Group-based management of savings and credit – the case of AKRSP in Pakistan

Annie Harper

Using groups as forums through which to provide savings facilities and as channels for delivering credit is widely accepted as a successful way of overcoming many of the problems associated with providing microfinancial services to the poor. However, there is a danger of the approach
being adopted with too little understanding of how groups can be used, and a lack of concern for some of the problems which may be faced. This article draws attention to the need for a greater understanding of operations in group-based microfinance, particularly where many management tasks
are decentralized to the lowest level. It differentiates between the well-known Grameen Bank model and an alternative model based on larger and more flexible groups, in which a lender 'wholesales' a loan to a group, which is then left collectively responsible for on-lending smaller loans to
the individual members. The potential advantages of this model over the 'Grameen' model and the potential disadvantages are explored. The article concludes that considerable lender support is required, and is likely to consist of training, advice services and monitoring, balanced with a flexibility
which allows groups to develop their own systems to meet the particular needs and demands of their members.