The compulsory saving is a deposit type in which an individual or groups of individuals keep or maintain as a pre-requisite to obtain a loan or to use it as a guaranty or security. It is also named as mandatory saving or saving of security. o It is a security saving required to be deposited by borrower client’s some months before accessing the loan, upfront as percentage of loan size and/or ongoing basis (weekly, fortnightly/ monthly) throughout loan period. o It is used as one of the major tools for borrowers to receive better loan sizewhich in turndiscourages the practice of withdrawing from their compulsory savings. o It is applied to all loan products of MFIs, except for staff loan. Every potential borrower client should have a mandatory savings account to be eligible for loan services. o This type of saving is opened using the minimum (initial) compulsory saving uniformly bursting for the product but the maximum is unlimited. o It shall not be released until full repayment of all outstanding loans. No possibility of partial or complete withdrawal from the saving portion for whatever reasons. This savings can only be withdrawn when the clients, groups and center members completed (repaid) their loan fully and wants to resign from membership voluntarily or group/center decision or in the event of the client’s death. o Similar to voluntary saving, it is interest bearing deposit and the minimum interest rate is as per directive of NBE. o Its collection can be done at office or in the field using continuous and pre-decided saving collection schedule (date, time and amount) agreed up on. o Ongoing deposits (sometimes named as group saving) amount, date, place & time should be decided by majority vote of group members or as per policy of microfinance institution. Product Boundaries Saving type: Mandatory Age range of clients: 18 yrs and above Account opening fee: Br. 7 Minimum opening balance: 10% (of loan size) Maintainable threshold balance: Br. 10 Interest rates: 7%