By the MicroSave Consulting and FSD Uganda teams

Across the globe, the lack of collateral is a primary barrier that economically excludes individuals notably young people especially women from accessing formal banking services. To get around this obstacle, the underserved population has resorted to establishing informal community-based financial systems to fulfill their financial requirements. These alternative arrangements, such as Village Savings and Loans Associations, Rotating Savings and Credit Associations, and Table Banking, have emerged as a means for the marginalised to access the financial resources they lack from traditional banking institutions. To extend financial services to the underbanked and unbanked, formal financial institutions have emulated and adopted some of the positive practices in the informal financial systems.