Global IME Bank (Project 2)

BANKING MADE EASY

Background

Since its inception, UKaid Sakchyam – Access to Finance Programme (Sakchyam) has worked in partnership with financial institutions, including commercial banks, to facilitate easy access of innovative new financial products and services, to Small and Medium Enterprises (SMEs) and individuals, to unleash their potential in Nepal. So far the programme has provided technical support to more than 40 financial institutions in rolling out innovative financial products and services (savings, credit, payment and insurance), and in the use of alternative delivery channels to increase the outreach of the financial services provided in far-flung areas. The programme also provides technical assistance to partner financial institutions to help them better service the SME sector and financing gaps faced by individuals, in a more focused and structured way. These interventions work towards ensuring improved access to finance for SMEs and individuals as banks and other financial institutions provide tailored financial services.

The Problem

Lack of access to finance for the vast majority of the people of Karnali & Province 7, especially farmers, has far-reaching consequences. With high-interest loans taken from informal money lenders and little to zero financial literacy, people are unable to be financial secure. Due to this, the poverty cycle continues – affecting the region’s health and education levels. It has also driven hundreds of farmers to pursue migrant labour jobs.

The Solution

Sakchyam provided Technical Assistance (TA) to Global IME Bank Limited (GIBL) to launch “Sakchyam Banking Solution through Branchless Banking (BLB) and Extension Counters Facility” in 2015. The idea was to provide financial access to rural communities that are deprived of financial services by expanding the outreach of the bank through alternative delivery channels – BLB touch points and extension counter facilities. Such innovations aimed to include more people from Karnali & Province 7 and bring them into the larger financial system.

The Result

Due to Sakchyam’s intervention, locals of Dadeldhura, Baitadi, Kailali and Kalikot now have access to financial products and services. By the end of the project, GIBL has:

  • Established 3 extension counters and 10 BLB touchpoints
  • Opened more than 13,000 accounts with total deposits of over NPR 177 million and total loans of over NPR 28.6 million disbursed
  • Launched G2P Payments for the first time through Sakchyam-supported Global IME Extension Counter in Jogbuda, Dadheldura

Lessons Learnt & Sustainability

  • Extension counters/BLBs are the best delivery channels for the banks to first enter into any new market. They help the banks to familiarise themselves with the local market to enable them to rollout their future expansion strategy. BLBs can be upgraded to extension counters, and extension counters to fully-fledged bank branches once a critical mass of customers is achieved.
  • Entering unserved locations with an investment plan for financial literacy helps banks to quickly achieve the critical mass of clients required to achieve commercial sustainability.
  • Tapping G2P payments and channelling financial transactions of local entities enhances opportunities for banks to cross-sell other financial products.

The project has successfully concluded.