Checklist for the Appraisal of

Savings and Credit Schemes

This checklist consists of two main parts:

I: An inventarization of existing savings and credit mechanisms and financial intermediaries
II: A checklist on some recommended mechanisms.

I: An inventarization of existing savings and credit mechanisms and financial intermediaries

    Savings Strategies and Credit Needs

  1. Which perceptions do poor people have on savings?
    • "... savings is refraining from consumption and takes place whatever the income we have ... "
    • " ... savings is what income is left after all cunsumptive expenditures have been made ... "
  2. For which different purposes do poor people save?
  3. In which form do poor people save: cash, kind or both? Why?
  4. Do poor people save individually, group-wise or both? Why?
  5. What are the different savings time-patterns and amounts?
  6. What are the characteristics of the savers in terms of occupation , sex etc.?
  7. Which perceptions do poor have on credit?
    • " ... credit is a gift ... "
    • " ... credit implies repayment ... "
  8. For what purposes do poor people need credit?

    Financial Intermediaries

    Informal financial intermediaries include:
    - relatives, neighbours and firends;
    - traders, shopkeepers, landlords, owners of capital assets, private pawnbrokers, private bankers;
    - rotating/non-rotating savings and credit associations.

  9. Which informal financial intermediaries meet the credit needs of the target group?
  10. What are the positive and negative aspects of the different informal lenders?

    Formal financial intermediaries include:
    - commercial and development banks;
    - co-operative societies and credit unions.

  11. Which formal financial intermediaries meet the credit needs of the target group?
  12. What are the positive and negative aspects of the different formal lenders?

II: A checklist on some recommended mechanisms

    The integrated approach

  1. Which programmes supplement and contribute to the savings and credit scheme of the NGO?
  2. Which parties implement the programme mentioned under 1 - target groups, NGOs government agencies banks etc.?

    The linkage of savings and credit

  3. Does the NGO undertake savings activities and what is the specific aim of those activities?
  4. Do these savings activities refer to monetary savings or savings in kind?
  5. How is savings mobilization related to credit disbursement in the savings and credit scheme of the NGO?
    - target group savings are one of the credit sources;
    - borrowers are required to have savings equivalent to some percentage of the loan requested.
  6. Do the savings activities contribute to other programmes of the NGO like basic needs services, organization and awareness building and economic programmes? How?
  7. In which phase of the programme-activities of the NGO are the savings activities started?
  8. Are the target group savings being used as an instrument (i.e. collateral) to create access to the credit facilities of formal financial institutions?

    The group approach

  9. Is the target population organized in any kind of group? Is this a traditional or a newly established group?
  10. What is the main purpose of these groups? Is the savings and/or credit provision the main aim or do they have other primary goals?
  11. What is the average size of the groups? Is there a minimum or maximum number of group members?
  12. What do group members have in common> DO the groups have a homogenous composition?
  13. In what way does the group provide guarantees for the loans of individual members?
  14. How is the purpose of loans determined?
  15. When are/which persons eligible for loans?
  16. Are groups and group-formations part of the strategies of the NGO to create facilities of formal financial institutions?

    Unsubsidized credit

  17. Which interest rate is charged on loans?
  18. What is the present inflation rate?
  19. Does the income out of lending (determined by the interest rate and loan turnover) cover all costs involved with the lending operation of the NGO?
  20. What is the repayment rate on loans?
  21. Which factors explain the (changing) repayment rates?
  22. Which mechanisms enhance and stabilize repayment rates?

    Risk-financing and sharing

  23. Which party carries or which parties shares financial responsibility for possible losses due to non-repayment?
  24. Which funds are being used to cover possible losses due to non-repayment?
  25. Do borrowers contribute to a loan redemption fund which (partly) cover possible losses due to non-repayment?
  26. Does the NGO act as a co-guarantor in the case of formal financial institutions which lend tot he target group?
  27. Has the NGO put an incentive or collateral deposit at a bank account to (co-)guarantee the lending operations of the bank to the target group and to create access to the credit facilities of formal financial institutions?
Source:
de Groot, Han and Otto Hospes (1988), Policy Guidelines for NGOs Involved in Savings and Credit Schemes. The Hague: Nederlandse Organisatie voor Internationale Ontwikkelingssamenwerking (NOVIB), June, 38 pp.
Hari Srinivas - hsrinivas@gdrc.org
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