A very interesting discussion about savings took place at the Microfinance India Summit today. Apart from just discussing the different options that MFIs have to facilitate savings, the discussion went on to talk about the issue of high cost involved in mobilization of small savings.
I realized that the chapter on micro savings in India has reached a different level altogether. It’s not only about figuring out the type of product poor people demand--the development practitioners seem to have figured that out. The main problem lies on the supply side. Mobilization of small savings is not at all cost-effective.
Further, during the tea break, I also got talking to Preeti Sahai of BASIX, who is heading a business correspondent model in collaboration with AXIS bank to provide smart cards to clients in different parts of east Delhi. This smart card directly allows the client to open a bank account with the AXIS bank. Apart from just providing credit, BASIX (along with AXIS) is providing savings facility to its clients as well. They hope to extend these services to other backward parts of Delhi. However, on speaking with Preeti, I got to know that the biggest challenge they were facing to do so was the high cost involved in facilitating savings.
Having witnessed a discussion on the same issue just before this, it struck me that there needs to be a change in the chain of thought about micro savings in India. It’s not the demand side which needs attention; probably more thought needs to be given to figure out cost–effective of ways of mobilizing small savings or else ... i wonder if mobilizing small savings really worth it...?
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