpose of solving a social problem in a financially self-sustaining way, rather than purely pursuing profits. He also said the Islamic banking sector is well placed to embrace ‘social business’ because of its ethical roots. All companies that are trying to do social good need funding to survive – that gives banks a key role in the development of social businesses, he said, and maintained that this could be funding a company that provides renewable energy, health care or IT to the developing world, as well as funding a company that provides micro finance to the local community.
