Community Finance

In 2010, Andhra Pradesh experienced a microfinance crisis that killed the sector in India's largest microfinance state. Aggressive growth by MFIs (including SKS Microfinance's IPO) led to over-lending—multiple MFIs lending to the same borrowers, creating debt spirals. Reports of 80+ borrower suicides triggered emergency government ordinances that effectively shut down microfinance in the state. The crisis shows what happens when growth metrics replace mission metrics.

• Multiple MFIs lending to same borrowers
• SKS Microfinance IPO preceded crisis
• 80+ reported borrower suicides

Cambodia has the highest microfinance debt per capita in the world—$4,280 average against $1,500 annual income. 2.6M households are indebted to MFIs. The crisis emerged as foreign investment flooded in seeking returns, and MFIs competed to lend. Families took multiple loans, used land as collateral, and when businesses failed, lost everything. Human rights organizations document coercive collection, child labor to repay debts, and mass land loss. It's a cautionary tale of what happens when microfinance scales without governance.

• CAUTIONARY: Highest MF debt per capita globally
• 2.6M households indebted
• $4,280 avg debt vs $1,500 income

CDFIs are specialised financial institutions with a primary mission to serve underserved communities. Unlike conventional banks, they're legally required to deploy capital for community benefit. The sector has grown to 1,300+ institutions deploying $450B+ in loans and investments to communities that conventional finance ignores. Mission-lock prevents drift toward profit maximisation.

• 1,300+ certified institutions
• $450B+ deployed to underserved communities
• Legal mission-lock requirement

China's Rural Credit Cooperatives (RCCs) form the world's largest cooperative financial system—2,300+ institutions with $3T+ in assets serving 80M+ rural households. They were designed to serve farmers excluded from commercial banking. However, 'cooperative' is misleading: governance is state-controlled, not member-controlled. RCCs function more like state-directed rural banks than true cooperatives. They show massive scale is possible but raise questions about whether state-controlled systems can achieve true alignment.

• 2,300+ institutions
• $3T+ in assets
• 80M+ rural households served

Compartamos began as an NGO providing microloans to poor Mexican women. In 2007, it IPO'd at a $1.6B valuation, making founders wealthy while charging borrowers 195% APR. Muhammad Yunus called it a betrayal of microfinance principles. Compartamos shows what happens when decoupling fails: once investor returns became the goal, mission alignment collapsed. High repayment rates masked exploitation—women repaid because they had no alternative, not because loans were beneficial.

• Started as nonprofit NGO (1990)
• IPO'd 2007 at $1.6B valuation
• Charged up to 195% APR

Handelsbanken is a publicly-traded Swedish bank that has operated without traditional budgets since 1970. Under CEO Jan Wallander's reforms, the bank eliminated central targets, gave branches full autonomy over lending decisions, and created Oktogonen—a collective profit-sharing foundation where all employees receive equal shares regardless of rank. The result: 50+ years of outperforming Nordic competitors on cost/income ratio while maintaining conservative lending. Handelsbanken proves that PSC-aligned architecture is achievable in for-profit, shareholder-owned contexts through governance design alone.

• FOR-PROFIT: Publicly traded (SHB)
• No budgets since 1970
• Branch autonomy over all lending

M-Pesa transformed Kenya: 96% of households use mobile money, financial inclusion jumped from 26% to 83%. It proved technology could bank the unbanked. However, M-Pesa is owned by Safaricom/Vodafone—a for-profit corporation. Transaction fees extract value from every transfer. The infrastructure is privately owned, creating dependency. M-Pesa shows transformative impact is possible, but corporate ownership limits regenerative potential and creates extraction risk.

• 96% of Kenyan households use it
• Financial inclusion: 26% → 83%
• 51M+ users globally

Mondragon is the world's largest worker cooperative—80,000 worker-owners across 95 cooperatives in manufacturing, retail, and finance. The regenerative model: workers contribute capital upon joining, surpluses are reinvested in new cooperatives, and the Caja Laboral (cooperative bank) funds expansion. The system has operated for 68 years, surviving multiple economic crises that bankrupted conventional companies.

• 80,000 worker-owners
• 95 cooperatives in federation
• €12B annual revenue

For Pacific Island nations like Tonga and Samoa, remittances from diaspora workers constitute 30-40% of GDP—the highest rates in the world. These aren't just individual transfers; they're structured flows to families, churches, and community obligations (like fa'alavelave in Samoa). The system creates a regenerative loop: communities invest in youth education, youth migrate for work, earnings flow back to support the next generation.

• 30-40% of GDP for Tonga, Samoa
• Structured obligations (fa'alavelave)
• Church and community flows

SEWA Bank was founded in 1974 by and for self-employed women—street vendors, home-based workers, and agricultural labourers excluded from formal banking. Today 600,000 women members save, borrow, and own the bank cooperatively. Savings regenerate into loans to other members, creating a self-sustaining financial ecosystem that has operated for 50 years.

• 600,000 women members
• Founded by self-employed women
• Savings → loans → savings cycle

SKS Microfinance was founded to serve India's rural poor and became the country's largest microfinance institution. In 2010, it conducted the largest MFI IPO ever—$350M valuation. What followed was textbook mission drift: founder Vikram Akula was ousted, interest rates climbed, aggressive collection practices emerged, and the company faced regulatory crackdowns. SKS shows how public market pressures can destroy social mission—investor demands for quarterly growth are incompatible with patient, regenerative capital.

• Largest MFI IPO ($350M)
• CAUTIONARY: Founder ousted post-IPO
• Interest rates climbed for returns

Stokvels are traditional South African savings clubs where members pool money for shared goals—funerals, education, housing, or bulk buying. With 11M+ members and ~$50B flowing through annually, stokvels represent one of the world's largest informal financial systems. They predate formal banking, survived apartheid, and continue thriving because they're built on trust, reciprocity, and community accountability rather than contracts and collateral.

• 11M+ active members
• ~$50B flowing annually
• Rotating savings and credit

In 2001, Thailand's government deposited 1 million baht (~$25,000) into each of 77,000 villages—the world's largest microfinance injection. Villages formed committees to lend to members. Results were mixed: some villages used funds productively for small businesses; others saw elite capture, poor lending decisions, and debt spirals. The program shows top-down PSC injection can work but requires strong local governance. Government capital without community capability creates risk.

• 77,000 villages participated
• 1M baht ($25K) per village
• World's largest MF injection