Overview of the Good Practice
Following their social mission, the affiliated Credit Unions (CU) operate where there is a greater need for financing, thus fighting poverty and improving the living conditions of its members. Keeping the operational costs low and working with volunteers helps the CUs succeed in opening sustainable branches in places where other types of institutions have failed: thus, their work is trusted within the local communities. Over a period of time the CUs collected supplementary data related to the loans and noticed that, especially in rural areas, members are borrowing money to support their small agricultural income-generating activities. Centralising the statistical data, AsCAR RV obtained an overview of the size of the phenomenon.
After researching solutions, the Board of Directors realised that the EIF Guarantee Instrument was the best tool to help AsCAR RV tackle this market gap. Thanks to the risk-sharing mechanism between the financial institution and the European Commission, the EaSI Guarantee Instrument enables selected microcredit providers and social enterprises finance providers to expand their outreach to underserved micro and social enterprises, facilitating access to finance for target groups who have difficulty accessing the conventional credit market.