Safesave (B): Providing Financial Services to Slum Dwellers

 This is an original MFMI resource

Author: Sebastian, Asuncion; Chua, Ronald
Publication Date: 2005
Publisher / Source: Asian Institute of Management
Length: 17 Pages
File Type: PDF
Language: English
Country: Bangladesh
Topics: Innovation, Marketing/Demand, Products
Keywords: product development, Bangladesh, savings, sustainability

Notes: This is Part B. Please see accompanying Part A.

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Abstract

SafeSave, a registered cooperative in Bangladesh established in 2002, provides savings and credit to the inhabitants of slums at their doorstep, operating on the presumption that poor people can and do save and simply lack a frequent opportunity to store savings in a safe, accessible manner. Loans are voluntary, with no minimum amount or repayment schedule, and without groups or assets as guarantees. Savings are also voluntary and are not tied up with loans except in determining the maximum loan size (usually three times the savings amount). The products are so designed based on Stuart Rutherford?s experiment, which showed the poor people?s wide range of saving, withdrawing, borrowing, and repayment patterns. And precisely because of this product flexibility, internal control used to be a problem until SafeSave employed handheld computers. The use of technology resulted in a better control system: product rules could no longer be manipulated; collectors were not given any discretionary power over loan amounts; there were fewer errors in recording. During Safesave?s first two years of operation as a formal entity, the organization was in the red. But by 2004 it was able to generate profits of almost Tk134,000 (or US$2,252).