MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Microfinance Blog Argues Importance of “Matching Types of Accounts to Types of Needs”

The CGAP Microfinance Blog, which is operated by US-based think tank CGAP (Consultative Group to Assist the Poor), recently posted an article by President Bindu Ananth of IFMR Trust, an affiliate of India’s nonprofit Institute for Financial Management and Research (IFMR), that argues the importance of “matching types of accounts to types of needs” based on several examples from India[1].

Ms Ananth argues that the financial challenges facing low-income households “boil down to one issue: lack of convenient access to “accounts” where one can receive, store and withdraw flexible amounts of value in a safe and remunerative way” [1].

Ms Ananth explores various account types that can meet various financial needs such as short-term consumption smoothing, medium-term building of lump sums and long-term retirement savings. Examining delivery options, risk, regulation and the question of financial viability of the service provider, Ms Ananth highlights the role that technology can play in reducing the cost and other challenges associated with identifying client banking needs. She also argues that government must play “an important role in supplying public infrastructure that helps improve the viability of opening and operating the accounts” [1]. Finally, looking at the role of savings accounts, Ms Ananth concludes that “a savings account by itself is no silver bullet for alleviating poverty but it allows low-income households to manage small and irregular flows in a manner that every-day and long-term goals can be managed better which is a worthy objective in itself” [1].

Ms Ananth’s article can be found at http://microfinance.cgap.org/2011/05/05/matching-types-of-accounts-to-types-of-needs-lessons-from-india/

By: Alexandra Pattee, Research Associate

About CGAP (Consultative Group to Assist the Poor):
Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to facilitating the provision of financial access to poor people worldwide. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.

Sources and Resources:

[1] CGAP Microfinance Blog, “Matching Types of Accounts to Types of Needs: Lessons from India”, http://microfinance.cgap.org/2011/05/05/matching-types-of-accounts-to-types-of-needs-lessons-from-india/

MicroCapital.org Article, May 10, 2011, “CGAP (Consultative Group to Assist the Poor) Microfinance Blog Discusses Role of Mobile Phones in Integrating Savings, Payments, Budgeting Services”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-microfinance-blog-discusses-role-of-mobile-phones-in-integrating-savings-payments-budgeting-services/

MicroCapital.org Article, May 3, 2011. “CGAP (Consultative Group to Assist the Poor) Microfinance Blog Examines Role of Transparency in Strengthening the Microfinance Sector”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-microfinance-blog-examines-role-of-transparency-in-strengthening-the-microfinance-sector/

MicroCapital.org Article, MicroCapital.org Article, April 25, 2011, “CGAP (Consultative Group to Assist the Poor) Explores Savings On Microfinance Blog”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-explores-savings-on-microfinance-blog/

MicroCapital.org Article, April 26, 2011, “CGAP (Consultative Group to Assist the Poor) Microfinance Blog Explores Effects of Arab Upheaval on Microfinance Institutions (MFIs)”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-microfinance-blog-explores-effects-of-arab-upheaval-on-microfinance-institutions-mfis/

MicroCapital.org Article, MicroCapital.org Article, February 15, 2011, “CGAP (Consultative Group to Assist the Poor) Explores Over-Indebtedness in Microfinance Through New Blog Series”, https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-explores-over-indebtedness-in-microfinance-through-new-blog-series/

MicroCapital Universe Profile: CGAP (Consultative Group to Assist the Poor), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

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