ROSCA method is a group of individuals who agree to meet together for save and borrow purpose with a defined period. It is a form of combined peer-to-peer banking (P2P) and peer-to-peer lending (P2P).
According to Wikipedia ‘F.J.A. Bouman described ROSCAs as “the poor man’s bank, where money is not idle for long but changes hands rapidly, satisfying both consumption and production needs.” They are also known as tandas (Latin America), partnerhand (West Indies), cundinas (Mexico), ayuuto (Somalia), hagbad (Somaliland), susu (West Africa and the Caribbean), hui (会)(Asia), palawugang (Philippines), Gam’eya (Middle East), kye (계) (South Korea), tanomosiko (頼母子講) (Japan), pandeiros (Brazil), juntas or quiniela (Peru), C.A.R. Țigănesc/Roata (România), and arisan (Indonesia).’
There are more than 1 billion people or 17% adults in developing countries around the world using ROSCA to save/borrow and support each other within their trusted community. Besides, more than 2 billion individuals or 39% of the world’s population don’t have bank account in the world and they might need help for some financial activity like loan. The bank system is contradicted as their purpose is to serve rich people instead of poor people. For people who don’t have bank account, don’t have good pay job and bad credit score, it will be very hard for them to get financial support like bank loan from traditional financial institution. In fact, they are the group of people which need help the most. Besides, the cost for commercial bank loan will be high for this group of people.
The global market size of the ROSCA is estimated more than 500B USD per year. (The calculation taken will be 1%-10% times the GDP of the country benchmark by India) Besides, the P2P lending market is growing rapidly and has a market size of 70B USD per year globally.