About Savings-Led Microfinance
WHAT WE DO
CRS' Savings and Internal Lending (SILC) methodology is a holistic, savings-led microfinance approach that provides a safe place for poor households to save and borrow to increase their income. The goal is to help members better manage their existing resources by teaching them basic financial management skills.
CRS’ savings-led microfinance methodology has its roots in traditional community-based rotating savings and credit associations. Our approach, however, significantly improves upon the methodology by helping poor communities create highly sustainable, accessible, transparent, flexible and self-managed Savings and Internal Lending Communities.
By facilitating savings services, CRS enables the poor to build up useful lump sums without incurring excessive debt or interest charges. Moreover, the SILC process helps protect members’ limited resources by shifting their money from poorly protected informal locations (e.g., under the mattress) to investments in group members’ businesses. This provides a positive return (dividend) on their savings.
The accumulation of savings and the subsequent ability to access flexible credit through an internal lending mechanism leads to greater financial resilience among participating households and investments in productive assets, ranging from agricultural production to small business activities.
As of December 31, 2014, CRS has almost 73,000 active SILC groups in 43 countries. Of these, 15,000 groups are in their first cycle and together have $6.8 million in total savings.
HOW WE DO IT
From day one, SILC groups are owned and managed by their members. This ensures the long-term sustainability and financial independence of the groups. Participation in SILC increases social cohesion by building trust among members, which results in greater financial inclusion of marginalized groups, such as rural farmers, women, people affected by HIV, and vulnerable youth, who are often excluded from formal financial services.
To address the need for sustained community-level financial services, CRS has introduced a market-based strategy that enables local entrepreneurs, or Private Service Providers (PSP), to expand savings group services on a fee-for-service basis anywhere there is demand. The PSPs are paid directly by the savings groups, resulting in an easily replicable and self-sustainable savings-led program. PSPs earn an income as they help create and support groups, and groups receive support from a quality-assured service provider independent of CRS or donor support.