54 Financial Landscape 4.2.3 INVESTMENT BASED SAVINGS Some of the MEs in all 5 locations saved in gold and either pawned it or sold it at the pawn shop or a gold shop when they required money. However, this trend was more popular in Bago. Chit (sheroot maker, Bago) saved her money at the gold shop and bought jewelry whenever she had saved enough. She had known the gold shop owner for six to seven years and thought it was a good way to save money. Naing’s wife (PoP statue maker, Bago) saved money in gold and sold it every time they required money. 4.3 BORROWING PRACTICES IN MYANMAR Cheroot maker saved money at the gold shop As the formal financial services sector was struggling to satisfy people’s needs, the informal financial sector was very active and had gained an important role in Myanmar. Informal money lending was traditional and prospering business in Myanmar and interest rates varied from 3-20% per month. The usual repayment period was between three to six months and could often be extended. Despite high interest rates, particularly poor Myanmar MEs regularly relied on uncomplicated and registered pawn shop loans which were traditionally run by the Chinese community. The loan amount granted and the interest rate charged depended on the type and the market value of the collaterals. For gold, the loan could amount to upto two-thirds of the market value, and the monthly interest was set at 2-3% . For all other items, loan amount granted was only 50% of the forced sales value of the collateral items and the monthly interest rate was 10%. The Yangon City Development Committee (YCDC) had fixed the repayment period for all pawn shop loans at four months and ten days. 4.3.1 LOANS FROM INFORMAL SOURCES Borrowing money from informal channels such money lenders, friends or relatives was a common practice among most of the MEs across all locations. Most of the MEs interviewed as part of this study didn’t have assets (like land) needed to avail of formal lending instruments. As a result, many relied on informal institutions and borrowed against items such as gold. In some cases, MEs interviewed had only ever used informal methods that required some collateral. Pawnshops were a popular option. They loaned money to the MEs while holding gold, longyi Money Lender in Nay Pyi Taw