Who Says You Can't Do Microsavings in India? Part 4: Practical Next Steps

MicroSave's India Focus Note No. 48 provides some practical and real solutions for MFIs, self-help groups, and cooperatives to rebalance the current microcredit push in India.

The note suggests that combining the creativity of informal organizations with the stability and trust provided by the formal market would be the best way to provide inclusive savings services. Some creative ways that MFIs in India can offer savings, while being true to their mission include:

• Business Correspondent model, in which regulated banks extend their services into underserved areas using contracted agents;
• Life insurance-based savings products;
• Pension schemes that could help the poor put aside money today to consume later when the need arises;
• Money market mutual funds that are an innovative way to offer quasi-savings services to the underserved;
• Gold savings, in which the borrower can save up to own gold coins in the future.

Microsavings can potentially help MFIs operating in saturated markets to differentiate themselves, reduce credit risk, diversify product risk, avoid mass default movements, and overcome politicians threats of prosecution because of a perception of pure money lender-like behavior.