Banco Caja Social (BCS), Colombia (Case Study)

Using Banco Caja Social (BCS) of Colombia as a case study, this paper presents the findings of the Consulatative Group to Assist the Poor (CGAP) on savings mobilisation. This paper:

• The macroeconomic context of Colombia, the financial sector, and the social and cultural context;
• Undertakes institutional analysis of the BCS, particularly of its characteristics, governance and organisational structures;
• Explores its demand-oriented savings products and technologies.
• Looks specifically at the characteristics of two simple products:
  • Traditional deposit accounts, "passbook savings" and time deposits designed as an entry ticket to credit and based on the principle of reciprocity to meet different types of demand.
  • Also the design of savings products such as voluntary savings, "Grow Every day" savings account, "Subediario", and "Everyday" semi-liquid savings account with fixed terms, "diadia".

The author concludes that there are three driving forces that explain the success evolution of BCS, especially in the area of savings mobilisation:

• The reform of the financial sector introduced fundamental changes. The exceptional institutional type of savings bank was abolished and BCS had to transform into a commercial bank;
• New prudential regulations that adhered largely to international standards were enforced;
• This new framework forced BCS to improve risk and liquidity management and to strengthen their capital base.

These three aspects are crucial for the protection of savings. [Adapted from the author's abstract]