Moving The Mountains: Savings As A Human Right In Bangladesh

Publication Date: Apr 1998
Published by: Special Unit for Microfinance (SUM)
Document Type: Paper (PDF)

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Recognising the needs of the poor in the provision of appropriate savings facilities

The paper suggests that the poor want to save, and indeed are saving in a wide variety of ways.

It remarks that there is a lack of facilities to enable the poor to save in a way that helps them meet current needs and opportunities, as well as future needs. Large microfinance institutions (MFIs) have instead concentrated on providing credit facilities at the lowest sustainable interest rates, and on capturing compulsory savings in order to do so

Further, it explains the clear preference amongst the poor for voluntary, open-access savings, although compulsory minimum weekly deposits (particularly when they are client-defined) are also often welcomed since they provide savings discipline and an opportunity to safeguard savings from "trivial" spending. The paper also predicts that voluntary, open-access savings schemes can generate much more net savings per client per year (and thus greater capital for the MFI) than compulsory, locked-in savings schemes and that they can provide a useful and well used facility for clients while doing so

Finally, the paper recommends:

• Implementing effective (but not restrictive) regulatory systems and (ideally) depositor protection schemes, to provide security for the introduction of large-scale savings mobilisation schemes;
• Moving ahead with the development of voluntary, open-access, savings facilities.