Compartamos: From Nonprofit to Profit
Behind its gentle image is a tough, highly lucrative bank
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Banco Compartamos portrays itself as the gentler lender to Mexico's poor. Compartamos means "let's share," reflecting the philosophy of its founder, José Ignacio Avalos Hernández. The scion of a cosmetics business family, Avalos, 48, is a devout Catholic who in 1990 converted a nonprofit donating food and clothing to the deprived into one that made loans guaranteed by borrowers' neighbors.
Clients, mostly women, gather weekly in groups of 12 or more. They can borrow only for small businesses, not consumer purchases, and they agree to see that the creditor gets its money back, even if the group has to make up the difference when a member falters. Peer pressure substitutes for motorcycle-mounted collection agents.