A rotating savings and credit association, or ROSCA, is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking.

It is a global phenomenon, variously called “committee” in India and Pakistan, Ekub in Ethiopia, Susus in Southern Africa and the Caribbean, “Seettuva” in Sri Lanka, tontines in West Africa, tanomoshi-ko or mujin in pre-1945 Japan, wichin gye in Korea, arisan in Indonesia, likelembas in the Democratic Republic of the Congo, xitique in Mozambique and djanggis in Cameroon, ROSCAs are informal or ‘pre-co-operative’ microfinance groups that have been documented around the developing world.

A ROSCA offers tremendous flexibility to the member.

ROSCA as a Savings Instrument

You can’t save alone – it is easy to misuse money.” “Saving money at home can make you extravagant in using it.” “Doing it with other members helps you to save.” “A Rosca makes you look harder for money to save.” “It is difficult to

keep money at home as demands are high. He can treat it as a recurring deposit till he needs the money, just like an overdraft facility with a bank. Most people use this to save for short-term goals, such as buying a vehicle or setting up a business. They are especially useful for goals that can crop up anytime during the tenure of the group, such as a child’s wedding or the purchase of a house.

ROSCA as an insurance

The traditional social obligations to help kinsmen, and sometimes neighbours and workmates, quickly comes into effect as word gets around among members of the rosca, who will adjust the order of rotation to enable the unlucky one to receive a turn. The speed with which roscas can usually react to their members’ needsccan rarely be matched by distant, impersonal, banking systems.

ROSCA creates a strong social bond

Reciprocity and commitment to the group are essential in order for the rosca to be sustainable, and this is mainly achieved though social enforcement and trust. Members of a Rosca feel a stronger connect within themselves as compared to the rest of the community. Ample instances have demonstrated that Rosca come together to help a member in trouble and have foregone their personal interests in such a case. Members feel stronger as an individual when they are a part of a group!

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