B e s t P r a c t i c e s
Three Success StoriesAn analysis of the management practices and modes of operation underlying the success of three rural financial institutions is presented here -
- The Bank for Agriculture and Agricultural Cooperatives (BAAC), Thailand
- The Village Banks (Unit Desas, BRI-UD) of Bank Rakyat Indonesia (BRI)
- Grameen Bank, Bangladesh
All three institutions are widely perceived as successful judged by the primary performance criteria of outreach and self-sufficiency, and all have excellent information available about their activities. However, while prominent examples, these are not the only successful RFIs. Several other promising rural financial programmes have emerged during recent years.Summary of main features:
- Favourable macroeconomic, agricultural and rural policies
- Adequate investment in the physical and social rural infrastructure (BAAC, BRI)
- High degree of management autonomy in the formation of operational policies
- Staff policies that stress training, accountability and reward through monetary incentives and promotion.
- Innovative, low-cost distribution systems and mobile banking
- Innovative and flexible loan terms and conditions.
- Close monitoring of loan performance; high collection rates and low arrears
- Domestic savings mobilization as a growing source of funds, resulting in diminishing or eliminating the need for donor funds
- Positive and often relatively high on-lending rates
- Control over administrative expenses.
- Advanced management information systems (MIS) which facilitate effective planning, control and timely monitoring of loan repayment
- Abstracted from:
- Yaron, Jacob, Benjamin McDonald and Piprek Greda, Rural Finance: Issues, Design and Best Proactices.. DRAFT, Second Revised Edition. Agriculture and Natural Resources Department, The World Bank, February 1997.
Hari Srinivas - hsrinivas@gdrc.org
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