Savings Circles

Sudha makes and sells floral garlands at Dharavi and as our conversation turned to savings she told me that she used bishi. I’ve spoken to a number of people at Dharavi who participate in bishi schemes (bishi = money matters in Marathi). Bishi is a kind of informal and voluntary local savings club which has a long history in India and has been employed rurally to also save and credit rice and grains. Bishi schemes constitute a type of Rotating Savings and Credit Association (ROSCA) – which are found across the world in base of the pyramid communities under a number of various names.

The schemes have various forms but at Dharavi basically go something like this example: a voluntary group is formed of 12 women within a particular community nominate an amount that they will each put into the scheme each month. (eg. Rs. 500) providing a monthly total of Rs 6000. Every month they will draw a saver’s name on a lottery system to be awarded the collective Rs 6000. Then that person will be removed from the list so that they cannot claim the full amount twice within a 12 month cycle. On occasion one of the participants may require credit from the group rather than waiting for their name to be drawn (eg. their cooker broke and they need to purchase a new one) They can appeal to the group and together they decide whether to award the full amount to them that month instead of using the lottery system.

Initially I had to work hard to put aside my assumptions about the inadequacies of bishi schemes. Yet after talking with a number of women I came to realise that they provide a local savings mechanism in which community participation creates a social pressure to save within a trusted environment with no transaction fees. The potential to fluctuate between emergency credit and the lottery system suits the flexible needs of investors. For some women I spoke to it wasn’t their only form of saving yet seemed to nurture a social platform on which to discuss money matters between women. Many were proud of what they had purchased via the scheme. (fridges, school fees, sewing machines, etc)

Some mentioned that even children run small bishi schemes, putting in Rs 2 each a day amongst 30 kids and drawing on a lottery system weekly to win Rs 420 – providing them more motivation to save than merely putting aside money alone which creates too much temptation to spend. Such incentivising to save is mentioned by all women I spoke to though others mentioned that the tendency to spend immediately on winning doesn’t support planned investment. Some told me it was an effective way of drawing some money away from male control of household finances.

The widespread and trusted nature of bishi schemes have indeed evolved into a number of more complex community run micro-finance models, some of which even intersect with more formalised banking. Merits and demerits aside – bishi highlights the social aspect common to many savings and credit schemes at the base of the pyramid.

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