MicroSave Briefing Note # 3: Mobilising Savings
Robinson, M. & Wright, G.
Publication Date: Jun 2001
Published by: MicroSave
Document Type: Other (PDF)
What do MFIs need to remember before starting large scale savings mobilization?
This note focuses on voluntary savings services and recommends that microfinance institutions (MFIs) should mobilize savings - collected profitably on a large scale – to avoid client exit.
The paper identifies issues that MFIs need to address in order to offer savings services:
- Building customer’s trust in the MFI;
- Carrying out appropriate market research and feasibility analyses before introducing savings services;
- Publicizing services in locally appropriate ways;
- Designing a combination of easily customizable products;
- Mobilizing savings from the public and not from the poor alone, to make large-scale savings mobilization viable and to finance substantial portfolios;
- Offering cross-subsidization to permit a combination of institutional profitability and wide outreach;
- Structuring interest and fees charged;
- Employing high quality, experienced, and committed personnel.
Further, the paper suggests few basic principles for large scale savings mobilization:
- It should be limited to publicly regulated and supervised institutions that are legally permitted to mobilize public savings;
- MFIs introducing voluntary savings should pay particular attention to the preconditions required and to appropriate sequencing;
- Products are necessary but not sufficient for profitable voluntary savings mobilization.
Finally, the paper lists the benefits for MFIs when they offer voluntary savings mobilization to their clients:
- Satisfied clients with better repayment records;
- An attractive source of capital;
- Additional income from loans made, investment of the new capital, and also from fees charged on savings transactions.
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