Safesave (a) & (b): Providing Financial Services to Slum Dwellers

Case: Safesave (A) & (B): Providing Financial Services to slum dwellers

Word count: 1456

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Submitted By: Sudikcha Koirala “sanu”

Case Context:

Bangladesh is considered as a birthplace for modern microfinance initiative in South Asia. The case (A) sheds light on the poverty situation in Bangladesh and the access to finance for the poorest of the poor which are mostly slum dwellers in Bangladesh. Poverty has been the major development hindrance to the Bangladesh as it was one of the worst in comparison of other South Asian countries. The case speaks about the initiatives held by various NGO and INGOs to provide the best alternative to the financial services to the people below poverty line in Bangladesh. Safesave is one of the initiative started by Mr. Rutherford as an experiment turned into a permanent Microfinance Institution providing savings and credit to slum inhabitants. It is a doorstep savings and credit which provides convenient banking services right at the door step of the inhabitants of slums which reduces the transaction cost and improve efficiency.

Safesave operates on an assumption that even people under poverty line can save but the lack of opportunity, accessibility and safety hinders their saving activities. Mostly the income is stored at home which is very liquid and carries risk of over consumption. There prevails the practice of saving money with group from their own community but it is relatively illiquid. Safesave attempts to fill this gap by providing collateral free loans and saving services which deduces the dilemma of risk or illiquidity. The Safesave provides door to door services which is very convenient and saves time and money for their client.

Key characteristics of Safesave:

The basic guideline of Safesave is that loan and terms should be client centric and based on their needs. Their services do not require groups or assets as collateral or guarantee. Clients receive various services like loans, saving accounts and other loan related services at their door on regular basis. Safesave does not impose many criteria like minimal amount or payment schedule for the loan or savings. Loans are voluntary and based upon client’s requirement.

Scope and Limitation:

As a pioneer in microfinance, Safesave is making remarkable impact in financial access to the poor and their socioeconomic progress. Safesave is still passing through the maturity stage along with the microfinance industry in Bangladesh. The competition is extensive as there are other MFs imitating the model of Safesave. Furthermore, Safesave is targeting mostly the slum population which is a large market but they do not have enough financial solvency or asset as collateral for loans. Moreover, most of them are illiterate. Another big challenge is dealing with those kinds of clients and make them understand the process of the institution. Safesave got fund from Plan International on its initiation stage but is not accepting any more grants which makes the sustainability issue way more intensive for them. They are dependent on their own source of funds which is interest from the savings and other investment activities. Although Safesave is an innovative initiative there exists scope for improvement mainly on operational mechanism. They can improve themselves by better management and by the use of more efficient technologies.