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125 Int'l Lab. Rev. 447 (1986)
Banking for the Rural Poor: Lessons from Some Innovative Savings and Credit Schemes

handle is hein.journals/intlr125 and id is 461 raw text is: International Labour Review, Vol. 125, No. 4, July-August 1986

Banking for the rural poor:
Lessons from some innovative
savings and credit schemes
Philippe EGGER *
Credit has long been regarded as a key element in agricultural
development strategies. The modernisation of agriculture is so dependent on
the adoption of new technologies and the use of better seeds, fertilisers,
pesticides and farm implements that without effective financial facilities
innovation and growth are hardly possible. Indeed, in many countries the
inadequacy of such facilities proved to be a major stumbling-block to the
Green Revolution and similar experiments. Small farmers have little access
to institutional credit, and the banking community has shown little
enthusiasm for expanding its network in rural areas. The gap has been
partially filled by specialised programmes.
For specialised agricultural banks, large-scale development projects, co-
operative institutions and even small non-governmental organisations, credit
has become a preferred tool for promoting development, no doubt largely
because of the flexibility associated with its delivery. Most major agricultural
development projects contain an essential credit component, and many
smaller projects operate some sort of credit facility or revolving loan fund.
Moreover, credit is widely used not only for agricultural modernisation but
also in projects to increase the level of employment and income among the
rural poor.
However, these interventions, whether big or small, are seldom wholly
satisfactory. They often reach only a small part of the rural population, grant
credit at unrealistically low rates of interest and operate only for a limited
time. While many have introduced valuable innovations in banking for-
malities and procedures and in organisational structures, they have not, as a
rule, prompted the banking system to face up to the needs of the vast
majority of the rural population who are generally forced to rely on informal
and often exploitative sources of credit.
* International Labour Office. This article could not have been written without the
guidance provided by my colleagues Dharam Ghai, Anisur Rahman and Rounaq Jahan, which I
gratefully acknowledge here.

Copyright © International Labour Organisation 1986

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