Principle 6


If choosing to promote a relationship with a financial service provider, empower SG members to make good choices based on their interests and demands.

While building relationships with formal financial institutions has not traditionally been a central objective of SG programming, members and facilitating agencies are increasingly recognizing the benefits that these relationships may bring, such as security for excess liquidity, long-term savings, and access to larger loans. In some cases, SGs are opening accounts on their own; in others, facilitating agencies are actively bringing SGs and banks together and working with financial service providers (FSPs) to develop financial products especially intended for SGs. At the same time, however, many are concerned that some linkages may have a negative impact on group stability, group dynamics, and even members’ financial well-being. Irrespective of the approach, these models require careful assessment of possible risks and thoughtful implementation guided by group demand.

Elements of Principle 6

Guidance Notes

Education of all parties involved in the financial relationship

If facilitating a financial linkage, promote informed decisions by all parties. Financial service providers need to understand how SGs work in order to design products that fit a group’s process; members need to understand the terms of the product and the contract before them. For SGs entering into relationships with formal financial service providers, financial education is widely believed to be a necessary component of their preparation. Members need to understand how FSPs work, what they offer, and what they require of clients. Financial education should empower members to ask the right questions and choose both the providers and the products that are right for them. Remember that trainers also play a crucial role in empowering members to make informed decisions and must themselves be educated on risks and opportunities.

Careful assessment of the financial service provider

Before facilitating a relationship with a formal financial service provider, assess its motives for entering into a relationship with SG members. Look for financial service providers that demonstrate an interest in SG members as clients well into the future, rather than as immediate opportunities for profit. In other words, look for providers whose shared vision of poverty alleviation and financial inclusion of underserved populations motivate them to meet SG needs.

Care for the interests of the group

Be an advocate first and foremost for the SG members and only offer the opportunity to enter into a relationship with a formal financial provider if it responds to members’ articulated needs. Before facilitating a relationship with a bank (whether for savings or credit), ensure that the group has the confidence to manage the relationship, and assess the interest of group members in pursuing this relationship. If promoting credit linkages, understand if the need for larger sums of capital is common or if it is limited to a few members. Only facilitate the credit linkage with groups that have 1) previous experience with financial institutions through a savings account and 2) a proven need for larger loans as demonstrated by high fund utilization rates and even distribution of loans among members. Keep in mind that group loans1 guaranteed by members’ savings have the potential to distort group processes and power dynamics, and may negatively affect members who might not need or want the external capital. Never promote the use of group savings as a guarantee for individual loans. As a general suggestion, leave the marketing of financial products to the financial service provider, and focus on representing the interests of the SG.

understanding of the implications of mobile banking

Mobile banking promises greater convenience and security but requires careful planning, especially since availability is still uneven, at times products are unregulated, and in many cases, systems are unable to meet the liquidity needs of Savings Groups. Consider training the financial service provider, the mobile money provider, and their agents on consumer protection, and make sure they understand and respect the needs and dynamics of the group. Be aware that transacting through an MNO, such as using an individual wallet, may require the group to alter its procedures. It may also shift the power balance in favor of those members with access to cell phones. Any adjustments to procedures should strive to preserve the cashbox and the group’s leadership structure, and guarantee proper documentation for each transaction.


Principle 5: If choosing to combine a Savings Group with other activities, plan carefully and respect the autonomy of the group.

Principle 7: Consistently monitor and evaluate program performance using responsible data collection, management and dissemination practices.


  1. Group loans are understood as loans from the formal financial institution to the group as a whole. The loan directly adds to the group fund and is managed according to the same rules that apply to the internally raised capital; in other words, all members have the same level of access to the funds, must follow the same request and approval procedures, and must repay the loan at the agreed-upon interest rate in the group constitution. 

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