Ngo_Bank_Compartamos

Bank Compartamos In 2006 the financial personal loans institution became a formal bank, Mexicans saw this small organization to grow from ground zero to the level of what any shareholder dream about, this organization was founded in 1990 as a credit institution NGO; borrowing small loans to small communities emphasizing in not-for-profit providing microcredit to marginal communities whom live in poverty helping with services that were not available to these communities, the slogan of bank compartamos the bank of the poor. The key factor playing a good role in this financial institution was to keep management low operating cost while borrowing microcredit with high rate of interest, making the financial business very profitable for compartamos as well as the shareholders, the mission to developed agencies was to raise standard of the poor while making the poor even more poor, sort of like the rich king taking from robin hood. Taking into consideration the high rate of 86 percent p.a. net taxes on its loans to the poor with a VAT of 99% p.a. compartamos claimed that their interest rates were so high because they were giving small size loans, basically the minimum wage in 1990 was the 20.12 pesos per day less than $2.00 dollars, in other words if you were given a loan of 450 which was the minimum to lend, and a Mexican citizen was making an income of 630 pesos in 1990, they were giving up more than half of their monthly income. I heard once someone saying that this business was good because they were keeping the clients happy and using the money from the poor to help other poor in other words cycling the monetary business, I almost choke out when I hear such thing, with those high interests I don’t any ethical movement in such business, but as a business man I applaud the way the scammed the poor to transfer that money to the pockets of the wealthy shareholders. First of all we need to stay focus and remember what was the aimed of such financial institution to aid a better quality of living of the marginal community, and one of the reason the emphasize loans especially for women was because they knew women would be more steady and responsible to make back those payments, also agricultures and microenterprises, I really don’t see any aid but making the poor more poor, one of the main reasons these people was coming back for more loans was not because they had the greatest service, but because they were able to paid back the money borrowed, and because the second time these people apply for another loan they didn’t have to go through the paperwork process since they already were considered clients. Another factor was when the financial institution opened its doors to the poor community; it was opened in a strategic topographical part of Mexico, like Oaxaca and Chiapas, where poverty was more remarkable than other states of the Mexican nation, either way this institution is just running business not a charitable institution but why disguise the truth behind poor people, because it was rentable, and easy to get people to come and get this loans even though they were not liquid and maybe high risk clients, but I’m sure this financial institution made a survey before to go into financial business, no one swims without knowing the waters. Everything was well-though and planned, when they had to lend large amounts of money they were no asking for house as a collateral, but were making the clients sign an insurance in case of death, the bank and only the bank was going to get this money from the insurance, assuring their investment in an even more profitable business. It’s like putting a price on your head without these people even knowing it, why' Because these people are not academically educated and sometimes it’s difficult to understand the concepts of business especially if you are given a bunch of paper work to sign in order to get your loan. The financial institution has growth to a large level that had attracted the eyes of investor’s from other countries, especially United States, only in its first day up to 32% price of shares, growing very fast at a rate of 12 times they had at the beginning, the poor gets poorest and the rich more fat, what is shameful is that 18 percent of such financial institution belongs to the Mexicans, the rest 82 percent of the shares belongs to foreign investors, the Mexican heritage is not really a Mexican heritage. Now they are so successful and so profitable they have opened the doors of bank compartamos in all over Mexico and at this moment they count with 187 operations which let me remain you belong to foreign and not to Mexican, but yes they are a good business and helping the poor. My final conclusion is be aware of who you doing business with, and do not misinterpret the meaning of and ethical institution and a merely business institution.