El problema de Dirichlet en dominios limitados por curvas de Jordan

The Village Fund system has a simple structure but is evolving. A management committee selected by and among the villages makes decisions – one of the system’s priorities is to have majority participation by village residents in Fund governance. The basic structure includes a chair person, vice-chair, treasurer, and secretary, with the larger Funds also having paid staff. Shares uniformly cost 100 THB. Members can buy multiple shares, but each still has only a single vote (similar to cooperatives). The lending parameters are simple: the maximum loan is now THB 30,000 for a term of one year (less commonly, two). The Funds lend out their government-provided capital at 6%. In addition, BAAC lends to Village Funds at 5-7%, and the Funds on-lend this to members at 9-12%. Retail loans require two guarantors, while the BAAC wholesale loans are conditioned on joint liability by the management committee. Thus, the Village Funds are essentially credit-only, with contributed capital and some borrowed funds. There is no prudential supervision as such, including no capital adequacy standard (BAAC interview).

The lack of prudential standards is relevant because the Village Funds also provide savings services.110 The Village Fund Act requires them to maintain an account for members’ shares and deposits separate from the original capital donated by government. There is a move underway to consolidate these savings vehicles (account no. 2 of the Village Funds) and to put them on a more sound legal-regulatory footing. Initially, this involves setting up separate community financial institutions for the member-owned funds, some of them covering multiple villages or districts. These CFIs are being established and strengthened under the mentorship of BAAC and other state banks. Member-based savings and governance may be sufficient for small groups, but consolidation into CFIs and expansion beyond the original groups raises the stakes.

Village Fund administration and oversight follows Thailand’s sub-national political structure. The NVUCF (NVF) has a staff of about 250, and it depends on cooperation and support from other departments of government at various levels, along with volunteers from the Village Funds’ membership. Overall, about 8,000 people administer this system (the NVF has plans to increase this number in the coming years). Of these, 7,000 are at the tambon level, which deals directly with the funds, monitoring and mentoring them. The Funds submit annual reports that are passed up the state hierarchy to the Prime Minister’s office – the latter reports to parliament on the Village Fund system in the context of budget deliberations. The more detailed monthly reports of revenues, expenditures, and loan portfolios are kept at the Village Fund level. The Funds themselves conduct internal audit, and the central NVF office contracts audit firms for the regular external audit. These audit and reporting procedures are normally annual, but can be performed every 18 months for Funds that are free of significant problems (NVF interview). State-contributed capital (along with interest earned and subsidies) is kept in the Village Funds’ bank accounts, usually at BAAC, GSB, or KTB. As mentioned, member savings are kept in a separate account, in most cases deposited at one of those banks. The new community-level institutions or CFIs intermediate the deposits of members drawn from the local Village Funds

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Also, the regulations permit Funds to lend to each other, which increases the risks associated with individual Funds’ weakness and loan defaults. Regulations of the NVUCF, B.E. 2551.

and, increasingly, beyond. The CFIs are informal institutions that set their own rules, having no recognized legal personality, license, or supervising authority. Some of them are reported to be registering as organizations and opening bank accounts – in one case in order to provide fund transfer (remittance) services to members (Pakdeewut 2012:16).

There are an estimated 4,000 CFIs, with plans to establish and institutionalize another 10,000 now being carried out by an informal advisory group from key organizations involved in the sector (NVF, CDD, BAAC, GSB, KTB). These organizations are mentoring and training the CFIs, and in doing so they are providing informal supervision. The CFIs are growing as they increase in number, with some of them aiming to aggregate or network at the tambon level. Some are experimenting with welfare services, even retail shops, as part of their services menu (NVF, BAAC, other interviews).The NVF, CDD, and banks – with the assistance of the public administrative hierarchy – are pursuing this as unofficial pilot.

The experiment is expected to show the model’s viability and lead to replication, formal recognition, and eventually a legislative framework. For now, there is no regulation or supervision as such. Those monitoring the CFIs can only warn and persuade against unsound practice. Meanwhile, the Village Fund system continues to run in parallel, with another tranche of capital expected in the coming months. The NVF intends to propose a legislative framework under which the Funds and CFIs are linked in a branch or affiliate network (NVF and BAAC interviews). The NVF proposal will be an important step in the development of a framework for microfinance regulation and supervision. Care needs to be taken that it is not put into effect prematurely, that it accommodates evolving practice including other programs and entities that may benefit from formalizing, and that it reflects best practice.

As this last point suggests, it makes sense to address the issues of regulation and supervision as they arise across the range of semi-formal and informal microfinance providers, from financial cooperatives to Village Funds, CFIs, and informal savings and credit groups of various kinds. This is not to suggest that all should be formalized and regulated, or at least not in the short term. Rather, there is a need for analysis and policy development with respect to these service tiers, with the aim of putting in place a formal structure to accommodate those providers whose scale and activities require it or would benefit from it.

As for the other informal grassroots groups, some resemble the CFIs just discussed and operate with support, mentoring, and oversight by institutions such as CDD and BAAC.111 Others remain quite small in scale or grow from the bottom up with little or no technical guidance. Some are networks promoted by monks that provide financial and welfare services, and invest in local ventures such as shops and rice mills. Researchers suggest that some of these groups have large amounts of cash that cannot be deposited in a bank unless entrusted to an individual, since the group or network has no legal registration and therefore cannot open an account. These organizations do not have training or systems for risk management, and many depend upon their founding leadership but have no plan for succession. The SFIs such as BAAC are providing assistance, but their own systems and manuals are too complex and cannot readily be used by grassroots savings and credit groups. The NVF rating system, moreover, is generic and cannot provide a basis for grassroots groups to develop the systems of accounting, risk management, loan approval, and others that they need as they grow larger (expert interviews).

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BAAC uses a simple assessment form on which financial data are entered and basic ratio analysis performed. Bank for Agriculture and Agricultural Cooperatives, “Guide to credit community financial institutions.”

Researchers and advisors are hoping to develop tailored assessment and management tools for such organizations that wish to transform into structured CFIs. As a further step, they anticipate that the larger well-run CFIs will be able to scale up to become tambon-level institutional hubs, analogous to holding companies or apex institutions. One solution here would be to provide a licensing window, with a cooperative legal structure and deposit guarantee, for the tambon-level hub institutions. The smaller providers could continue to operate informally, using local authority structures and social pressure to ensure financial discipline. One worry here is that the grassroots groups and in some cases the CFIs appear to resist the idea of regulation and oversight from outside (FPO and expert interviews).