FINCA International Case Study

FINCA International, Inc. delivers financial services to the poor so they can start their own business, raise household incomes and improve their living. FINCA provides these services through a global network of self-supporting and locally-managed institutions. John Hatch founded FINCA International in 1984. It is a non-profit organization and the innovator of the village banking methodology. “A village bank is an informal self-help support group of 20-30 members, predominantly female heads-of-household. If the program is ‘on mission’ in a normal village bank about 50% of all new members entering the program will be severely poor – representing families with a daily per-capita expenditure of less than $1; the rest are moderately poor or non-poor. These women meet once a week in the home of one of their members to avail themselves of working capital loans, a safe place to save, skill training, mentoring, and motivation. Loans normally start at $50-$100 and are linked to savings such that the more a client saves the more she can borrow. The normal loan period is four months and is repaid in 16 weekly instalments,” explains John Hatch in his lecture, “A Brief Primer on FINCA", at the University of Berkeley's Haas School of Business, July 21, 2004. The

In order to integrate into the formal financial sector claims village banking programmes to navigate a new landscape, the one that provides new prospects for growth while exposing them to new potential risks. It is insufficient for a village banking programme to set its sights on commercial funding, such as the funding must be on favourable conditions and organized in a way that minimizes the risks from changes in exchange rates, interest rates, refinancing and regulations. To decrease these risks, the following generation of technical assistance to commercializing MFIs will focus on specialized expertise in banking, commercial law, financial and