Hands off village banks

A

ll of sudden commercial banks are falling over themselves trying to win village bank groups, also known as ‘Banki m’khonde’. The banks are putting out all manner of messages trying to woo these groups to open accounts with them, promising all sorts of rewards for any village bank group that opens an account with the banks.

One thing that most of these commercial banks are missing or, perhaps, they have not yet asked themselves is why there is a boom of village banks? Why are people preferring to save their money in village banks than the commercial banks? These are just some of what I would consider crucial questions the banks that are making a joke of themselves need to ask themselves before trying to entice these village groups with their mockery of rewards.

My view is that commercial banks are very elitist, predatory and manipulative in nature. They thrive on taking advantage of most of their clients’ lack of adequate financial knowledge to impose some bank charges that often are not explained when one is applying for a loan, for instance. On the other hand, village banks, have come to counter this.

The village banks started with the concept of serving the people that most commercial banks thought were unbankable.

Again, as the name suggests, the village banks are in places where commercial banks thought they wouldn’t make any meaningful profits, so why even bother have a bank in such a locality, so they thought.

Trying to entice village banks to open accounts with commercial banks is completely missing the point. These village saving groups are designed to operate at lowest cost possible and allow flexibility such that members have easy access to cash with no bank fees and transport to-and-from the bank.

It is this flexibility and easy access to their money that made village saving groups to be this attractive such that now they are everywhere, not just confined in rural set-ups.

Again, cash invested, is meant to be circulated right away and not kept in some account where it chips away slowly but steadily in the name of bank charges and other not so well explained transactions.

Village saving groups have taken the power of savings from the banks into people’s own hands. People have built houses, started small businesses and they are able to pay school fees, thanks to these groups. It is not easy to quickly access bank loans. The process is quite tedious for most folks.

These are just a few of the reasons village saving groups are growing in popularity and savings. Commercial banks, if anything, should work on their processes which are quite hindering for an average Malawian. Stop making our lives difficult when we want to access cash.