Topic:
How Do Financial Institution Help Mobilize Savings and Facilitate Investment?
There are many financial institutions today that offer different financial products and services to people; from all walks of life. All these financial institutions play a very important role in the society; and that is to help and teach the people to save and increase their money savings and improve their investments. These financial institutions have been in the business for many years to help and guide their clients on how to make use of their money into full advantage. There are credit services that are being offered to those individuals who have small businesses. The money that they loan from micro finance institution would be used as their start up capital or additional capital in their business. They are given a certain grace period to pay the money that they loan. So, by the time that they will have paid the total amount plus the loan interest; they can already reapply for another loan service. This kind of financial service is very ideal and helpful to small group of individuals who aspire to do business and investments in their own right. Much more for the well to do individuals and families who earn great income, they could surely avail a macro level of mobilizing their savings and increasing their investments. Many (MIFs) Micro Financial Institutions out there render varied financial services to a large scale of individuals, professionals, and investors who want to improve their income and investments. (www.cgap.org)
Based on different case studies worldwide; show that (MFIs) Micro Finance Institutions have been offered diverse financial products and services to deal with clients’ financial needs. There is a health-care savings product for emergency hospitalization and series of medication and health maintenance. In this health plan the member and his/her beneficiaries can avail health benefits and reimbursement during hospitalization. Retirement plan is also very rampant worldwide, big and stable companies offer Provident Funds to their employees which they can withdraw when they reach their retirement age. Life-insurance has also been provided many years by (MFIs) in time if the member dies his/her beneficiaries or heirs may receive compensation from the insurance company. The same thing goes to funeral- there is a funeral insurance that covers the burial costs of the family which is very expensive nowadays. The educational plan as one major financial need of every family has been quite popular worldwide, that is the reason many clients avail different educational plan for their children. Furthermore, clients can avail any emergency loan from these different financial products in a very low interest rate under the cash guaranteed value and dividends of the insurance policy. Many (MFIs) offer savings, current and time deposit account that offer very flexible maintaining balance and gives access to payment services such as payment checks, credit card and other payment transactions that require speedily process. Savings account and current account are the most common account in a financial institution; these accounts encourage individuals to save regularly as part of their income that build up interest in a regular basis. Time deposit account is a kind of saving that accumulates higher interest rate than saving and current account this is used by a certain group of individuals or families who are saving for a long term goal. (www.microfinancegategeway.org)
It just shows that even the low income households would have the opportunity to mobilize savings in micro level institutions. The micro level establishments render the most needed financial service to low level income families and that is credit services which offer low interest rate at the same time allowing their clients to mobilize voluntary savings. (www.microfinancegategeway.org)
No matter how much is the income; anyone could still save for rainy days. Everybody wants to save and can save if there is willingness and compliance to do the saving process. Every household have to save a part of their earning for future needs and emergency purposes. Buying a car, house and lot, education of the children are the most vital requirements for any household. The same thing applies to any wedding plan and birth expectancy. But it is not easy to save and invest alone for essential events and occasions. Everybody needs a financial system and financial partner to do better in any saving and investment plan. (www.microfinancegategeway.org)
While sickness, sudden death and natural calamities are very serious matter that anyone could ever hardly experience in this world. But, if a person could have managed properly his/her earnings and he/she have been able to save and invest his/her money in the right way for these unforeseen events ; he/she would be always ready and prepared for whatever financial adversities that come into his/her way, that person would not be at lost because he/she knows deep in inside that he/she has done the right thing in advance . (www.microfinancegategeway.org)
References:
http://www.cgap.org/Microfinance. , April 03.2011
http:// www.microfinancegategeway.org, April 03, 2011
http:// www.microfinancegategeway.org, April 03, 2011
http:// www.microfinancegategeway.org, April 03, 2011
Credit:ivythesis.typepad.com
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