Are you interested in knowing more about small-scale savings mobilization? This page offers a selection of resources on over a dozen subtopics related to micro-savings.
Financial cooperatives are on the front lines of deposit-taking in many countries, penetrating into areas too poor or remote for other formal institutions to reach. However, because of their typically small size and remoteness, they are often not subject to the same type of monitoring by financial authorities as other financial institutions, leaving cooperative members' savings without the same type of protection. How to improve the regulation of supervision of cooperatives is therefore a subject of intense debate among policy makers and advocates of financial inclusion. The four resources examine different aspects of the debate.
Regulation, Supervision, Governance & Control in Cooperatives: A Resource List CGAP (May 2006)
Read the list This annotated bibliography highlights 25 key resources on the regulation and supervision of, and governance and control, in financial cooperatives. The list includes hyperlinked titles possible as well as a link to a collection of related documents on the Microfinance Gateway.
Cooperative Financial Institutions: Issues in Governance, Regulation and Supervision By Carlos E. Cuevas and Klaus P. Fischer (November 2005) Read the summary Read the full paper Read an interview with Carlos Cuevas This paper discusses the structure of the CFI sector, existing legal and regulatory frameworks and implications for the functioning of CFIs, and proposals for effective supervision of CFIs.
Supervision: A Responsibility to Share? Développement International Desjardins (September 2005) Read the summary Read the full paper This paper outlines the main forms of cooperative supervision through networks and describes situations when each type is most appropriate. The paper recommends implementing internal and external supervision simultaneously.
The Characteristics of a Federated Network of Financial Cooperatives Développement International Desjardins (May 2005) Read the summary Read the full paper This paper discusses the structure of the CFI sector, existing legal and regulatory frameworks and implications for the functioning of CFIs, and proposals for effective supervision of CFIs.
Savings and MFI financing
Savings are not only a valuable client service but also an increasingly important source of funding for MFIs. But how do deposits stack up against other types of available financing for microfinance, including foreign and international debt and equity? These three papers examine the place of savings on the MFI balance sheet.
How Should Microfinance Institutions Finance Themselves? (Translation and synthesis of executive summary) By Portocarrero, Tarazona and Westley (2005)
Read the summary Read the full paper This book presents an analysis of four different sources of funds available to MFIs and suggests the most adequate funding strategies at different levels of development of the organization. It also provides best practices for each funding source.
Financing Microfinance Institutions: The Context for Transitions to Private Capital By Marc de Sousa-Shields and Cheryl Frankiewicz (December 2004) Read the summary Read the full paper This paper presents a comprehensive overview on financing of the microfinance sector in developing countries. It aims to define the MFIs financing context to understand its potential to access greater commercial capital.
Financing Microfinance: Exploring the Funding Side of Microfinance Institutions By Tor Jansson (2003) Read the summary Read the full paper Jansson argues that MFIs have outgrown the funding ability of donor agencies and that as more MFIs transform into financial institutions with other capitalization options, donor funds will become less necessary. He concludes by identifying ways in which donor agencies can continue to positively influence the growth of microfinance.
Asset building for the poor
The selected documents below provide a glimpse of how asset building policies have been or should be applied throughout the world. Also see the "Ask the Experts" interview with Michael Sherraden, who has done seminal research on asset-building policies as a poverty-alleviation strategy in the United States.
Asset-Building for Microenterprises through Matched Savings in Low-Income Countries By Mark Schreiner (December, 2004)
Read the summary Read the full paper This paper describes the arguments behind asset-building policies and proposes some adaptations to matched-savings programs for use in low-income countries.
Household savings and residential mobility in informal settlements By Somik Lall, Ajay Surr and Uwe Deichmann (May, 2005) Read the summary Read the full paper This paper analyzes the factors that allow slum dwellers in India to move out of informal settlements, concentrating on the role of household savings.
Promoting Financial Inclusion By HM Treasury (December, 2004) Read the summary Read the full paper This paper presents the UK's "Financial Inclusion Fund" and "Financial Inclusion Taskforce," two strategies adopted to fight financial exclusion.
Banks Mobilizing Microsavings
Here are four different examples of how banks have successfully offered savings services to poor clients.
The Service Company Model: A New Strategy for Commercial Banks in Microfinance
By Cesar Lopez and Elizabeth Rhyne (2003)
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This paper presents alternative strategies for commercial banks to establish successful microfinance operations, focusing on the Service Company Model.
Sanchayeeta (Saving) Daily Deposit Scheme of Cuttack Urban Co-operative Bank By Kailash C. Sharma (2004)
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This paper describes Cuttack’s Urban Co-operative Bank (CUCB) daily savings and loan repayment collection scheme, which utilizes roving agents to reach poor clients.
Grameen II at the End of 2003 – A Grounded View of How Grameen’s New Initiative is Progressing in the Villages By Rutherford, S., Maniruzzaman, M., Sinha, S. K. & Acnabin & Co. (2004)
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A few years after Grameen decided to change its methodology to what is now known as Grameen II, the authors researched the impact of the implementation of the new policies including capturing savings from the public.
The Experience of Bank Rakyat Indonesia in Microfinance
By M. Jarot Eko Winarno (2004)
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This paper presents the history and experience of Bank Rakyat Indonesia (BRI) and highlights key characteristics of its products and operations.
Community Finance Mechanisms
Cooperatives, village banks, SHGs, ROSCAs, MOFIs...whatever you call them, these member-based, savings-led institutions have proven a compelling, low-cost option for extending financial services to poor, rural, and remote areas. However, they have also been subject to sharp criticism for endangering poor people's deposits through inadequate management and supervision. When it comes to the savings of the poor, are MOFIs more like lock-boxes -- or leaky buckets? Building on the "Point/Counterpoint" discussion between Jeff Ashe and Beth Rhyne on the merits of MOFIs, the recommended reading below bring you a selection of resources detailing different MOFI models, and best practices that encourage their strength and sustainability.
Developing Community Finance: Some Lessons Learned
By Anne Gaboury, DID (January 2005)
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Created in 1970, DID specializes in providing technical support and investment for the community finance sector in emerging and developing countries. This paper summarizes the lessons learned from DID’s work with community finance partners throughout the world.
Adapting ROSCA Methodology for Savings and Credit Self-Help: The KEPP By William Steel (2004)
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This paper presents the distinguishing features of the Kenya Entrepreneurship Promotion Program (KEPP) initiative based in Kenya. At present, KEPP facilitates 61 groups with about 1400 members. The author also touches on the subjects of sustainability and outreach regarding this particular program.
Group Intermediation in Ghana. The Credit with Education Programme By Francis Beinpuo (2004)
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While several attempts to provide credit to self-help groups have been implemented in Ghana, the Credit with Education methodology has been the most successful intervention. This paper discusses the environment for financial intermediation in Ghana, and it presents the case of the successful partnership between Freedom from Hunger (NGO) and a rural bank.
PACT’s Women’s Empowerment Program in Nepal
By Jeffrey Ashe and Lisa Parrott (October, 2001)
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The PACT’s Women’s Empowerment Program (WEP) in Nepal differs from typical microfinance programs in that it serves as a time-limited catalyst of group development. Although recent trends in microfinance favor centralized control, WEP allows for total local control, and it removes itself completely once groups are trained in basic skills and can operate independently.
Access to Financial Services
For most clients, basic deposit accounts represent the first entry point into the formal financial system. But how many people around the world -- especially poor people -- are using these entry points? Measuring the degree of access to and usage of financial services is the thrust of a major new data collection effort underway among the World Bank and other major donors. The papers below approach the topic from various different angles, from policy objectives to measurement of demand and supply. Follow the links to read concise summaries or the full versions of the papers
Safe and Accessible: Bringing Poor Savers into the Formal Financial System
By Rani Deshpande (September 2006)
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This Focus Note summarizes the findings from Country-Level Savings Assessments in Benin, Bosnia, Mexico, the Philippines, and Uganda, which suggest five strategies for improving poor people's access to savings services.
Access to Financial Services. A review of the Issues and Public Policy Objectives
By Stijn Claessens (May 2005)
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While lack of access to financial services may not be a 'market failure' in the true sense, there are public policy reasons to encourage it. However, the type of interventions undertaken to promote access is a critical issue. While direct interventions such as subsidies could actually hurt lower-income households, financial education, increased competition, more infrastructure, and the use of technology are considered better policy alternatives.
Reaching Out: Access To and Use of Banking Services Across Countries
By T. Beck, A. Demirguc-Kunt and M.S. Martinez (September 2005)
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This paper presents a new set of indicators of banking sector penetration, consisting of quantitative data about access to and use of financial services. The paper also uses these indicators to show the relationship between banking sector outreach and firms’ financing obstacles.
Comparison of supply-side study and results from FinScope 2003 for BNLS countries
By Doubell Chamberlain (Genesis Analytics, 2004)
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This paper summarizes results from FinScope surveys on access to financial services conducted in Botswana, Lesotho, Namibia, and Swaziland in 2002 – 2003. Four basic types of services were covered: transaction accounts, savings accounts, credit, and insurance.
Financial Institutions with a "Double Bottom Line": Implications for the Future of
Microfinance (Occassional Paper No. 08)
By Christen, R.P., Rosenberg, R.& Jayadeva, V. (July, 2004)
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This paper summarizes the results of one of the first surveys of outreach among Alternative Financial Institutions (AFIs), which serve clients traditionally excluded from the mainstream banking sector. The paper estimates numbers of deposit and loan accounts in AFIs by type and by region, and analyzes some of their challenges going forward.
Access to finance – Measuring the Contribution of Savings Banks
By World Savings Banks Institute –WSBI-(August, 2005)
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This paper adds savings bank figures to previous CGAP research to calculate new estimates of the global supply of 'accessible financial services.' It also highlights the significance of savings banks in the microfinance market, concluding that savings banks can represent an efficient means of reaching poor and remotely-located clients with affordable financial services.
Managing Small Deposits - 1
IT-enabled devices are being hailed as the solution to lowering transaction costs for both clients and institutions, the keys to achieving sustainability in savings services for the poor. Below is a selection of key documents that describe the kinds of technologies currently being used to mobilize small deposits. Follow the links below to read the summaries or the full versions.
Stored Value Cards: A Scan of Current Trends and Future Opportunities
By Katy Jacob, (2004)
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The paper highlights the potential of stored value cards (SVC) as a powerful tool to engage consumers in a variety of financial transactions with greater ease, favored by an increasing number of competitors and the fast evolution of the technology.
SafeSave's Experience with Handheld Computers
By MicroSave (March 2005)
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SafeSave introduced handheld computers in January 2003 and by February 2005 it is already serving about a third of its clients using this system in the place of paper transactions. SafeSave, with the aid of donor funding, developed a tailor-made system which has had a positive impact on client satisfaction, improved internal controls and diminished errors.
CGAP IT Innovation Series - Automated Teller Machines
By Steve Whelan
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The paper provides a basic overview of how ATMs work and how they are used by microfinance organizations. It describes the basics of ATM technology and the services it provides, plus it explores the experiences of Prodem in Bolivia, Ademi in Dominican Republic and MEB in Kosovo, drawing basic conclusions about using ATMs for microfinance operations.
ACCION PortaCredit: Increasing MFI Efficiency with Technology
By Barton S. and Busto, C. (May 2004)
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Since 1999, ACCION has been working on the development of a handheld application that improves the efficiency of the loan disbursement process for MFIs. PortaCredit, as they've named their application, has been successfully implemented in several institutions.
Managing Small Deposits - 2
Here are some recommended readings on savings management: tips, tricks, and best practices. Click below to read the summaries and the full versions.
Mobilizing Savings from the Public – Basic Principles and Practices By Marguerite Robinson (2004)
Read the summary Read the full paper This paper has two objectives: 1) It aims to help transforming MFIs’ stakeholders to understand what to expect when introducing savings; and 2) it aims to inform their decisions about whether mobilizing savings is the right choice for the institution.
Serving Small Depositors: Overcoming the Obstacles, Recognizing the Tradeoffs By Madeline Hirschland (July, 2003)
Read the summary Read the full paper The author makes a comprehensive account of the elements to be considered when serving small depositors. It highlights clients’ preferences regarding savings products and contrasts them with what organizations can, realistically, do to meet these preferences.
Serving Depositors: Optimizing Branch Based Banking By David Cracknell (February, 2005)
Read the summary Read the full paper This paper analyzes the significance of branches in providing savings products and studies how to make branches work efficiently. The facts presented in this paper are based on MicroSave’s Action Research Partner’s in East and Southern Africa.
A Toolkit for Planning Conducting and Monitoring Pilot-Tests – Savings Products By Michael J. McCord, Graham Wright and David Cracknell (MicroSave)
Read the summary Read the full paper MicroSave has developed a toolkit to design and implement pilot-tests in a controlled and scientific manner. It is designed to help organizations prepare a pilot-test for a savings product from the very initial stages of planning, along every step of the pilot process and up to the final evaluation of the product.
