The Lottery Bank

Here’s an idea I was exploring sometime this week.

Martin Lottery lets the Dept of Small Savings use its counters to encourage small savings amongst the poor because of the popularity of the lottery, its reach and the high traffic at its counters.

How about using lottery as a means of saving itself? The basic idea is to align savings with lottery that they already indulge in, allow them to see the merits in savings and then to choose savings over lottery.

When a person buys a lottery the first time, the lottery gets his details and maintains an account of the amount he has purchased for till now. The prize for the lottery is determined by his cumulative purchase amount. For the Rs.0-100, it could be say Rs.5000, for 100-500, Rs.20,000 and so on. A large part of the money he spends on the lottery is saved in his name, the rest along with the interest on the savings is used for the prize money. He has the option to withdraw from his savings once his savings reach a substantial amount, say Rs.1000, thus making it a mini bank. This will encourage small savings amongst the poor and at the same time reduce the spending of their meager earnings in the lottery game.

With time, the lottery can be phased out, by making the draw cycle longer and longer. Eventually, when people start realizing the value of small savings, they can be given an option of getting interest on their savings if they opt out of the lottery. I am hoping a lot of people will opt out of the lottery in three years time.