MicroSave, an Indian for-profit technical assistance, training and resource center, recently published “No Thrills: Dormancy in NFA Accounts,” a study on India’s “No Frill Accounts (NFAs),” a basic account option legally required of private banks as part of Reserve Bank of India’s (RBI’s) “Financial Inclusion Programme.” Funding for the research came from the Omidyar Network, a US-based “philanthropic investment firm.”
The research, conducted in the states of Uttar Pradesh, Rajasthan and Tamil Nadu, found that despite a high number of account openings, many clients use NFAs only to withdraw government benefits and wages, and that most accounts are inactive. In many areas, MicroSave reports, 20 percent or fewer use their account for small savings, the original intention of NFAs. The research also indicated that most banks lose money on NFAs.
By Rick Altieri, Research Associate
Established in Uganda with United Nations funding in 1998, MicroSave is a for-profit technical assistance, training and resource center. MicroSave’s headquarters was relocated to Lucknow, India, in 2006 with support from ICICI Bank. In 2008, MicroSave was transformed into a consulting company, which has since completed projects in Cameroon, Congo, Ethiopia, Ghana, Kenya, Malawi, Nigeria, South Africa, Tanzania, Uganda and Zambia.
Founded in the US in 2004, The Omidyar Network is an investment firm that provides investments and grants to “socially responsible” organizations in the areas of microfinance, entrepreneurship, property rights, social media, marketplaces and government transparency. To be eligible for a grant, an organization must be “determined to be aligned to Omidyar Network’s goals, have an identifiable impact, have potential for large-scale impact, have proven leadership, and exemplify innovation.” Omidyar Network typically makes investments of USD 1 million or greater. As of 2009 Omidyar Network reports total assets of USD 249 million.
Sources and Additional Resources:
MicroSave: “Research Papers on Dormancy in No Frill Accounts.” http://microsave.org/announcement/research-papers-on-dormancy-in-no-frill-accounts
MicroCapital.org Brief, “MicroSave Launches Social Performance Management (SPM) Toolkit for Microfinance Institutions (MFIs)”, April 26, 2011. https://www.microcapital.org/microcapital-brief-microsave-launches-social-performance-management-spm-toolkit-for-microfinance-institutions-mfis/
MicroCapital.org Brief, “Standard Chartered, MicroSave Launch Microfinance Risk Management Toolkit” December 10, 2010. https://www.microcapital.org/microcapital-brief-standard-chartered-microsave-launch-microfinance-risk-management-toolkit/
MicroCapital.org Brief, “State Bank of India and Oxigen Private Limited Install First 80 Microfinance Kiosks in Mumbai and Delhi”, September 20, 2010. https://www.microcapital.org/microcapital-brief-state-bank-of-india-and-oxigen-private-limited-install-first-80-microfinance-kiosks-in-mumbai-and-delhi/
MicroCapital’s Microfinance Universe Profile: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroSave
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