Collaborative finance is a category of financial transaction that occurs directly between individuals without the intermediation of a traditional financial institution. This new way to manage informal financial transactions has been enabled by advances in social media and peer-to-peer online platforms. The wide variety of collaborative finance resources may vary not only in their organizational and operational aspects, but also by geographical region, share of the financial market etc. It is precisely this heterogeneity that enables the informal savings and credit activity to profitably reach those income-groups not served by commercial banks and other financial institutions. It is their informality, adaptability and flexibility of operations – characteristics which reduce their transactions costs and confers upon them their comparative advantage and economic rationale. Collaborative Finance is characterized by highly personalized loan transactions entailing face-to-face dealings with borrowers and flexibility in respect of loan purpose, interest rates, collateral requirements, maturity periods and debt rescheduling. Following are the features of collaborative finance that make it attractive to low income households: It does not require a license – most informal suppliers work without an operating license to supply money. It is non-profit motivated – profit, if any, is ploughed back into the community and its members. It has multiple proprietorship – proprietorship lies not with one or two persons, but the group as a whole. It does not need collateral – collateral and guarantees of repayment is ensured by, for example, peer pressure. It has specific borrowers identified – most of whom are members of the community. It has close informational links – between members that ensure repayment. It facilitates reciprocation of credit disbursal – there is a give-and-take attitude, where borrowers and lenders interchange their roles. It is not regulated by the central bank – with respect to limits and restrictions, reporting requirements etc. It encourages community participation in other fields of development – the participatory approach of informal initiatives is easily replicable to a wide range of other community development issues. Origin The concept has been championed by Don Tapscott and Anthony D. Williams, co-authors of the book MacroWikinomics: rebooting business and the world. Development Rotating Saving Associations A Rotating Savings and Credit Association (ROSCA) is a group of individuals who agree to meet for a defined period of time in order to save and borrow together. "ROSCAs are the poor man's bank, where money is not idle for long but changes