Most rural areas of Nepal have small population scattered over VDCs that are difficult to reach. The geographic landscape of these areas, most are accessible through foot trails only, poses another set of challenges to the local population of the area. The majority of the population are dependent on basic agriculture for their livelihoods. Most of the youth have very little options but to work abroad as migrant labourers due to the lack of employment opportunities. Also, in the absence of financial institutions in those areas, local people are deprived of formal access to finance.
Due to the absence of formal financial institutions in the remote rural areas, locals avail loans at extortionately high interest rates from the local money lenders who often exploit the inability of the borrowers to repay the loans. Also, the habit of saving and investing in productive activities is found to be severely lacking in such communities.
As for the financial institutions, although they are interested in serving these communities, the difficulties in establishing full-fledged branches in such remote areas makes the proposition less attractive from a business point of view. Therefore, they are always in the lookout for ways to cater to these markets. Use of alternate delivery channels such as Branchless Banking (BLB) is one of the ways to serve these scattered communities in a cost effective way.
To address the above mentioned issues, UKaid Sakchyam Access to Finance and Machhapuchchhre Bank Limited (MBL) have joined hands to launch a project titled ‘Simplified Microcredit Service”.
Under the project, MBL will establish 20 Branchless Banking (BLB) touchpoints across 7 different districts. These include Banke (3), Dang (3), Kailali (3), Kanchanpur (3), Rupandehi (3) and Surkhet (2) in the Mid and Far Western Development Regions (MFWDR) and Dhading (3) in the Central Development Region (CDR).
Also, MBL will deploy 14 Relationship Managers (RM) in 14 of their branches identified as having potential for microfinance, especially microcredit businesses. The RMs will be exclusively involved in microfinance activities in the areas covered by their respective branches and will also be responsible of achieving the loan-related targets set in the Sakchyam-related project.
Additionally, the bank will carry out various financial literacy initiatives in rural and suburban areas. These will include running financial literacy camps and using Interactive Voice Response (IVR) technology to reach more people in geographically challenging areas.
Over the project period of 3 years, MBL aims to serve over 3,000 beneficiaries through their BLB touchpoints and dedicated RMs. Besides this, the bank targets to reach 13,000 beneficiaries through their financial literacy initiatives. MBL aims to mobilize over NPR 80 million in deposits from its BLB touchpoints and disburse NPR 705 million in loans through their various loan products customized to the local requirements. Overall, the project will provide access to various financial products and services to some of the most unserved and underserved population in Nepal.
Latest Update on Sakchyam – MBL Partnership
As of September 2017, Machhapuchchhre Bank have,