Developing agricultural savings and credit institutions

Existing systems of informal credit delivery need to be recognized, and concerted action taken that not only enhances such activities, but also provides necessary resources, training and support. Thus people's efforts in mobilizing credit should be seen as a logical complement to banking services. They fill a gap in the banks' delivery system and do not, as is popularly argued, duplicate or compete with banks.

The creation of a system of service and financial institutions that support agriculture, and the individual efforts of farms and agricultural entrepreneurs to increase productivity and profits is essential in the development process. No issue is more limiting and severe than the lack of producer access to financing at affordable rates. Farmers lack the capital required to restore productivity, thus limiting their capacity to take advantage of any policy reforms that may occur.

Most successful micro finance institutions have a high level of participation by poor people in ownership and decision-making. Leading micro finance institutions such as the Self-employed Women's Association (SEWA), cooperative banks, Grameen Bank, credit cooperative societies, credit union movements, are members-based organizations. Rural banks are grass roots institutions in which poor people manage their own organizations.