Throughout the world, the supply of savings services is not enough to meet the demand of poor people, who need savings accounts to manage cash flows and build up financial cushions against unexpected events. This need is particularly important given the irregular incomes of these households. That poor individuals are even willing to pay substantial fees and take on significant risks in using some of these services is also indicative of the need for savings. Many poor households cope using Informal savings options such as hiding money under the mattress or keeping it with family and friends are generally less secure and easily result in loss of precious savings. Even options such as rotating savings clubs can be prone to break-down. The alternative, formal savings services are often out of reach because of the difficulties faced by commercial banks in reaching these hard to serve areas.

Who can and cannot accept savings is a pressing question for regulators, who are trying to balance the goals of promoting access to savings with protecting deposits and ensuring systemic stability. Institutions that accept deposits and intermediate funds must be subject to some prudential regulation and supervision. In some countries, there is a growing sector of unregulated microcredit organizations that are well-positioned to offer savings services but are not yet licensed to do so. Regulators can use a tiered, risk-based approach to licensing, regulating and supervising savings-based microfinance. Such an approach allows certain mature microcredit organizations to integrate into formal financial system by accepting deposits. Specialized regulation and supervision is applied simply as a risk-based approach to regulating microfinance because it entails unique risks that can be adequately addressed with appropriate regulation.