Microsavings- A neglected pillar of Microfinance: Does literacy influence the saving preferences of poor women?
Abstract
The agenda of financial inclusion has been one of the top priorities of several developing economies. India is pursuing this goal through several parallel efforts, both governmental and private. Towards this effort, the Microfinance Industry in India is playing a key role of taking credit to the door step of people, primarily women. However, in all of this rapid growth and expansion of the Microfinance industry in India, financial inclusion has been narrowed down to micro-credit inclusion. The other main pillar of financial inclusion, that is, Savings, has been largely neglected or at best limited to opening savings bank accounts which majorly stay dormant bereft of activity. It is very important for the government, policy makers and the financial industry to design the right saving products that suite the needs of the poor. With the heterogeneity of preferences of the poor stemming from their complex financial lives of trying to make ends meet, it is imperative to understand the factors that might influence the preferences that the poor have with respect to the savings products they would like to use. Literacy plays an important role in the financial and social autonomy of Indian women. In the light of this situation, the study through carefully collected primary data, attempts to understand how literacy affects the savings preferences of the poor women in South India. This study has an important bearing on the designing of the right financial product for each customer group of poor women which in turn has a direct influence on the economy and the Microfinance industry.
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