Community Savings Funds - Providing Access to Basic Financial Services in Marginalized Rural Areas of Mexico

This paper describes the characteristics and results of the Community Savings Funds (CSFs) promoted by the Ministry of Agriculture in Mexico. These funds allow the marginalized community groups to save and administer their own funds securely, efficiently, and profitably.As per the paper, the CSFs have the following characteristics:

• Promoting group organization and solidarity;
• Fostering responsible savings and credit culture;
• Members owning and administering the funds themselves;
• Providing credit for consumption requirements besides productive purposes.

The paper describes some of the challenges that the CSFs face:

• Profit and sustainability: CSFs are expected to be financially sustainable since they receive no seed capital or external financial support;
• Overcoming risks and challenges of growth: keeping the cash safe is risky in a marginalized rural setting;
• Regulatory environment: National Banking Commission certifies only those CSF that are financially, administratively, and organizationally viable.

The paper concludes that:

• The CSF project confirms the need of and interest in marginalized rural areas to have financial services that are accessible, reliable and profitable and are adapted to people's needs;
• While CSFs often constitute a better option than others available in marginalized rural areas, the breadth of their outreach is limited;
• Recent failure of other non-bank financial intermediaries has sown fear and distrust in this type of institution.