Emergence of MFIs
In recent years, an increasing number of Nepalese
non-government organizations with considerable experience in the
field of microcredit, have transformed themselves into full-fledged
microfinance institutions (MFIs). With the advent of non-government
MFIs, wholesale fund providers have emerged, providing seed as
well as scaling-up funds to MFIs. Rural Microfinance Development
Centre Ltd. (RMDC) is one such organization that started its operations
in January 2000, to service retail MFIs such as rural development
banks, rural cooperatives, NGO-financial intermediaries providing
microfinance services to the poor, primarily the women living
below the poverty line. The organization attains its funding from
its promoters and shareholders, which consists of the Central
Bank of Nepal, 13 commercial banks, 5 regional Grameen Bikas Banks,
the Deposit Insurance and Credit Guarantee Corporation and Nirdhan.
RMDC has also accessed funding support from various international
organizations, such as Asian Development Bank (ADB) and Australian
Agency for International Development (AusAID) as well. As of 2003,
RMDC has provided wholesale loans to 25 MFIs, which in turn have
provided microcredit services to 170,000 poverty stricken families
in Nepal.
Diversified Portfolio of SBP
One of the larger MFIs supported by RMDC is CSD and its microfinance
initiative, SB Bank. In September 1993, CSD received an initial
seed capital of $50,000 from Grameen Trust, Bangladesh to implement
Self-Help Banking Program (SBP), a Grameen Bank replication in
Nepal. It received further scaling up funds from Grameen Trust
to expand its program to other districts. In 2002, CSD transferred
the assets and liabilities of eight districts – Siraha,
Saptari, Udaypur, Dhanusa, Mahottari, Bara, Parsa and Makwanpur,
belonging to SBP to form Swabalamban Bikas Bank Ltd. (SB Bank).
tant.
SB Bank, like other Grameen type microfinance
programs, provides microloans to poverty stricken women for undertaking
various income generating activities to promote self-employment.
SB Bank offers five types of loans to its clients –
General Loans, Seasonal Loans, Micro-Enterprise Loan and Housing
Loans. The Bank also has a provision for emergencies where members
can borrow upto Rs.2,000 for a maximum of one year from the Centre
Fund or Group Savings Fund to meet emergencies. This
provision has enabled many members when they had nowhere else
to turn, to tackle medical or other contingencies. The Bank offers
four types of savings – Group Savings, which involves a
deposit of RS.10 by group members fortnightly, Center Fund, where
borrowers have to save five percent of the first five consecutive
general loan, Voluntary Savings, where members can deposit and
withdraw any amount, anytime from their individual accounts and
lastly the Welfare Fund, which is created by the members by means
of donations, penalties etc.
SB Bank also offers insurance schemes for life,
housing and livestock protection, which are also very popular
with the clients as they compensate the poor members for their
loss. SB Bank conducts periodic socio-economic development workshops
for its members where various topics such as health, nutrition,
adult literacy, leadership and other awareness issues are covered.
As of April 2004, SB Bank has been able to reach
33,741 poor women in eight districts through its 27 branches.
It has provided its members with various economic and social services
for the betterment of their livelihood. During that period, SB
Bank disbursed $23.8 million in loans, of which $2.6 million remains
outstanding with a repayment rate of 98%. As of December 2003,
SB Bank has accumulated $1.13 million in members’ group
savings.
Community Development Initiatives
SB Bank’s community venture, Centre for Self-Help Development
or CSD is a not-for-profit and non-governmental organization.
CSD was established in August 1991, with a mission to work for
and with the rural poor to promote self-help groups. It provided
the poor people, especially women, with microcredit and other
business and social development services. CSD’s programs
included community development, self-help banking, human resource
development and training support program that involves publication
and communication.
One of the interesting projects undertaken by CSD is
the Community Health Initiative (CHI) Project in Jumla, Makawanpur
and Okhaldhunga, all of which are poverty-ridden areas of Nepal.
Part of the CHI Project is to promote and facilitate the installation
of Improved Cooking Stoves (ICS). These stoves help in the reduction
of respiratory diseases which is rampant in the villages due to
improper use of wood burning stoves, and aids in the efficient
use of fuel wood. Thus ICS helps reduce the women’s workload
and time spent for the collection of fuel from the forest. The
total number of ICS implemented in these regions is over 4,000
as of 2003.
The CHI Project also involved the construction of pit
latrines in Jumla. As the awareness level for proper hygiene was
extremely low amongst the community, open outdoor areas were the
usual places for defecation causing serious threat to health.
In order to tackle this issue, CHI constructed 4,385 pit latrines
in Jumla.
Nutrition, Education and Rehabilitation Program (NERP) is also
considered to be an integral part of the CHI Program as it organizes
awareness sessions on acute malnutrition suffered by children
in Jumla. As a result of the health and sanitation programs advocated
by CSD, people have established kitchen gardens where they grow
vegetables for better nutrition, keep their household and surroundings
neat and clean and practice proper hygiene.
The activities of the microfinance institutions in Nepal are
not only aiding in poverty alleviation, but they are also bringing
about vast social changes in the country. In a male-dominated
society, women are rarely expected to work for a living. But with
the opportunities provided by MFIs, more and more women are breaking
free from the shackles of male dominance and achieving financial
independence.
