Thrift
Also called: Savings habit · Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Class 11, Ch 5 "Rural Development"
Meaning
Thrift is the habit of saving small sums regularly. Even a very poor family can build up a fund this way over time. Thrift is the first step in a self-help group (SHG): members save first, then take small loans from the pooled money at interest below the moneylender's rate. Thrift and credit societies and Jan Dhan bank accounts also encourage this habit, especially in rural areas.
Example
In an SHG, each member saves ₹25 to ₹100 or more at every meeting, depending on what she can afford. After a year or two of regular saving, a bank gives the group a loan in its name. In Kerala, Kudumbashree started in 1995 as a thrift and credit society for poor women and collected ₹1 crore in thrift savings.
Don't confuse with
- Credit: Thrift means saving your own money. Credit means borrowing someone else's money and promising to repay it later. In an SHG, thrift comes first and makes credit possible.