Rotating Credit And Savings Association (ROSCA)


DEFINITION of 'Rotating Credit And Savings Association (ROSCA)'

A group of individuals that fill the role of an informal financial institution through repeated contributions and withdrawals to and from a common fund. Rotating Credit and Savings Associations are most common in developing economies or among immigrant groups in the developed world. This is because accessing formal institutions is difficult due to their unavailability or because these institutions are unable to provide the appropriate service. The name derives itself from the types of transactions that occur in these associations; members pool their money into a common fund, generally structured around monthly contributions, and money is withdrawn from it as a lump sum by a single member at the beginning of each cycle. This occurs for as long as the group exists.

BREAKING DOWN 'Rotating Credit And Savings Association (ROSCA)'

Memberships are generally based on ethnic or geographical lines, and the structure of payments and withdrawals vary from group to group. Both transactions can vary in occurrences as often as daily to every six months, and recipients of funds are commonly chosen based on financial need or lottery.

  1. Third World

    A phrase commonly used to describe a developing nation, but actually ...
  2. Savings Association Insurance Fund ...

    A government insurance fund for savings and loans and thrift ...
  3. Development Economics

    A branch of economics that focuses on improving the economies ...
  4. Microfinance

    A type of banking service that is provided to unemployed or low-income ...
  5. Socially Responsible Investment ...

    An investment that is considered socially responsible because ...
  6. Emerging Market Economy

    A nation's economy that is progressing toward becoming advanced, ...
Related Articles
  1. Credit & Loans

    The Evolution Of Banking

    Banks are a part of ancient history. Find out how this system of money management developed into what we know today.
  2. Entrepreneurship

    Microfinance: What It Is And How To Get Involved

    This growing industry is full of opportunities for the socially conscious investor.
  3. Insurance

    An Introduction to Microfinance

    Is microfinance a way to help the poor, or will it just make them poorer?
  4. Economics

    What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.
  5. Term

    What are Pension Funds?

    A pension fund is a company-sponsored fund that provides income for employees in retirement.
  6. Retirement

    Tired Of Banks? Try A Credit Union

    These nonprofit organizations can provide a range of services for lower fees.
  7. Savings

    Online Banks: Lower Costs And Little Sacrifice

    For many, online banking has become a day-to-day routine. Still, there are some holdouts who refuse to accept the method.
  8. Taxes

    How New Offshore Bank Rules Will Affect Americans

    FATCA is being implemented in 2013. Here is how it will affect the personal banking and taxes of Americans who hold offshore bank accounts.
  9. Brokers

    The Future Of Sales Brokers

    The role of the sales broker, as a purely transaction-based salesperson, is changing. Find out what's next for this industry.
  10. Personal Finance

    Understanding The Consumer Financial Protection Bureau

    The new CFPB will try to make sure the financial products and services market is fair, transparent and competitive.

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!