Janata Bank

SAKCHYAM ACCESS TO RURAL BANKING

Background

Nepal’s mid- and far-western regions have thriving, busy towns with plenty of modern facilities. A few kilometres outside these towns however, the region’s villages have starkly different environments. Although these villages have immense potential in areas such as agriculture and tourism, access to basic services such as education, healthcare and finance have hindered their progress. Most financial institutions provide services in urban and semi-urban areas, catering to relatively affluent populations. Providing access to finance with Branchless Banking (BLB) touch points and financial products and services tailored to these remote communities help unlock opportunities.

Challenges Faced

During an interaction with locals in mid- and far-western Nepal, locals explained that lack of financial institutions with rural-based banking products and services resulted in dependency on informal borrowings for their financial needs. Although the presence of government-owned banks was observed in some areas; they were deemed inefficient and did not venture beyond loans against collateral within the comforts of their branches. This resulted in the population in the surrounding villages falling back on informal loans even when a bank branch was present in their region.

To cater to the gap illustrated by such a demography and as observed by Janata Bank’s team in  underserved districts, Sakchyam supported Janata Bank to set up 50 BLB touch points during the project period in Darchula, Achham, Kailali and Dhangadi districts of Nepal. The bank also plans to lend products like Women Entrepreneur Loan, Small and Medium Loan to businesses/enterprises, Agro-based Loan, Low-cost Housing Loan, Cattle and Livestock Farming Loan and Bee farming Loan, among others, to the local populace of the above mentioned districts.

Sakchyam’s Intervention

Janta Bank, with UKaid Sakchyam’s support, will establish 50 BLB touch point during the project period and altogether 70 BLB touch points in the period of 5 years. Their pricing structure for interest rates on deposits and lending is competitive and pursuant to market forces; fees and commissions shall be competitive and pursuant to regulatory norms; the use of technology will be customer-friendly.

Likely Impact

Janata bank will work at VDC level in 5 districts: Darchula, Achham, Kailali and Dang in the mid- and far-west. Their target groups are the financially underserved population in rural areas, and small and medium sized business firms. They aim is to provide 1,260 deprived sector and micro lending loans during the project period of 3 years, totalling NPR 292,397 in loans. The bank also aims to provide remittance services to the local people and aims to carry out 46,000+ transaction during the project period.

Latest Update

As of March 2018, Janata Bank has launched 33 BLB touchpoints and opened over 3,800 accounts with total deposits of over NRP 71 million. The bank has disbursed loans over NPR 65 million.