Savings and Credit Sector Strengthening and Rural Microfinance Capacity Building

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The Project builds upon, and enhances the Bank's overall program of strengthening Mexico's financial sector, and providing targeted assistance to the rural poor. Its main objective is to contribute to the integration of low-income people into the national economy, realize their income generating potential, and increase their access to financial services. The components will support: 1) consolidation of the savings and credit institutions (SCIs) sector, by strengthening eligible institutions, improving SCIs infrastructure, and enhancing sector supervision. An assessment, preparation, and implementation plan will assist in SCIs restructuring (e.g., mergers or acquisitions) through technical assistance (TA) provision, based on an evaluation criteria, which includes liquidation of unviable institutions, to be determined on case-by-case basis. Moreover, an information system will be integrated, to enable sector institutions to provide financial reports, maintain accounts and financial information, and provide other operational, control, and reporting services. A training program for SCI management, and staff will include modules in the areas of finance, accounting, risk management, credit analysis, and governance, while supervision procedures and competencies will be supported through training on micro-finance institutions, and TA to adapt regulations as needed; 2) community training, to be provided to the poorer segments of marginal populations on basic household finance, and financial transactions. TA will support activities under this component; 3) consulting services, and studies aimed at improving financial intermediation, sector performance, and auxiliary supervision. The component also includes dissemination programs, workshops, and training in rural micro-finance activities; and, 4) project management, through an operational core team at implementing agencies to implement, and monitor and evaluate activities.