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RURAL FINANCE papers are produced by the World
Bank and CGAP staff, and are jointly reviewed by ARD, FSE, and CGAP. They are
intended to be accessible, succinct presentaitons of good practice microfinance
and guidelines relevant to the World Bank project cycle and available funding
instruments, as well as to other donors.
Renewed emphasis on poverty reduction has put rural populations, particularly
agricultural households, back in the spotlight of development efforts.
Agricultural development programs often include credits for agricultural
production, which have renewed the debate about how to provide finance in rural
areas. This paper offers a model (agricultural microfinance), for providing
financial services to poor, rural farming households, which combines the most
relevant and promising features of traditional microfinance, traditional
agricultural finance, and other approaches.
State banks, or recently privatized state banks, offer huge potential for sustainable
expansion of financial servies to low-income populations due their existing rural
presence and extensive rural networks of branches or outlets. This note offers
models for engagement and recommendations for working with
state banks.
A few innovative MFIs have adapted their operations and products to expand
viably into agriculture lending in difficult rural areas. This note describes
how they have tailored their procedures and products to growing cycles, applied
risk management techniques, and adopted new technologies and and alternative
delivery mechanisms to increase coverage and lower operating costs.
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