Mobilizing Savings from the Public : Basic Principles and Practices

This paper discusses the different aspects of savings. The author argues that, for micro credit institutions (MCIs) that have the necessary infrastructure, transformation into a formal financial intermediary can be a route to viable, commercial microfinance and large-scale outreach to the poor.

The paper discusses:

• The concerns and challenges of collecting and intermediating voluntary services from the public;
• The question "What do savers want" and states that the economically active poor will save in financial form if appropriate voluntary savings services are delivered effectively at the local level;
• Formal financial institutions that provide microfinance services.

The paper states that the most important step for an MCI considering transformation is to fully understand the basic principles that underlie successful voluntary savings mobilization from the public. It also:

• Affirms that experienced microfinance institutions (MFIs) can operate profitably on a large scale, serving many clients and financing all or most of their loan portfolios with savings;
• Lists the ten basic principles for MFIs to consider when mobilizing savings from the public; one of these principles, the introduction of savings for the public, requires careful sequencing in detail.

The paper concludes with a discussion of why voluntary savings matter for the development of the microfinance industry, and who benefits from them.