Reviewed by Aug 27, 2020| Updated on
Micro-savings is a microfinance branch, consisting of a small deposit account provided to families or individuals with low income as an opportunity to store funds for potential use. However, micro-savings accounts operate similar to a standard savings account but are structured around smaller amounts.
The minimum balance requirements are always excluded, or very minimal, so consumers can save small amounts of money and may not be charged for the service.
In developing countries, micro-savings plans are usually offered as a means of encouraging savings for education or other future investments. Those who invest in these programs are better prepared to deal with any unexpected expenses, which would usually affect individuals with low income.
Many micro-savings programs may charge small fees to use the service or no fee at all. The aim is to allow the account holder to set aside funds to build up their savings over time, often in small increments. These programmes may be offered by non-traditional organizations, including numerous startups that create associated apps to keep the consumer up to date with their spending habits.
Micro-savings account creation stems partly from an attempt to reverse a population pattern that continues to consume and spend more than it saves. It's also a way of reducing some of the entry barriers that traditional savings accounts may have.
Micro Savings in India
There are several savings options available in India. Many of these options are not easy to undertake or the most profitable. Yet, there are viable ways for those who take the time to understand the options and needs.
The citizens usually focus on the micro-savings options provided by informal and community-owned methods. Also, there are conventional financial institutions that offer schemes for micro-savings.
The Self Help Groups (SHG), cooperatives, gold savings, and chit funds are a few ways Indians use for micro-savings.