Let’s talk savings. Imagine you are a seamstress living in central Mongolia -- like this Kiva borrower -- and your husband’s cab breaks down or you need to fix a leaky roof. How are you going to pay for that? Without savings, your options are limited to borrowing either from a bank or an individual. But that may require a long wait, making the need for cash even more dire.

If you had savings, however, this cash flow problem could be averted, or at least diminished. This is the goal of Kiva field partner XacBank. Based in Mongolia, it's offering Kiva clients voluntary savings accounts to smooth out life’s unexpected financial speedbumps.

While XacBank has been educating its Kiva borrowers about the benefits of savings accounts since 2010, it only recently launched a campaign to make saving a reality for more people. It's issuing gift cards to its Kiva clients, allowing them to open savings accounts with 9% of the interest they repaid on a loan. As a result, 3,000 Mongolian Kiva borrowers now have savings accounts where there were none.

The impact is visible. Early last year, XacBank client Gantsetseg B borrowed $2,050 via Kiva to grow her sewing business. She purchased more fabric, two new sewing machines and hired three additional people. After she repaid her loan on time, XacBank gave her a savings gift card, getting her started with an account and helping her expand her business to 10 employees and seven sewing machines.

Savings has become an important part of Kiva’s vision for a world where all people -- even in the most remote areas of the globe -- have the power to create opportunities for themselves and others.

To reward and highlight our field partners who offer voluntary savings accounts, we award them with the “Facilitation of Savings” social performance badge. The idea is to encourage more microfinance institutions and banks to do the same, and allow lenders who support savings to loan for this cause.

To learn more about our social performance badges and how we measure and reward our field partners for additional services they provide to their borrowers, check out this Kiva webinar:

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Borrower photos courtesy of Xacbank, CGAP

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