Robert Peck Christen

Introducing savings services into ASA, a microcredit institution

This article describes the experience of the successful Bangladeshi microcredit institution, ASA, in introducing savings accounts. Aiming to increase its access to capital, and to provide a greater range of financial products to its clients, from 1997 ASA launched open-access savings accounts, a contractual savings accounts and a term deposit account. ASA soon found that its overall savings balances increased, but no more than would have been expected if only its original compulsory savings account had remained. Although deposits increased rapidly, so did withdrawals, leaving ASA without the expected additional capital, and with the additional costs of extra transactions. Capital could be mobilized more cheaply elsewhere. In spite of the advantages to clients (particularly women) of being able to save small amounts secretly, ASA decided in the interests of institutional sustainability to drop the new accounts. This article goes on to compare a situation where savings products have taken off: BRI, Indonesi...