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Can microsavings work without microcredit? A case study of India Post Payments Bank
Author(s) -
Ashta Arvind,
Pillarisetti Satish
Publication year - 2020
Publication title -
strategic change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.527
H-Index - 16
eISSN - 1099-1697
pISSN - 1086-1718
DOI - 10.1002/jsc.2332
Subject(s) - microfinance , payment , business , outreach , commission , work (physics) , financial system , payment service provider , net interest income , finance , interest rate , economics , economic growth , mechanical engineering , engineering
Abstract Microsavings institutions that cannot provide microcredit are unlikely to be self‐sustaining. Payments banks are Indian microfinance institutions that can collect microsavings, but cannot give microcredit. They have been mainly unsuccessful owing to low spreads between interest given to savers and interest received from the reserve bank or commercial banks on interbank deposits. The commission income from transfer payments is too low to pay the high overheads of rural outreach. Payments banks would like to transform themselves into small savings banks that can provide microcredit.