Creation of a New        Use of Intermediaries     Linkage Building
Banking Institution
---------------------    ----------------------    ------------------------
      SYSTEM 1                  SYSTEM 2                  SYSTEM 3
---------------------    ----------------------    ------------------------
Development Banking      Development Banking       Development Banking
with the poor            for the poor              of and by the poor

                      C H A R A C T E R I S T I C S

The target group is      The development bank is   The development bank and
both a participant and   the participant and       NGO are co-actors and/or
instigator through its   instigator.               instigators with the 
own financial insti-                               banking system organized
tutions.                                           by the poor themselves,
                                                   thus there are three
                                                   co-actors.

The users are also       The bank remains owner    Each participant remains
the owners of the        of its system and         owner of his/her own
bank and its assets.     sub-systems.              assets.

Banking functions are    The bank is the           The promoting organization
added to the other       starting point. Its       or the grass roots group
daily functions which    sub-systems can help      itself is the starting
make up group acti-      the bank to really        point.
vities.                  reach the poor.

The poor people          The bank moves towards    Grass roots groups move 
provide themselves       the poor.                 towards the bank, and the
with a bank.                                       bank also towards the
                                                   group.

The idea of banking      A new banking instrument  This is first and foremost
is integrated into       is created by the banks;  a financing operation that
other activities         it is not really inte-    does not belong to the bank
                         grated into other         but to the people.
                         aspects of community 
                         life.

EXAMPLES:

Grameen Bank, B'desh;    Syndicate Bank of India;  Bank of Indonesia with Bina
Self-managed village     CESA of Ecuador; Agri.    Swadaya; Diviseema of India.
banks of Mali and        Development Bank of 
Gambia; SEWA of India.   Nepal.

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Hari Srinivas - hsrinivas@gdrc.org
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