strategy
Creating rural banking systems
Synonyms:
Developing agricultural banks in support of rural communities Description:
Creating rural banking systems to facilitate access to credit for rural population, particularly women and indigenous groups, and to promote rural savings. Context:
Specialized agricultural banks have distinctive functions and requirements which include supervision of productive activities of their clients, a rigorous project appraisal exercise, different performance criteria and different skill requirements for their staff. They rely heavily on foreign loans and government contributions. They are financial intermediaries in a restricted sense, in that they extend credit but rarely mobilize savings. Implementation:
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities. Agenda 21 recommends establishing and/or expanding favourable conditions for the provision of services, such as credit facilities and marketing outlets for rural populations. Counter Claim:
Specialized agricultural banks face a number of problems, starting with often non-performing loans. Moreover, their fixed interest rates barely cover their average operating costs and are rarely revised to allow for prevailing levels of inflation. As a result the purchasing power of their portfolios tends to diminish. Like the commercial banking system, agricultural banks do not appear to have had an appreciable impact on smallholder agriculture. Loans are usually channelled to big commercial farmers while small, unmechanized, rain-fed agricultural operations tend to be neglected. Broader:
Developing rural communitiesDeveloping rural communitiesStimulating rural enterpriseProviding full banking servicesImproving rural financial networksCreating non-profit banking servicesMobilizing domestic financial resources for poverty alleviationCreating new systems Narrower:
Financing cooperative loansProviding low-interest loansDeveloping rural credit schemesEstablishing community credit unionEstablishing rural banking systems for women Facilitates:
Combating droughtFunding small scale farmingForming farming cooperativesForming farming cooperativesFinding minimally backed loansFinding minimally backed loansIncreasing effectiveness of informal lendingProviding functional skills in vulnerable areasIncreasing public participation in desertification controlCommercializing agricultural products Values:
Support Organizations:
African Rural and Agricultural Credit Association Scheme for Agricultural Credit Development International Bank for Rural Industrialization Southeast Asia Association of Rural Government Banks Subjects:
Society → CommunitiesAmenities → Rural
Commerce → Banking
Agriculture, Fisheries → Agriculture
→ Systems
Development → Development
Type Classification:
C: Cross-sectoral strategies Related UN Sustainable Development Goals:
