Hitelkörök

Hitelkörök, often translated as credit circles or lending circles, are informal groups of individuals who pool their savings to provide small loans to each other. These groups typically consist of a small number of people, often friends, family, or neighbors, who trust one another. The core principle is mutual support and shared responsibility for lending and repayment.

In a typical hitelkör, each member contributes a regular, usually small, amount to a central fund. This fund then rotates among the members, with one member receiving the entire collected amount for a specific period. The recipient uses the loan for a particular need, such as starting a small business, covering educational expenses, or addressing an emergency. After repayment, the fund continues to rotate to the next member.

The success of a hitelkör relies heavily on trust and social cohesion. Members are usually known to each other, which encourages timely repayment as defaulting on a loan can damage personal relationships and the group's reputation. Unlike formal financial institutions, hitelkörök often do not charge interest, or if they do, it's a nominal amount to cover administrative costs or to benefit the group as a whole.

These informal lending mechanisms are particularly prevalent in communities where access to traditional banking services is limited or for individuals who may not qualify for formal loans. Hitelkörök serve as a vital source of capital and financial inclusion, fostering economic empowerment and strengthening community bonds. They represent a grassroots approach to financial intermediation.