Mobilising Savings

This note focuses on voluntary savings services and recommends that MFIs should mobilize savings - collected profitably on a large scale to avoid client exit. The paper identifies issues that MFIs need to address in order to offer savings services:

• Building customer's trust in the MFI;
• Carrying out appropriate market research and feasibility analyses before introducing savings services;
• Publicizing services in locally appropriate ways;
• Designing a combination of easily customizable products;
• Mobilizing savings from the public and not from the poor alone, to make large-scale savings mobilization viable and to finance substantial portfolios;
• Offering cross-subsidization to permit a combination of institutional profitability and wide outreach;
• Structuring interest and fees charged;
• Employing high quality, experienced, and committed personnel.

Further, the paper suggests few basic principles for large scale savings mobilization:

• It should be limited to publicly regulated and supervised institutions that are legally permitted to mobilize public savings;
• MFIs introducing voluntary savings should pay particular attention to the preconditions required and to appropriate sequencing;
• Products are necessary but not sufficient for profitable voluntary savings mobilization.

Finally, the paper lists the benefits for MFIs when they offer voluntary savings mobilization to their clients:

• Satisfied clients with better repayment records;
• An attractive source of capital;
• Additional income from loans made, investment of the new capital, and also from fees charged on savings transactions.