Savings Are a Human Right (And Good Business too): The Case for Voluntary, Open Access Savings Facilities
In this paper the author puts foward a case for voluntary savings from poor. He has cited the example of BURO, Tangail, Bangladesh as an example to demonstrate that most people (including the most poor) want to save, while not borrow all the time.
On one hand, the author cites the case of Banco Caja Social, Colombia to make a point that the transition from compulsory, locked-in savings to voluntary savings is not easy fro microfinance institutions (MFIs), and on the other, he shows that Bank Rakyat Indonesia, who have made this shift successfully have reaped immense benefits (US $2.7 billion through 16.1 million saving accounts with over 30% members with monthly income of US $78 or less).
The author then provides a detailed background and modus operandi of BURO, Tangail to demonstrate how they initiated a savings friendly model in 1989 and by December 1996, 30 branches were turning profits. Some of the Savings facilities provided are:
- Open savings deposits;
- Open savings withdrawal system;
- Fixed term deposit scheme.
They also provided credit facilities such as:
- Supplementary loan system;
- Simple prepayment facilities;
- Line of credit system;
- Flexible loan repayment system.
As per the author, the poor require a reasonable mechanism to save and effective regulatory system must be put in place to protect their savings.
