From microcredit to microfinance: evolution of savings products by MFIs in Bangladesh

This paper chronicles how the microfinance industry in Bangladesh has evolved from its initial focus on credit, disbursing standardized loan products and collecting obligatory savings to the development of flexible savings products. We describe the process through which the industry gradually moved away from compulsory savings and introduce flexible savings. We provide detailed descriptions of various savings related products used by MFIs in Bangladesh. We point out the numerous problems that can arise when MFIs collects savings especially from non-members without a proper legal framework. We conclude the paper by suggesting prudent regulation of MFIs to ensure the security of the meager savings of the poor.