Microcredits are given to those who normally cannot access "official" sources of funding because of bureaucracy; guarantor, income level, and asset requirements; and other banking regulations.
1. Credit for Production, Consumption, or Service
For the improvement or creation of both formal and informal small businesses. Based in neighbor guarantees (not monetary or asset guarantees) and with the preliminary approval of a Community Credit Agent (Agente Comunitário de Crédito), the loan must be presented to the Credit Committee which ultimately evaluates and approves the loans, made in amounts of up to R$15,000.00 in up to 12 payments. Interest rates are progressive and range from 0.5% to 3.5% monthly.
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2. Credit for Productive Inclusion
“Instant credit” allowing the creditor to benefit from the day-to-day opportunities the community market has to offer. Aimed toward families receiving government assistance through the Bolsa Familia Program (up to R$150), beauty product vendors (up to R$400), and street vendors people (up to R$200), loans are re-paid in up to four payments and interest rates range between 1.5% and 2.5% monthly. Credit recipients must present proof of trade or craft and justify the purpose of credit. On average 160 microloans are issued in Banco Palmas alone.
3. “Casa Produtiva”
Instant credit for the purpose of home renovation, with the objective to create or improve an income generating enterprise. The maximum value of the loans is R$450, re-paid in up to six payments with an interest rate of 2.5% monthly.
4. Credit for Local Consumption
Disbursed in social currency palmas in the maximum amount of R$600 payable in up to four payments with no interest. Local businesses offer discounts (5-10% off) for those who buy using the social currency. In 2010, 240 businesses in Conjuno Palmeira were accepting the social currency, offering discounts to those buying with it. The palmas is indexed to the real, is backed by the official country currency, and the exchange between the two currencies is legally permitted. As of 2010, 42,000 palmas were circulating in the neighborhood.
Microinsurance
“Palmas Microseguro” was launched in September 2010. It is a microinsurance policy for low income, Banco Palmas clients. At an annual cost of R$27.30, it offers up to R$3,000 life insurance policies (accidental or natural death), funeral cost coverage up to R$1,000, and a R$5,000 lottery every month for one year to clients. Those who buy more than three policies are allowed to pay in as much as six payments per year, (there is a special loan directed at these cases). On average 130 policies are sold per month.
Banking Correspondent
Banco Palmas has a strong role as a banking correspondent, helping the community to locally make and receive payments such as bolsa familia and pension benefits, open checking and savings accounts, as well as other banking services. This role is an important one for community banks in general because it allows basic banking access to communities who may be located very far from traditional banks, thereby making commuting difficult or impossible for elderly or disabled residents. On average 17,000 transactions per month are executed.
The Brazilian Network of Community Banks
Banco Palmas belongs to the Brazilian Network of Community Banks (see below), The Ceará Network of the Solidarity Socio-Economy (a Rede Cearense de Socioeconomia Solidária - RCSES), and the Brazilian Forum of Solidary Economy (o Fórum Brasileiro de Economia Solidária - FBES).
The Brazilian Network of Community Banks currently includes 52 banks (as of March 2011) throughout Brazil, each created with the experience and support of Banco Palmas. A community bank is not a branch of a central bank, rather part of a network, following reference and common work methods defined by the Brazilian Network of Community Banks. The following is some basic information about community development banks:
What are Community Development Banks?
Community Development Banks provide solidarity finances services in a network of associative and communitarian nature, directed towards the generation of jobs and income, having at its base the principles of the solidarity economy.
What are the main characteristics of the Community Development Banks?
The community itself decides to create the bank, becoming its manager and proprietor;
It always acts with two credit lines: one in Real currency (R$) and another one in circulating social currency;
Its credit lines stimulate the creation of local production and consumption networks, promoting the auto-development of the area;
It supports enterprises as a commercialization strategy (solidarity shops, fairs, central office for commercialization etc.);
It acts in areas characterized by a high degree of exclusion and social inequality;
It is aimed at a public characterized by a high degree of social vulnerability, in particular the beneficiaries of governmental programs;
It aims to become financially sustainable in the short term, obtaining subsidies justified by their social utility.
What is the objective of a Community Development Bank?
To promote the development of low income areas through the encouragement and creation of local production and consumption networks. It operates with the support of the economic initiatives of the solidarity economy and its diverse scope, such as socio-productive enterprises, service providers, support for socio-commercial initiatives (markets, solidarity fairs), and consumer organizations.
What is the management structure of the Community Development Bank?
CDBs are managed from within the structure of the community organizations (associations, councils, forums etc.) and other types of civil society initiatives that are recognized within the community, such as unions, NGOs, and churches. Its management involves a shared dimension with strong components of local social control, based on the mechanisms of direct democracy.
How do you finance Community Development Banks?
Its financing is done through access to public resources as well as a solidarity fund for community investment. This fund is formed from multiple sources: private, personal donations or those from legal entities; membership fees (from private or legal entities); commercial services provided that face no competition; and other types of services provided.
Who are the main potential customers of Community Development Banks?
Because of its condition as a citizen's initiative focused on the development of the area, CDBs are aimed at a public characterized by a high degree of social vulnerability in particular, including (but not limited to) women, youth, merchants, new entrepreneurs, etc.
What is the capacity of Community Development Banks?
To allow the methodology to work properly, CDBs operate primarily in communities of up to 50,000 inhabitants. It is possible to have more than one functioning CDB in the same community or neighborhood.
Social Businesses
Small, formal or informal, businesses funded by Banco Palmas targeted to meet local demands. The projects are independent and interconnected through a solidarity network. They use the logo and performance structures of Banco Palmas.
PalmaTur
PalmaTur is an inn under the solidarity network of Banco Palmas which promotes alternative, urban community tourism. It was initially created by 20 neighborhood women trained by Instituto Palmas's Incubadora Feminina program to provide services in tourism and retail. Through 12 months of training with a total of 940 hours / activity, PalmaTur emerged. The idea behind PalmaTur is that there exists a Fortaleza beyond the Beira mar; the outskirts of the city too have many features worthwhile for tourists and new residents alike. The wealth from such an enterprise can be shared in a sustainable way, giving back even more to the community. The primary objectives of PalmaTur are to:
Promote Conjunto Palmeira as an alternative tourist destination in Fortaleza, strengthening the local economic development and having as a base the principles of sustainability and solidarity.
Guarantee work and income for the women of the neighborhood by including them in the formal labor pool.
Palma Fashion
Palma Fashion is a program created to give women suffering from drug addiction, domestic violence, and other setback the chance to learn various skills in the art of fashion in order to give them the opportunity to be their own, productive members of their society. Palma Fashion produces a diverse collection of clothing, handbags, shoes and more.
Palma Limpe
PalmaLimpe produces cleaning materials: detergent, disinfectant, bleach, fabric softener and liquid wax, and is composed of youth from the community. Training for this enterprise is provided by the municipal government and additional resources are provided by Banco Palmas.
Loja Solidária ("Solidarity Shop")
The Loja Solidária operates out of Banco Palmas headquarters and exhibits and sells products manufactured in the neighborhood. Products are also sold at the Banco Palmas Market (Feira do Banco Palmas), a weekly public space where products made in the neighborhood are sold. It serves as an instrument to reinforce the community culture, allowing opportunities for the presentation of artists, singers, and other performers of local culture as well. The social currency is accepted at both venues.
PalmaNatus
PalmaNatus was created in 2005 and works with handmade soaps and herbal products such as syrup, rosemary, and pepper.
