The SafeSave Program

About one third of Dhaka’s 11 million people live in slums. Most adult slum residents are poor but working, finding informal sector jobs such as being a driver, domestic help, or construction worker. Some find work in factories, particularly in the garment industry. The slums have active economies of their own, but they are poorly served by formal financial intermediaries. Instead, traditional means of saving and borrowing, like joining rotating saving and credit associations (ROSCAs) or finding a friend willing to serve as a “money guard”, are common ways to manage funds.⁹

SafeSave was launched in 1996 with the mission of offering its clients “the most convenient possible way to turn their savings into usefully large sums of money.”¹⁰ To do this, SafeSave clients are served by “collectors” who visit them in their homes or businesses six days a week. Each day, clients can choose to add to their savings, pay down loans, or to draw down their savings, in amounts that are variable and freely chosen. Clients must visit the branch office only to withdraw more than 500 taka in a day or to get a loan. Once clients obtain a loan, they can pay it back on their own schedule – in small frequent bits, in a lump sum, quickly, or stretched out over time. The only stipulation is that interest on the outstanding balance must be paid each month. The program thus combines the convenience of a ROSCA with the flexibility that a bank can offer. While borrowers are required to hold savings accounts, savers are not required to borrow; at any time, about two thirds of clients hold loans. None of the loans require assets to be pledged as collateral, although, as we describe below, a form of “financial collateral” is employed.¹¹

The first branches were in western Dhaka. Apart from residence in the slum, there are no additional eligibility requirements or means tests. The first branches served were in Tikkapara and Kalyanpur, a mix of densely-populated slums where squatters live in rows of lightweight huts built on bamboo frames, with woven bamboo walls and, in better circumstances, tin roofs. The third branch was opened in Geneva slum, a community of Bihari refugees with government-provided concrete housing along a grid of narrow lanes. The analysis below compares interest rate changes in Tikkapara and Kalyanpur to ongoing conditions in Geneva.

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms..

Comment(s)

There are [0] comment(s) for this entry. Post a comment.