Banks must also be poor-friendly

It has been an undisputed fact that banks, commercial banks that is, have never been friendly to the poor. It is easier for the rich to access credit than the poor. Account- opening rates and the asking minimum balance at some of the banks are just too much for the low-income people to afford.

It is not easy for the poor to access credit facilities in the banks given the high, in fact extremely high, collateral conditions attached to loan applications. Conditions range from the mundane to the bizarre. Some banks demand as much as 500,000/- as minimum balance. Some demand that people opening accounts with them must know English!

This has adversely impacted on the various people’s development projects, including agriculture and livestock keeping, farming, small industry and business due to lack of a stronger initial capital, proving a disservice to the nation’s poverty alleviation endeavour.

Given this poor-denied-loan and rich-getting-loan banking scenario, there has been serious effort to establish friendlier savings and credit societies and other legal microfinance institutions over the years to help the financially weaker. One such example is the savings and credit cooperative societies (SACCOS) that are spread all over the country.

These have really been a people’s saviour. SACCOS finances have truly transformed people’s lives as they boosted their various undertakings. People have been able to initiate various income-generation ventures and even build better homes through this arrangement.

There has also been experiments at establishing low-income friendly banks in some parts of the world, especially Bangladesh, where an entrepreneur, Prof Mohammed Yunus, founded the Grameen Bank, who has been quoted saying that people can change their lives provided they have the right kind of institutional support.

As Prof Yunus contends, people need finance. They are not asking for charity, which is no solution to poverty. Therefore, the call made by the Prime Minister, Mr Mizengo Pinda, to commercial banks in Arusha on Saturday to abolish unnecessary bureaucracy and start catering for low-income people is commendable.

Banks must take heed and shed their traditional poor-unfriendly tag. They can do it by initiating special loan schemes to cater for all. The development of this country will be fully achieved through involvement of all income groups, especially the low ones, who are the majority.

source: daily news