Banking on the rural poor

The Prokjek Ikhtiar(PI)is a rural credit scheme in Malaysia which follows an adapted version of the Grameen Bank Approach (GBA). PI provides credit on reasonable terms to very poor small farm households with the aim of reducing poverty.

PI followed the GBA (which has now taken the style of a credit programme for poor women)but did not restrict or specify target groups other than on economic situation.

The initial response from the target areas was from males, who made up 2/3rds of the loanees. The fact was accounted to the social patterns of the target area in that the Malay culture embodies male headed households and the head of the family is expected to earn and support the family.

Many difficulties were faced by the male loanees as they worked outside the village and away from their homes and found it difficult to attend weekly meetings of the loanees. As attendance dropped, the weekly repayments of loans which were done at the meetings also reduced.

Women loanees, on the other hand, some of whom who considered the meetings social events, attended meetings regularly and thereby made regular repayments.After the initial setback the potential borrowers were screened not only to determine their economic standing but also to ascertain their ability to participate in the credit programme and priority was given to female loanees.

On being chosen, the potential borrowers are given a training to help them to understand the complicated loans and loan conditions. The potential borrowers must then pass an oral test confirming their understanding of the loan conditions and procedures and must indicate their agreement to the conditions before becoming eligible for a loan.