The poor and marginalized need access to very small amounts of savings and credit to help smooth incomes, meet predictable expenses, and reduce shocks in emergencies. Quick access to a small amount of credit or accumulated savings to pay school fees, for example, can enable a farmer to defer selling or pre-selling harvest to a time when prices are higher, in some cases substantially increasing incomes. With more stability in their cash flow, people can make better choices around health, education and nutrition, and as well, invest in income generating activities. Savings groups offer an effective means to meet the needs of those too poor or too remote to access services from banks or MFIs.
The Village Savings and Loan (VSL) model is a self-managed and self-capitalized micro-finance methodology. By having its members mobilize and intermediate local pools of investment finance, it offers savings, insurance and credit services in markets outside the reach of formal institutions. VSL responds directly to the unmet financial services needs of the remote and rural poor by providing: i) a secure place to save; ii) the opportunity to borrow in small amounts and on flexible terms; and iii) affordable basic insurance services. VSL aims to increase household financial assets and decrease household vulnerability to financial and other shocks. VSL are a simple, transparent, cost-effective and sustainable means of providing entry-level financial services to the very poor.
In Bangladesh, Tarango is the pioneer of VSL program. Tarango started VSL program in July 2006 under Chars Livelihood Program (CLP) and since then providing technical support to different implementing partners and development agencies that includes CLP, Save the Children, Winrock International, Caritas, and CODEC etc. Tarango has translated the original VSL manual in to Bengali and tailored in Bangladeshi context. Tarango’s technical support includes-
- Institutional Capacity building (ToT)
- VSL Kits supply (Steel Box, Pass books, Training Guide book etc.)
- Onsite monitoring support
- MIS management