Saturday, March 12, 2005

Models for Sindhi Ghareeban-ji-Bank

Dear Friends,
I attended a seminar on banking for poor-- urban and poor. The following web address gives a lot of useful information, ideas and linkages.
Check it out yourself. Dr Dhakan, I hope this will be of some assistance in your work.
Here is a brief description of what it is all about.
WHAT IS VILLAGE BANKING? What is Village Banking? Village banking is a means of delivering financial services—small loans and savings products—to those who could not otherwise obtain them. While many agencies and organizations provide small loans to low-income families, not all use the Village Banking method. Developed by FINCA Founder John Hatch, the Village Banking method is unique in the responsibility and autonomy given borrowers in running their banks and in its emphasis on community, as well as, individual development. The Village banking method has been shared widely with 40 voluntary agencies and development organizations who currently operate over 80 programs worldwide.
Loans, Not GrantsLoans—at market rates of interest—are the central service provided by the Village Banking method. FINCA offers loans, not grants, to low-income microentrepreneurs, because at the root of their poverty is lack of opportunity, not lack of desire to work. While many poor families have ideas for fostering their own employment by creating small businesses, few can access the capital they need to begin. By virtue of being poor, they are cut off from this type of support because of lack of collateral or credit ratings.
Even a small loan can stimulate productivity, enabling the microentrepreneur to build assets and purchase inventory at the best prices. By investing and repaying the loan and increasing his or her business as a result, the borrower reaps an additional reward—increased self-esteem through self-help.
Loans are a renewable resource, which can impact entire communities. A loan is borrowed, invested, and repaid, after which it can be used to stimulate yet another fledgling business. FINCA loans circulate throughout low-income communities until their effect is multiplied many times.

Borrower-Run BanksFINCA does not simply extend loans to low-income families, it helps to create community-run, community-focused credit and savings associations, particularly in areas untouched by the formal financial industry. The Village Banking method is highly participatory in nature. It gives the beneficiaries a voice and it involves them in the development process. Members not only receive loans, they form cohesive groups who manage and collect repayments on those loans, who save diligently and decide on ways to invest those savings, and who progress together, forming networks for mutual support.

Community as Well as Individual DevelopmentFINCA lends to groups of neighbors who come together to guarantee one another’s loans, and to work together to ensure that the bank runs smoothly. The group is critical; without it, individuals cannot realize their full potential. By sharing their problems, challenges, and successes, clients learn and progress together. Village Banking groups are a great source of moral support for start-up enterprises. Members network, advertise for, and patronize one another’s businesses. Cooperation takes precedence over competition. Microentrepreneurs know that if one members’ business attracts customers to the neighborhood, all are likely to benefit. The working capital brought into the neighborhood by a Village Banking group seldom stops working. As FINCA loans rotate among members of the community and as members’ savings are re-invested in the neighborhood, opportunity and economic vitality increase.
-----------------------------Here is brief information about The Foundation for International Community Assistance (FINCA) who had organized today's seminar. Their foundr John Hatch was the speaker.
They have some job openings in Pakistan too which are listed on the web page.
OUR MISSION FINCA (The Foundation for International Community Assistance) has been helping families to create their own solutions to poverty since 1984.
FINCA is:An anti-poverty organization. Our work is aimed at creating employment, raising family incomes, and reducing poverty worldwide.
A provider of financial services to low-income families. We offer small loans and a savings program to those turned down by traditional banks, believing that even the poor have a right to financial services. With these loans, families can invest in, and build, their own small businesses and their income-earning capacity. Worldwide, our clients post repayment rates over 96%.
A leader. FINCA invented the “Village Banking™ method” of credit delivery, now used by more than 80 other organizations worldwide. We operate on five continents in more diverse cultures than any other microcredit provider.
Not a typical charity. We offer loans, not gifts, and we promote financial independence, both among our clients and in our programs. Although we are a nonprofit, we strive to operate using sound business principles and an entrepreneurial spirit.
Our mission:FINCA provides financial services to the world’s poorest families so they can create their own jobs, raise household incomes, and improve their standard of living. We deliver these services through a global network of locally managed, self-supporting institutions.
Our work:Enables poor families to create their own solutions to poverty.
Provides small solutions—loans of $50-$1,000—and multiplies them a million times.
Promotes community and individual development: FINCA Village Banking groups—borrowing groups of 10-50 neighbors—promote the success of entire communities.
Requires a partnership between a family who wants to escape poverty, and another family willing to finance the small loan that gives them that opportunity.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home