Appendix: SafeSave Product Rules

Product P2

Offered in Tikkapara and Kalyanpur branches as of November 1997. Not changed (except for the February 2000 interest rate rise on loans) until August 2003.

Eligibility: Anyone in the slum including children (children allowed to borrow); multiple accounts per person allowed and per household allowed.

Account Fees: no account opening, closing, or monthly fees.

Savings: Deposit any sum any time; withdraw any sum any time unless a loan is held in which case no withdrawal allowed; interest paid in two ways (a) if account held for 5 years, then 25 percent of final balance paid at the end of the term (provided certain safeguards against ‘end loading’ were satisfied) (b) if account closed before 5 years interest paid retrospectively at closure at 1 percent a month for accounts that attained and maintained 1000 balance.

Loans: Account must be 2 months old and savings must have reached 500 before first loan; first loan = savings balance + 1000, subsequent loans savings balance + 1500, then savings balance + 2000, etc, no limit; disbursement fee of 100 for loans up to 5000, 200 taka for bigger ones; interest charged monthly at 2 percent per month on outstanding balance at end of previous month; no fixed repayment schedule and no fixed term but a ‘renewal fee’ equal to the disbursement fee payable each 6 months.

In February 2000, the interest rate on loans was raised from 2 percent to 3 percent per month; renewal fees set at 3 percent of outstanding balance (rather than as a set figure).

Insurance: None.

Product P3

Only offered in Geneva branch. Introduced in March 1999 and not changed until August 2003.

Eligibility: Anyone in the slum including children (children allowed to borrow); multiple accounts per person allowed and per household allowed.

Account Fees: no account opening or closing fees, 10 taka monthly service fee.

Savings: Two products: current and long-term, both optional.

Current Savings: deposit any sum any time; withdraw any sum any time; no linkage with loans; interest paid on balances of 500 or more at 1 percent a month but no interest in months when withdrawals are made.

Long-term savings: a 60-month accumulating savings device, monthly deposits 50 or a multiple of 50; if terminated prematurely no interest is paid; after 60 months the client stops saving and interest is added at the same monthly deposit rate, so the longer the client holds the savings the more s/he receives and the higher the effective rate.

Loans: Client must have held and paid into a long-term savings account for 2 months before a loan can be taken, and must be up-to-date with long-term savings to borrow; first loan value 1000 then rises in 1000 steps; maximum value cannot exceed the monthly long-term deposit x 100. Repay any time, any schedule; charge of 3 percent of loan when it is disbursed; interest paid monthly at 3 percent of previous month-end balance.

Insurance: None.

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