Who Says You Can't Do Microsavings in India? Part 1: Community-Based/Owned
MicroSave's India Focus Note No. 45 discusses the microsavings options provided by informal and community-based/owned methods.
Most MFIs in India provide only credit, as it is easier to undertake, and tend to ignore savings. Almost every Indian MFI has a mission to improve access for all financial services. The note states that microsavings could be provided through self-help groups (SHGs), cooperatives, and chit funds. Key steps to fulfill this goal include:
- Improving internal management of SHG funds;
- Emphasizing savings-linked services through banks to provide savings to SHG members that serve their individual needs;
- Bolstering cooperative laws to protect the rights of members and de-politicize the movement;
- Helping to build up the capacity of cooperatives;
- Ensuring government acknowledgement of the importance of cooperatives in financial inclusion;
- Allowing a scaling-up of cooperatives across borders;
- Implementing methods to regulate chit funds.
Community-based financial institutions have a much closer mission alignment with serving the underserved than conventional financial institutions. However, there is a systemic issue of governance, scalability, and viability. The note states that there are a few well-managed programs in India that could be strengthened with a concerted, coordinated effort.
