The present study analyses some conceptual and empirical issues of the saving behavior of
the rural population in Pakistan. The major emphasis of the study is to answer the
following questions: What are the different types of saving of rural households? What is
the magnitude of saving in rural households? How are savings kept? What are the different
decision making strategies for income management within a household? What is the
difference between saving and investment priorities among different social strata and what
are its reasons? What are the socio-economic factors influencing the form and extent of
this saving?
The study area lies 50 km northeast of Sargodha District in Tehsil Bhalwal of Province
Punjab in Pakistan. Empirical evidences reveal four direct saving acts such as saving in
cash, saving in bond holding, saving in agricultural products, and saving in livestock. The
quantitative analysis of the saving composition proves saving in kind as the most stable,
preferred, profitable and flexible method in almost every stratum. Besides these direct
saving acts, the rural community practices some indigenous traditional saving
arrangements on the basis of cooperative type traditional institutions such as Sep relation (a
bank of labor), Wanghar (a bank of labor), Share leasing of livestock (saving in livestock),
Rotating saving system (a bank for cash), and Vartan Bhanji (a bank for cash and kind).
The saving methods practiced in rural Pakistan are determined by a number of socioeconomic,
socio-cultural, psychological and institutional factors. Empirical evidences
prove indigenous saving mechanisms as more purposeful for the rural population, because
saving is generated in the form it is required for the satisfaction of needs. The direct
saving, however, has mostly to be converted into cash or exchanged against other items
before its utilization. The lack of access to and information on the market compels rural
savers to sell and exchange their commodities with the village shopkeepers or livestock
dealers at comparatively much lower prices. The ultimate benefit of saving to the saver is
of considerable importance because it acts as an important incentive to save.
The question of how to make these savings more productive for the saver is one of the
biggest challenge for the policy makers. The ultimate solution can be a linkage of the
formal and the informal financial sectors, since both sectors follow their set priorities and
function independently in Pakistan, so far. A ‘bottom-up strategy’ would be the most
feasible to establish an indirect link between rural households and banks through a third
intermediating agency. The present study recommends the establishment of an indigenous
based private voluntary organization as an intermediating agency and proposes a linkage
model in this regard.