NIC Asia Bank Limited

SATHI SANGAI SAKCHYAM BANDAI

Background

Most rural parts of Nepal have small population scattered over difficult to reach areas. The majority of the population are dependent on basic agriculture for their livelihoods. Limited or non-existent local employment opportunities compel youths to search beyond the comforts of their regions for opportunities, as migrant workers, in India and abroad. Also, in the absence of financial institutions in these areas, local people are deprived of formal access to finance.

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Challenges 

Due to the low footprints of formal financial institutions in the remote rural areas, locals avail loans at extortionately high interest rates from the 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. Scattered communities and lack of infrastructure, among other things, greatly increases the establishment and operation cost for financial institutions. Using a combination (Hub & Spoke Model) of physical branches and alternate delivery channels such as Branchless Banking (BLB) is one of the ways to serve these scattered communities in a cost effective way.

Bajura is one of the geographically (most) challenging districts, making it unattractive to financial institutions as a possible market for the expansion of banking activities. As such, the district is yet to see the establishment of a full-fledged physical branch by an A-class private Commercial Bank.

Sakchyam’s Intervention

To address the above-mentioned issues, UKaid Sakchyam Access to Finance Programme (Sakchyam) and NIC ASIA Bank Limited have partnered to launch a project titled ‘Sathi Sangai Sakchyam Bandai”.

Under the project, NIC ASIA Bank has established a physical branch in Martadi of Bajura, making it the first A-class private Commercial Bank to have launched a full-fledged physical branch in the district. Besides this, the bank also plans to establish 3 Branchless Banking (BLB) touchpoints in Bajura and the adjacent districts.

Through the branch and the BLB touchpoints, NIC ASIA Bank will introduce modern banking products including credit products such as Commercial Agriculture Loan, Laghu Udhyam Karja, Agriculture Equipment Loan, Cooperative Financing under Deprived Sector Lending and Small Business Loan.

Additionally, the bank will carry out various financial literacy initiatives in Bajura and adjacent districts. These will include Mass Meetings, Radio Jingles, Interactive Voice Response (IVR) messages, Tablet-based literacy initiatives, Leaflets & Flyers, and Street Dramas.

Likely Impact

Over the project period of around 3 years, NIC ASIA aims to serve over 4,000 beneficiaries through their Bajura branch and BLB touchpoints. The bank aims to mobilize over NPR 100 million in deposits and disburse around NPR 184 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.

As of June 2018, NIC ASIA has launched one physical branch in Martadi of Bajura, which is the first commercial bank branch of the district. The branch has opened more than 2,700 accounts, collecting NPR 82.08 million in deposits while disbursing NPR 54.3 million worth of loans. The bank has also launched one BLB touchpoint in Bajura.