The village banking method has been shared widely with other voluntary agencies and development organizations. While many agencies and organizations provide small loans to low-income families, not all use the village banking method. Developed by FINCA Founder John Hatch, the village banking method is unique in the responsibility and autonomy given borrowers in running their banks and in its emphasis on community, as well as individual, development.
Loans�at market rates of interest�are the central service provided by the village banking method. FINCA offers loans, not grants, to low-income microentrepreneurs, because at the root of their poverty is lack of opportunity, not lack of desire to work. While many poor families have ideas for fostering their own employment by creating small businesses, few can access the capital they need to begin. They are excluded from conventional financial sources (e.g., commercial banks) because they lack credit ratings and assets to pledge as collateral.
FINCA lends to groups of neighbors who come together to guarantee one another�s loans, and work together to ensure that the bank runs smoothly. The group is critical; without it, individuals cannot realize their full potential. By sharing their problems, challenges and successes, clients learn and progress together. Village banking groups are a great source of moral support for start-up enterprises. Members network, advertise for, and patronize one another�s businesses. Cooperation takes precedence over competition