wlm4 at cornell.edu (Will
06-12-1995, 01:17 PM
In November 1995 representatives from 30 agencies and 20 countries met in
Guatemala for the First International Conference on Village Banking.
Participants sought to develop a set of principles and standards that could
help effective village banking programs. The interaction and understanding
of common concerns at this conference will serve as the basis for future
collaboration on village banking issues.
Village banking provides a model which enables poor communities to
establish their own credit and saving associations in village banks. The
sponsoring agency makes one loan to one village bank which then makes loans
to its members, guaranteeing the loans and relying on peer pressure and
support among members to help ensure repayment. Borrowers start with an
extremely small loan and work their way up to an established ceiling. Credit
is linked to savings and loan sizes to the amount saved by each borrower.
Members' savings are held by the village bank as an internal account and
forms one capital the bank can lead or otherwise invest to increase its
resource base.
Now village banking is being implemented in over 25 countries in Latin
America, Africa and Asia. Over 3000 banks serve close to 84,000 members, 92
percent of which are women. The active collective portfolio stands at about
$8.5 million with an average loan size of $80 and a 97 percent repayment rate.
Although savings mobilization is still key for capitalizing village banks
the motivation to save is changing. Most implementing agencies have had to
strike balance between empowering village borrowers to create their own
management systems and providing sufficient oversight to assume
accountability. These programs have made great investments in accounting
training to improve banks management. This is often supplemented with
literacy training.
Village banking has changed from a financial service model to an
integrated provider of credit and savings with education, health, nutrition,
environment, and general community development.
Now village banks, originally projecting three years to autonomy, in
practice find their capital accumulation slowed by member demands for
greater access to saving, lower rates and fluctuating membership. Programs
are exploring a number of options for ensuring members' ongoing access to
financial services, including the diversification of loan products and
linking either banks or their individual members to other financial
institutions.
Evaluation of village banking programs indicate that their benefits are
both economic and social with positive impact on banks, members, and their
communities. Borrowers increase incomes, diversify and expand activities,
and participate in the group and its democratic process. Some members have
increased their knowledge and improved practices in management, literacy,
nutrition, and health.
The Small Enterprise Education and Promotion Network (SEEP) will publish a
monograph on village banking this summer. For further information please
contact SEEP, 777 United Nations Plaza, New York, New York 10017,
212-697-6222 (phone) or 212-692-9748 (fax).
Reprinted from Crafts News
Spring/Summer 1995 Vol. 6, Issue 24
1001 Connecticut Ave NW, Suite 1138
Washington DC 20036
This post transferred from the cdb-l mailing list
Guatemala for the First International Conference on Village Banking.
Participants sought to develop a set of principles and standards that could
help effective village banking programs. The interaction and understanding
of common concerns at this conference will serve as the basis for future
collaboration on village banking issues.
Village banking provides a model which enables poor communities to
establish their own credit and saving associations in village banks. The
sponsoring agency makes one loan to one village bank which then makes loans
to its members, guaranteeing the loans and relying on peer pressure and
support among members to help ensure repayment. Borrowers start with an
extremely small loan and work their way up to an established ceiling. Credit
is linked to savings and loan sizes to the amount saved by each borrower.
Members' savings are held by the village bank as an internal account and
forms one capital the bank can lead or otherwise invest to increase its
resource base.
Now village banking is being implemented in over 25 countries in Latin
America, Africa and Asia. Over 3000 banks serve close to 84,000 members, 92
percent of which are women. The active collective portfolio stands at about
$8.5 million with an average loan size of $80 and a 97 percent repayment rate.
Although savings mobilization is still key for capitalizing village banks
the motivation to save is changing. Most implementing agencies have had to
strike balance between empowering village borrowers to create their own
management systems and providing sufficient oversight to assume
accountability. These programs have made great investments in accounting
training to improve banks management. This is often supplemented with
literacy training.
Village banking has changed from a financial service model to an
integrated provider of credit and savings with education, health, nutrition,
environment, and general community development.
Now village banks, originally projecting three years to autonomy, in
practice find their capital accumulation slowed by member demands for
greater access to saving, lower rates and fluctuating membership. Programs
are exploring a number of options for ensuring members' ongoing access to
financial services, including the diversification of loan products and
linking either banks or their individual members to other financial
institutions.
Evaluation of village banking programs indicate that their benefits are
both economic and social with positive impact on banks, members, and their
communities. Borrowers increase incomes, diversify and expand activities,
and participate in the group and its democratic process. Some members have
increased their knowledge and improved practices in management, literacy,
nutrition, and health.
The Small Enterprise Education and Promotion Network (SEEP) will publish a
monograph on village banking this summer. For further information please
contact SEEP, 777 United Nations Plaza, New York, New York 10017,
212-697-6222 (phone) or 212-692-9748 (fax).
Reprinted from Crafts News
Spring/Summer 1995 Vol. 6, Issue 24
1001 Connecticut Ave NW, Suite 1138
Washington DC 20036
This post transferred from the cdb-l mailing list