Thursday, February 14, 2008

Banking for specific communities : A wonderful opportunity

Community based banks are success stories in India. Examples are: Rickshaw Bank and Sex Worker Bank.

Rickshaw Bank is started in 2004 and the central idea is the issue of an asset-based loan to the rickshaw puller for which installments are repayable on a daily repayment plan with one-year duration. Full and timely repayment leads to ownership of the rickshaw being handed over to the puller. This concept is in contradiction to the existing practice in which an equivalent amount of a daily rental fee is paid to rent the vehicle, possibly for the lifetime of activity, with no scope for ownership.

Usha Bank is started by a sex worker and it is with the purpose of providing economic security to Sex workers. Although sex workers earn in cash, they have little control over their assets. Most of their income is used to pay off power brokers within the industry, bribe local cops and provide sustenance to their families. This makes them vulnerable to extortion by moneylenders. Perpetually in debt, it is not uncommon for prostitutes to pay annual interest rates as high as 1500 percent.

Here the opportunity is clear. your business model has to suit the specific requirements that the community faces. Interested? write me to my gmail id: malapati.

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