UAE | General
Informal banking for expat villagers
Jeevan and 44 other members of his village are members of an informal but sophisticated banking system Jeevan calls "the society".
- A.A.L.
- Published: 00:00 September 2, 2006
Dubai: Jeevan and 44 other members of his village are members of an informal but sophisticated banking system Jeevan calls "the society".
Membership to the Society costs Dh100 per month and is open only to members of Jeevan's village, Nizamabad.
Jeevan likes to think of the society as a social grouping based on trust and community values. All members know each other from the village, and are only there "to look out for each other".
Membership fees are collected by an appointed "cashier" for 18-24 months after which members get their saved amount back along with interest collected from loans.
"If a member has to leave the country without taking his balance, he can get it back at home in Nizamabad," says Jeevan.
The society meets once a month where the group's balance is announced by the cashier and members are given the opportunity to present possible loan requests before the rest of the society.
Members can take one- and four-month loans of Dh1,000 for which they are charged Dh50 and Dh100 in interest respectively. All collected interest is added up, divided and distributed equally between the members at the end of the cycle.
So what does the cashier get out of it?
"Nothing," insists Jeevan. "We agree to appoint a trustworthy man every cycle, who does the job for the sake of the community."
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