'village banking system has been developed by Muhammad Yunus with considering rural context of Bangladesh. Is it useful to the other developing countries to achieve rural development? What are the challenges of this approach ?
We should be careful with a banking system that give credits to low resources people in developing countries, As an example I can talk about many Mexican women that are just full of debts because they use this money not to invest, but just to buy food or other items for their family and, at the end, they ended moving to another place to scape from the bank because they cannot pay.
Unfortunatelly, they involve other women in their debts because these banks only give credits to a group of women, this way if a woman does not pay, the rest of the group have to pay.
This way the banks hardly loss, but the economy of many poor women may ended worse.
hi Ofelia Andrea Valdés Rodríguez
Thanks lot for your valuable contribution
In my openion development of villege bank system is a useful approach for rural development only if it is not based on the micro or macro financing system.
infact this model is designed to preserve the money for the hard time specifically in agriculatural sector for fertilizers, sprays etc
Thanks all
I as I could find out, lack of available funds is one of the key issues in community based bottom up development projects launched in Sri Lanka as well as in many other southern peripheral countries, thus, community banking systems based on the ‘microcredit theory’ can be developed to increase accessibility to the necessary funds for local communities’ self-employment activities. This theory focuses on developing village banking systems with microcredit methodology at grassroots levels allowing villagers to take a small loan whereby very poor and marginalized community members are supported in their own sustainable livelihoods.
Imran, What do you think about that?
One of the major advantages here is that this kind of community banking system via application of the microcredit methodology is not completely new in the South Asian countries. For example, the Grameen Bank in Bangladesh is successfully operating microfinance organizations, which conduct funding programmes for self-emolument projects of the marginalized communities. Therefore the microcredit theory can be considered as most practical action to associate with a bottom up development approach. Am I correct? I f not are there any practical reasons for that?
As Ofelia Andrea Valdés Rodríguez highlighted , [we should be careful with a banking system that give credits to low resources people in developing countries] . Then what kind of methods or system can we implement to rural development process. Rural villagers do not have enough money for invest. Without giving economic support they will unable to participate development activities, even if we propose fantastic plan? What is your ideas about that??
Hi Syed Azamussan! Thanks lot for your contribution. I just want to know about practical situation
you can view the example of AKHWAT program for uplifitn the rural areas
It is unique among development intervention that facilitates to transform the socio-economic status of the people through micro-credit services. Formal financial institutions like commercial banks became a failure to provide loans to the marginalized people without collateral. Thus, the village banking model may deliver both financial and non-financial services to the unbanked people with a view of socio-economic transformation.
I believe there are other factors as well, "Capability Development Approach" purposed by Amartya Sen is one of such, the availability of microcredit services and exposing it to poor people is just one step as pointed out by Sen, he argues that these poor and marginalized communities should be made capable to use these services in order to uplift themselves from poverty. I believe that in South Asian countries although the rural development banks have been operating since the 1980's it hasn't done a huge impact in the lives of the poor. Collateral and high-interest rates are one of the reasons for the failure of the Grameen model which has been commercialized in the present day. Apart from that what about the people that are socially excluded, indigenous and peasants? people that have no collateral, land ownership, or even citizenship like in the case of "Musahaar Communities" in Southern Nepal and India. I have been extensively looking at how microfinance as a tool for eradicating poverty in these communities has played its role in a local level. Any thoughts??
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