UNYC Nepal’s Increasing Access of Microfinance Services to Rural Areas of Nepal’s Mid and Far- Western Regions

Background Despite Government of Nepal’s strategic support to the microfinance sector and the successes it achieved in Nepal, millions of rural Nepalese still lack basic access to finance particularly in hilly and mountain districts of Mid and far west  of Nepal. In addition to this, for many centuries, Nepali society followed a now-out-dated traditional hierarchy system. This belief-based system placed certain people higher in the system than others, considering those placed low to be ‘untouchable’ and depriving them of basic necessities such as education. Such communities such as Dalits and Janajatis were reduced to performing pre-determined tasks in society.


Although such a belief system that was also biased toward women and racial minorities is non-existent now, in remote regions of the country such as villages in far-western region, the repercussions of such a system has left long-lasting problems. In this region, people from such social backgrounds are stuck in vicious cycles. Poverty is a crippling factor with ripple effects – the poor often do not get even primary level education and this leads them to having little to zero literacy in terms of financial behaviour. Poor decision making puts them back on the cycle, making lives harder and seemingly without a way out of such hardships.

Challenges Faced In the absence of formal financial institutions, people are dependent on local money lenders to fulfil their financial needs. The cost of borrowing from the local money lenders is very high, and often exploitive. Similarly, financial products and services are often designed to cater to urban and semi-urban populations only. Members or rural communities are either forced to make use of whatever options there are available or depend on informal sources to take care of their financial needs. Tailored financial products and services for rural poor are unheard of and the adoption of modern technology, rampant in urban areas, to benefit these rural poor communities, an excellent, cost-effective and practical way of providing guidance and training on financial behaviour, is an approach that is yet to see efficient implementation. Capacity enhancement for capable entrepreneurial minds, which could prove to be a sustainable investment toward promoting economic self-sufficiency is largely absent and financial institutions often do not keep in mind profiles of the customers when providing services to them.

Sakchyam’s Intervention UNYC Nepal with help from Sakchyam Access for Finance Programme will roll out various products through 9 new branches in Bardiya (2), Kalilali (7) and in Dadeldhura (1) with one branchless banking point. UNYC Nepal will develop a market place within the catchment area of each new branch and will offer entrepreneurship development training to their potential clients. The financial products being developed and offered include loans for productive use, seasonal loans, loans to encourage micro-entrepreneurship, as well as loans for housing, foreign employment and unexpected emergencies. They will also encourage savings on a group basis, individual saving plans, and for children. The skills development will include training in piggeries, pigeon, poultry and goat rearing, vegetable farming, bee keeping, as well as pickle-making.

Likely Impact The project aims to bring around 15,000 women into the financial system. All of the target groups are from disadvantaged women; especially from indigenous Tharu, Dalit, Muslim, Madhesi, and ethnic communities and women from freed Kamaiya, Kamlahri, Adherawa, and Haliya communities. Further, the eligibility criteria is women with less than 10 katthas of land, or who have no government jobs, or make less than NPR 50,000 as annual earning.