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Community-based Savings Groups (CBSGs) India

In recent years, there has been increasing acknowledgement that microfinance agencies are not always able to address the financial service needs of the very poor and particularly those living in remote and isolated areas. Small transaction sizes, sparse populations and poor infrastructure limit the ability of Microfinance Institutions (MFIs) to reach areas where much of the world’s poorest and most marginalised population lives. Globally, researchers have repeatedly found that those with low incomes have the capacity to save and are often able to save significant amounts. Furthermore, very poor people need not only the opportunity to save but also access to very small amounts of credit (generally amounts too small to be financially viable for MFIs to provide) to help smooth incomes, meet unpredictable expenses and reduce shocks in emergencies. For example, quick access to a small amount of credit or accumulated savings to acquire livestock can enable a farmer to defer selling or pre selling harvest to a time when prices are higher. This can lead to a substantial increase in income for the farmer. Community-based Savings Groups (CBSGs) offer an effective means to meet the needs of poor and remotely located populations that find it difficult to access services from banks or MFIs.