Banking on the rural poor

The Projek Ihktiar (PI)is a rural credit scheme 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.

As PI works with the poor it records many instances when it has been approached by individuals and organisations who wish to make cash donations to aid the poor.

Initially this aid was accepted by PI and each Centre, which is the operating unit of the credit scheme in each target area attempted to distribute the aid in equaland fair portions among the target groups. However the aid was never sufficient for all members to receive a portion and some were left out.

This gave rise to two serious problems.

One being that the unfair distribution of free aid created disharmony among the members which harmed the successful working of the group.

The second, more important problem was that the aid, free of any conditions, confused the members. Questions were raised to the nature of - if aid to the poor did not have to be repaid, why were the poor required to repay PI loans?

The solution to the problem was the conclusion that aid must never be mixed with credit.

PI has now resolved the problem by putting all aid received into the general loan fund and giving out more loans using the fund.