Around the world, poor households save in various forms and for various purposes. Although empirical evidence suggests that the poor would deposit if appropriate financial institutions and savings facilities were available, little progress has been made to establish microfinance institutions (MFIs) as full-fledged financial intermediaries. In fact, today most MFIs offer only credit, and savings mobilization remains the forgotten half of microfinance.
The CGAP Working Group on Savings, formed in 1996 and chaired by GTZ (representing Germany), has recently completed case studies of four deposit-taking MFIs and a related comparative paper. This note represents a synopsis of these studies.
People tend to save to compensate for uneven income streams. Poor households save for various purposes, such as insurance against bad health, disability and other emergencies, investments, social and religious obligations, and future consumption. Poor households save in-cash, in-kind (animals, gold, grain, land, raw material and the like), and use rotating savings and credit associations and other forms of financial and nonfinancial savings and loan associations because of limited access to appropriate deposit facilities.