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SKS provides
loans to the poor through a community-owned, grameen
(village) banking program that utilizes the peer-lending model
developed by the Grameen Bank of Bangladesh. SKS' methodology
involves several phases-a village survey, projection meeting,
the formation of groups and sangams (Centers), and
administration of the savings and loan program.
During the formation phase, it is crucial that SKS staff keep
in mind that only the poor should be targeted for membership
in SKS. This is important not only because the mission of SKS
is to empower the poorest, but also because only the poor will
accept the strict credit discipline that is needed for near
perfect repayment rates. A low default rate is essential for
SKS to become financially sustainable, thus enabling the
organization to access large amounts of credit to lend to its
members.
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