NMB Microfinance

ENHANCING FINANCIAL ACCESS ON RURAL TOURISM

Background

UKaid Sakchyam Access to Finance Programme (Sakchyam) is committed in connecting rural poor, disadvantaged groups (DAGs), and women to formal financial institutions in order to provide them with choices to save, borrow, invest, and earn. While enhancing access to finance for people living in remote and inaccessible regions is an urgent need, efficiency and sustainability of doing so are also critical. When it comes to informal entrepreneurs in Nepal’s remote Himalayan districts, unless a concerted effort is done to meet their financial service needs, their choice is limited to informal financial sources. Sakchyam believes a paradigm shift is needed in the microfinance sector to strengthen the capacity of microfinance institutions (MFIs) so that they are able to achieve organizational efficiency and expand their outreach in a sustainable manner.

Challenges

Given the diverse socio-economic and geographical context of Nepal, the need to adopt innovative solutions backed by technology is necessary to enable convenient and affordable access to financial products and services for rural poor communities. Currently, microfinance in Nepal is considered expensive due to the high start-up and monitoring costs. Moreover, Micro, Small and Medium Enterprises (MSMEs) which focus on rural tourism, agribusiness, livestock farming and other micro entrepreneurial activities, have additional challenges because of lack of appropriate products offered by formal financial service providers to meet their financial service needs.

Sakchyam’s Interventions

NMB Microfinance Bittiya Sanstha (NMB MF) is a ‘D’ class financial institution licensed by Nepal Rastra Bank in January 2012 under the Bank and Financial Institution Act 2006. NMB MF is a subsidiary of NMB Bank and was established with core mission of inclusive banking. With Sakchyam’s support, NMB MF launched “Enhancing Financial Access on Rural Tourism” project to provide access to financial services in five remote districts Manang, Mustang, Rukum, Myagdi and Illam. NMB MF proposes to establish two new branches and five sub branches through this project and introduce new financial product for the entrepreneurs.

Impact

Over a two-year period, NMB MF planned to increase its outreach to serve more than 7,000 individuals, all who will be women and 30% of whom will be from DAGs. It also aimed to create at least 3,500 sustainable MSMEs. To do this, NMB MF introduced Easy Loan, a new financial product for micro-entrepreneurs. In addition it has also introduced tablet banking after piloting in two branches.  NMB MF has also developed a comprehensive financial literacy programme paired with business skills development training including on tourism and hospitality.

As of September 2018 NMB Microfinance has,

  • Established 2 branches and 6 sub branches, reaching over 4,000 beneficiaries
  • Disbursed over GBP 21K  in loans and mobilized GBP 17K in deposits
  • Promoted easy loan for tourism enterprises (700 loans, GBP 423K with the loan size up-to GBP 3,546)
  • Deployed 53 tablets for financial service delivery