RAWALPINDI, May 24 The widespread committee system of saving money practised by community groups in Pakistan for the purpose of mutual financial benefits with no cost to others rank the third largest savings channel in the country.

The concept of such committees has been discussed in a new World Bank report which says this informal money-lending method is widely understood by nearly 90 per cent of the population of Pakistan.

The committees are also the third most popular borrowing channel after the loans from shopkeepers, family and friends. Majority of the Pakistanis are involved in such group schemes, says the World Bank study on 'Finance for the underserved and small enterprises'.

According to the study, ballot committees are much more frequently used than other committees. Deliberating further on the concept of the committees, the World Bank study says these are not used significantly more by women (14 per cent) than men (14.5 per cent).

They do not cater to other under-served groups such as farmers and labourers. Finally, the committees are used more than twice as much in urban areas in rural areas, particularly in Punjab and Sindh. Their use also increases with income, points out the study.

Women and urban areas are significantly more likely to participate in the committees. The incidence of committee participation is also found to increase with education levels and decrease with age.

While being employed in the formal or informal sector has a positive incidence on using committees, the professional profile effect on the likelihood of committee participation reinforces their urban nature.

Committee participants are more likely to be formal corporate workers. Over 84 per cent of the users participate in only one committee. Contributions to committees are made on monthly-basis.

Change in income has the highest impact on changes in payments to committees, with the exception of Balochistan where family reasons have the highest impact on amounts paid to the committees.

The committees are the second most popular informal saving channels for savers, as much among women as men. Saving with family and friends is done equally among rural and urban areas across income groups. Three-quarters of formal savers were also saving informally.

While women's attitude towards financial services suggest higher savings motives than men, women are excluded from access to most savings channels; all characteristics held constant, women are found less likely than men to be savings account holders.