A statement of the empirical or theoretical question
How could community banks and specifically Palmas Bank , build a new culture of economic solidarity for a less exclusive financial system?
A concise account
Our method of work will have two lines of research: first, we will study the scientific literature on the Brazilian financial system and, specifically, the banking institutions that exclude impoverished communities from the system. The bibliographic study will lead us to community banks and specifically to Palmas Bank, as a concrete alternative to overcome the problem of unassisted communities by the traditional financial system. In a second step, we will do field research to understand the impact of this alternative on the reality of the Palmeiras community, assisted by the Palmas Bank.
The main argument of the paper
The microfinance industry in Brazil has been an effort to reach impoverished communities and provide them with credit. However, thinking about the expansion of the sector beyond simply offering credit continues to be one of the greatest challenges for expanding service and adequate financial products to meet the needs of the Brazilian population at the base of the financial pyramid, especially in low HDI communities.
It is precisely in this gap that the discourse of the importance of community banks appears. Therefore, in addition to institutions regulated and supervised by the Brazilian Central Bank that have specific microcredit programs and microfinance industry, there are also other specialized operators in these programs that are not regulated or supervised by the Central Bank. We refer to NGOs (non-governmental organizations) and OSCIP’s (civil society organizations of public interest), especially in microcredit, both constituted in the form of non-profit civil associations.
The community banks are organized under the legal form of non-profit civil associations that provide financial and non-financial products and services aimed at supporting the development of popular economies in neighborhoods and municipalities with a low human development index (HID). Its can partner with public and private entities to achieve their social goals.
However, beyond a simple "physiological alternative," that is, to fill an absence of the financial system that does not understand and does not reach impoverished communities, community banks want to go further. The genetic experience of the Palmas Bank shows us the future of this kind of "solidary financial entities".
When Bank Palmas was founded, the very first Brazilian communty bank experience, there was a mix of freedom and conflict. Without the recognition of the Brazilian State and inside of several conflicts with national financial system, including with its own currency, the bank was subject to serious legal actions by the Central Bank.
The first struggles were overcome, and came the second phase, marked by pseudo-legality (that is, even if regulated, it is not a bank, but an association) and dependency. With the legal framework of microcredit OSCIP’s and the wide possibility of support, Palmas Bank has expanded its portfolio of services, however, it has become deeply dependent on the supporters.
The third and great wave of this process, still in progress, linked to technology, gives the possibility of return to freedom, and the tranquility of exercising its activities in a regulated way. What is being possible to see in this phase is the transformation of social money (Palma social currency) into e-money (e-Palmas). Allied to technology and regulated by the Brazilian law that provides the use of electronic currencies, Palmas Bank could generate its own resources and create an alternative system of producing income and wealth for the community, without having to be totally dependent on maintainers.
A statement of the main conclusions
The originality of the community banks in Brazil, symbolized especially by the genetic experience of Palmas Bank is to unite the offert of services and financial products of banking institutions, with their capacity to produce wealth in the community. It’s in this "Brazilian expertise" that e-money is born as a unique possibility to make community banks self-sufficient in building a solidary and human economy. From this perspective, our text gains its relevance in the context of EMES as sharing of concrete experiences, presentation of a new stage of community banks in Brazil and, finally, the exchange of dreams of solidarity.
References
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SILVA, Jeová Torres. Avalição de impacto e de imagem: Banco Palmas, 10 a nos. Fortaleza: Arte Visual, 2008.
4. Financing issues for social enterprises, philanthropy and social finance
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