Factors that act as enablers or roadblocks to savings by the poor a study based in South India

Abstract

The paper aims to understand the factors which act as either enablers or roadblocks to saving by the poor. Microfinance in India is rapidly growing, focusing however, only on the credit side of finance while not emphasizing Micro-savings. This study aims to understand the factors that people look for in a savings product that would facilitate their regular savings. The study was based on survey research administered to 700 respondents. Principal Component Analysis (PCA) was used to bring out the factors that the poor look for with respect to using the savings services. The paper brings out factors that are important for the poor and those that act as roadblocks in them being able to save regularly. It suggests that liquidity, and ease of reach are important enablers while minimum balance restrictions, inconvenient timings of the institution act as road blocks to regular savings, among other factors. The paper has strong implications for the design of the right financial products for the poor with a customer centric focus. This has a symbiotically benefitting outcome to the poor and the institution which benefits from regular usage in the long run. The paper fulfills the gap in the understanding of factors that are important for the poor to save regularly.