Alternate Models to Micro-savings for the "Bottom-of-the Pyramid" in Rural Areas: Lessons from India, Bangladesh, and Nepal
This paper, published by Neela Mukharjee of Development Tracks, focuses on the bottom-most segments of rural poor and critically looks into the dominant model of micro financial savings related to Micro-Finance (MF) activities. The standard assumption is that savings need to be in financial form and should be done with regularity and predictability over time by clients of MF groups in order to strengthen thrift habit and to generate financial assets and back ups. Drawing from field evidence and data related to India, Bangladesh and Nepal the paper illustrates the following:
(a) Why and how the dominant model of micro financial savings has gross limitations in terms of the savings behavior of those at the Bottom-of–the-Pyramid (BOP);
(b) What lessons can be drawn from Bangladesh, Nepal and India from the alternate models of micro-savings by Grameen Bank, BRAC, Nepal’s forestry department and Self-Help Groups, India;
(c) What could be an alternate model for approaching micro-savings, which has better applicability to the BOP groups for enabling them to gradually get into the ambit of larger MF-related activities; and
(d) What could be some policy doables for bringing the BOP groups into a virtuous cycle of savings and investment activities and exploring alternate pathways out of poverty and deprivation.
