Where are They Now? Learning from the Progress of Seven Microfinance Deposit–taking Institutions from 1996–2003

Publication Date: 2008
Published by: Consultative Group to Assist the Poor (CGAP)
Document Type: Other (PDF)

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This paper examines the success of small-balance savings institutions.

This note follows the progress of seven leading small-balance savings institutions that GTZ studied in 1996 as part of the CGAP Working Group on Savings Mobilization. It examines the progress from 1996 to 2003, of the following institutions: BAAC (Thailand), BRI-Microbanking Division (Indonesia), BCS (Colombia), Centenary (Uganda), CVECA (Mali), FECECAM (Benin), RPB (Philippines).

The original analysis provided empirical evidence that the key to significant growth in poor people’s saving is access to deposit services designed for them. This note identifies the following trends common to the institutions:

• Massive growth, both in the number of individual savings accounts and the volume of individual savings;
• Faster growth in deposits than in lending;
• Consistently small average deposit size;
• Strong financial performance.

The note identifies the following drivers of performance common to all the institutions:

• Improved products and delivery systems;
• Improved risk management;
• Competition.

Finally, the note highlights strong demand for small-balance savings services by low-income clients when products are appropriately designed and accessible. It finds that small-balance savings services can be managed profitably over time by a range of institutional types. The challenges include:

• Being focused on risk management;
• Developing lending capacity in line with deposit-taking capacity.