5. Banco Palmas: Conjunto Palmeiras rises from the ashes

Thus, it was against this backdrop that ASMOCONP redefined its priorities and generated strategies for income generation. This shift in the Association’s priorities would inaugurate a new phase in Conjunto Palmeiras’ history where the Banco Palmas project would help the community rise from the ashes of socio-economic vulnerability.

Banco Palmas (see Figure 5) was, thus, founded in January 1998 with an initial capital endowment of only 2,000 Brazilian Reals ($1,500 US), donated by Cearah Periferia, a local NGO. Additional funds were obtained from other local and international NGOs during the first six months of operation, totaling 30,000 Reals ($27,000 US) which were earmarked for microcredit loans.


Figure 5: Banco Palmas

In addition to issuing microcredit, Banco Palmas had two other concurrent objectives.  The first was to reduce financial exclusion in the community. Even to this day 39% of the Brazilian population does not have a bank account, and it is reported that 41.20% of this population wishes to have one[1].  However, financial inclusion was hard to achieve for the people of Conjunto Palmeira under the traditional banking system due to the latter’s banking conditionality for which the people of Conjunto Palmeira.  Furthermore, traditional banks were all located far from the community.  Thus, Banco Palmas would resolve these two issues by being a proximity bank and by having banking conditionality adapted to the local community’s reality.  The second objective was to promote a production and consumption cycle within the community.

To articulate these two objectives, three instruments (as shown in Figure 6) were designed as part of Banco Palmas’ methodology to be used in combination with the microcredit issued by the bank.  These three instruments include a social currency, an intensive professional training and a map of local production and consumption.

Figure 6:  Banco Palmas’ Methodology: Instruments for Local Development

[1] Schiavinatto, F and de Holanda Schmidt, F., 2011. SIPS Bancos. Inclusão financeira e bancarização no Brasil. In Sistema de indicadores de percepção social, by Fabio Schiavinatto (org.), 181-210. Brasilia: IPEA.


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