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Starting a bank from scratch a child's play? Absolutely, if you ask some enterprising youngsters in India, who have not only managed to establish one, but also, unlike many of the large International banks, run it successfully since 2001. What's even more impressive is that the young bankers and their 9,000 + clients are all homeless!
The Children's Development Khazana (treasure) opened its first branch in 2001 at a homeless shelter in New Delhi as a way to help the street children protect their hard-earned money from thieves. Since then, the idea has caught on like wildfire.
Today, Khazana boasts of 12 branches all across New Delhi, with a total of Rupees 12 lakh (about 22,000USD) in deposits. Not only that, there are now 77 affiliated branches in other parts of Asia, ranging from Nepal, Bangladesh and Afghanistan to the island of Sri Lanka and even, Kyrgyzstan in Central Asia. While no deposit or balance is too small for the bank, they do have strict regulations about where the money is earned from - Funds obtained by begging or selling drugs are not welcomed at this bank!
Also, unlike the real banks, all employees are volunteers, which means that they go to school or a paying job during the day and work at the bank in the evening. To ensure that everybody gets a chance to participate in running the branch, two volunteer managers are elected from the client base every six months.
Karan, the current manager is just 14-years old. During the day he earns a living by helping out the cleaning crew at wedding banquets and other big parties. In the evening, he handles the deposits and withdrawals, entering each amount painstakingly in their passbook to ensure accurate recordkeeping. After the bank closes, he along with an adult volunteer from the shelter head over to a regular bank and deposit the funds collected into Khazana's interest-bearing bank account.
And, while it started as a way to safeguard hard-earned money, The Children's Development Khazana, is today a full-fledged bank, one where kids can not only deposit money which earns them 5% interest, but also, request loans for family emergencies, entrepreneurial ventures or even, to pay for school.
The terms of the loan depend on the borrowers past payment record. Given that the bank has had very little or no trouble with defaults this, is not a big issue - A sentiment that cannot be shared by their larger counterpart banks that are managed by professionals. Maybe they could use some advice from these Indian street kids.