Based on experiences drawn from Bangladesh, this essay puts forward a case for voluntary, open-access savings schemes as a profitable alternative to compulsory, locked-in savings schemes. It quotes examples from the experiences of BURO as opposed to that of Grameen Bank and BRAC. Locked-in “Group Fund” savings acted as de facto loan guarantee reserves and had allowed the larger MFIs to develop a huge capital fund for their lending operations. It was feared that allowing members to withdraw would result in huge outflow of funds.

The paper also analyses and shows how BURO has indeed demonstrated that voluntary open-access savings schemes can mobilise more net savings per member, per year, than compulsory locked-in savings schemes and provide a valued, and well used, financial service while doing so.

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