The Financial Inclusion component is one of three major components of the Sakchyam Access to Finance Programme. Under this component, the Programme works with Nepal’s Microfinance Institutions (MFIs) including Microfinance Development Banks (MFDBs), Financial Intermediary Non-Governmental Organizations (FINGOs), Cooperatives, and insurance and remittance companies.
Working together, our objective is to make financial products and services inclusive by enhanced access in the programme areas, particularly in rural and difficult-to-reach areas where a majority of the population including the extreme poor, women, and members of disadvantaged groups (DAGs) are un- or underserved. Due to remoteness and difficult topography, physical, communication and institutional infrastructure is limited or non-existent. This results in the exclusion of the majority of the region’s population, from formal financial services.
Our support is focused on the following areas:
- Branch expansion: Most financial institutions, including MFIs, are currently concentrating their services in district headquarters. Opening up branches in remote and less accessible areas is expensive for them. We help them expand their branches into remote and less accessible areas in order to improve their outreach while maintaining financial viability.
- Product and service development: Products and services offered by MFIs are largely uniform and do not meet clients’ needs. We help them design, price and launch new, innovative financial products and services oriented toward the poor, women, and DAGs as well as combating climate change. To name a few, we are working with our partners to develop alternative energy, migration, MSME loans along with remittance and micro insurance products, including for the first time in Nepal, weather-based index insurance (WII) to reduce farmers’ risk. We are also promoting alternative guarantee mechanisms, beyond traditional collateral which many poor and underserved groups do not have.
- Alternative delivery channels: Currently, MFIs and rural clients are limited by limited infrastructure, but mobile technology is changing that. We work with our partners to expand financial access by introducing appropriate technologies including mobile banking and branchless banking.
- Capacity building: In order to ensure the viability of our partners and our projects long after Sakchyam, we are committed to improving the institutional capacity of our partners and the industry as a whole. We work with our partners to conduct a capacity assessment and create a capacity strengthening plan that focuses on the following areas: 1) Improving MIS 2) Expanding the Outreach; 3) Enhancing Sustainability; 4) Improving Efficiency; 5) Incorporating Client Protection.
- In particular, we are committed to building our partners’ Management Information System (MIS) working with the NMBA to provide an industry-level software that provides quality accounting and reporting. Second, we are working to connect the industry to the national credit bureau to reduce financial risk and over indebtedness nationwide.
- Financial Capability: In close collaboration with Component 3, we are working to build our partners’ and their clients’ understanding and uptake of financial products and services through effective and innovative financial literacy. Learn more here.
- Legal & Regulatory Support: We work with stakeholders to identify and address key legal and regulatory barriers affecting the MFI industry in Nepal. Learn more here.
Interested in being a partner financial institution of Sakchyam? Learn more here.