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Posts Tagged ‘loan contract’

Elite Capture (2)

Posted in Financial cooperatives, History, Microfinance, tagged , , , , , on March 2, 2012| Leave a Comment »

By 1979 only 61 of the 400 Comilla cooperatives were still functioning.  One observer attributes this result to four factors:  fraud/lack of internal controls, stagnation, diversion of funds, and ineffective external supervision. The central problem of fraud and weak controls “was possible not only because of individual dishonesty, but because the people were not made aware of their rights, and were not in a position to voice their rights (Aditee Nag Chowdhury, Let Grassroots Speak, p. 54).

Partly as a result of Dr. Khan’s experience, later Bangladeshi practitioners in microfinance, such as Dr. Muhammad Yunus and Fazle Hasan Abed, (more…)

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Elite Capture: Comilla

Posted in Financial cooperatives, History, Microfinance, Uncategorized, tagged , , , , on March 1, 2012| Leave a Comment »

The ‘cooperative wave’ of microfinance gave way to the ‘microcredit’ wave in the 1970s. ‘Elite capture’ severely damaged the cooperative wave in the South. The story of the transition from the Comilla model to Grameen Bank, at the inflection point between the movements, is exemplary.

The ‘Comilla Model’ was initiated in East Pakistan by Dr. Akhter Hameed Khan in 1959. Khan drew inspiration from the Raiffeisen credit unions of rural Germany. He envisioned ‘vigorous local institutions’ that could provide credit and access to markets for the farmers of Comilla district. The cooperatives (more…)

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Be Wary of Assumptions

Posted in Financial cooperatives, Microfinance, Orality, tagged , , , , , on May 3, 2011| 5 Comments »

During one of my quarterly visits to the Far North Credit Union, I was intrigued to discover the note “QF” next to several loans recorded in the cash book.  I was told these were “quick fire” loans, made without any written record and no collateral, to a maximum of $50.  When I asked where the idea had come from, I was told it had been given to them by New Zealand’s credit union pioneer — Colin Smith — during a training workshop.

Formal speaking is a powerful living tradition

Horrified at the idea of a loan of any size being made without a signed contract (and the subsequent default levels!) — and knowing that Colin, a chartered accountant, would never countenance such a thing — I tracked down the origins of their innovation to a presentation he had given on improving members’ experience of the loan

(more…)

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The ‘village finance’ segment

Posted in Microfinance, The village, tagged , , , , , , , , on April 17, 2011| Leave a Comment »

Poor villagers in the developing world are a distinctive, underserved microfinance segment. There are nearly a billion rural people who make less than $1.25 a day, and most are illiterate or marginally literate, so microfinance documents are inaccessible to them.

There are three widely neglected factors that make rural microfinance fundamentally different from urban microfinance. (more…)

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Why Not?

Posted in Microfinance, Orality, tagged , , , , , , , , , on December 2, 2010| 4 Comments »

Loan Contract Chambak Village Cambodia

Why are there not finger-counting icons and/or tallies (see right) on every passbook owned by every illiterate client in microfinance?

This small change could make microfinance more comfortable for poor borrowers and poor savers, and contribute in a small way towards our shared goal of ‘access for all’. (more…)

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