Microcredit and the culture of reciprocity

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The Bangko Kabayan experience as an Economy of Communion enterprise

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Microcredit and the culture of reciprocity

  1. 1. Bangko Kabayan: A Case Study of Microfinance and the Culture of Reciprocity<br />Teresa Ganzon<br />January 27, 2011<br />
  2. 2. The Philippines<br />Developing nation<br />Population = 96 Million<br />About 1/3 (32.9%) of whom live below the poverty line, earning less than $2 a day<br />
  3. 3. Microfinance in the Philippines<br />The government has been encouraging private sector, including the formal banking sector, to introduce and offer microfinance services.<br />Few formal financial institutions have chosen to engage in microfinance.<br /><ul><li>Today, only about 10-15% of the 680 rural banks dispersed in the Philippine countryside offer microfinance products. </li></li></ul><li>Bangko Kabayan, 1957<br />53-year old Philippine rural bank in the province of Batangas<br />Grew its resources and loans, mostly fueled by rediscounting funds from the Central Bank<br />Experienced disastrous results in the ‘70s causing it to nearly close down from wholesale defaults <br />We became very conservative in lending and only accepted loans secured by hard collateral<br />
  4. 4. Economy of Communion<br />A business does not exist to produce profits only for its owners, but for the following purposes:<br />For those in need in the community<br /> For structures of formation<br /> For reinvestment into the company<br />Paradigm consistent with the distributive nature of social enterprises<br />
  5. 5. Paradigm Shift<br />From traditional, collateral-backed lending to unsecured microfinance technology<br />Strict monitoring of accounts<br />Hiring and recruiting qualified field personnel<br />Acquiring competencies in cash flow and character-based risk assessment<br />
  6. 6. Our true calling<br />
  7. 7. Focus group discussions<br />
  8. 8. Product Development<br />Educational <br /> Loan<br />Micro-<br /> insurance<br />Housing<br /> Microfinance<br />
  9. 9. Grassroots Entrepreneurship Education<br />Understanding <br />Financial <br />Statements<br />Opportunity Seeking<br />marketing<br />Human Resource Management<br />OPERATIONS<br />
  10. 10. Clients giving back<br />Community Development Officers (CDOs)<br />rolling out the EntrepEskwela Program in <br />different microfinance centers<br />
  11. 11. Conclusion<br />Transformation from a traditional, collateral-based lending institution into one that has been able to adopt microfinance unsecured lending<br />Even as a microfinance-oriented institution, we have chosen to do things differently. We do not wish to grow in a manner where relationships from within the enterprise and with the clients will be secondary to “standardization and structure”. <br />This is a challenge we face today – and every moment of our enterprise life: to balance the demands of business while not losing track that man and relationships are primary and central.<br />

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