(A partnership between UKaid Sakchyam and Prabhu Bank Ltd)


Micro, Small and Medium Enterprises (MSMEs) often face financial constraints because they lack audited statements and other information about their operations, and as a result, financial institutions have difficulties assessing the risk of lending to them. Studies have shown that information sharing, credit bureaus and credit scoring can increasing credit to MSMEs, but not all countries have well-developed credit bureaus that gather the level of information needed to build a reliable credit-scoring model.


A large chunk of Nepali population including MSMEs and businesses operating in rural/semi-urban market clusters are still devoid of loan products and services offered from large formal Financial Service Providers (FSP) such as commercial banks. The situation exists for reasons engendering from both supply and demand sides. At supply side, prospective clients won’t have required knowledge, information, practices and history that are the basis for credit-worthiness assessment of the formal financial institutions. At supply side, most of the FSPs not only won’t have the experience of servicing such clients but also lack effective and efficient processing tools to ensure the exercise would eventually contribute to their bottom line i.e. profit.

Sakchyam’s Intervention

UKaid Sakchyam Access to Finance Programme (Sakchyam) has worked extensively to identify the appropriate tool i.e. a psychometric credit information tool developed by the Entrepreneurial Finance Lab (EFL), an offshoot of Harvard University. This test measures the credit worthiness of clients based on his/her ability and willingness to pay. Sakchyam is providing total project support of NPR 38.2 million to Prabhu Bank enabling it to implement psychometric credit scoring model developed by EFL to evaluate and make lending decisions targeting micro & small entrepreneurs, smallholder farmers and deprived sector in general (as per NRB’s requirement).

Likely Impact

The project is expected to help entrepreneurs with no past (formal) credit history to get on board into the formal banking system, establish a track record and be able to leverage on their account performance in the future to help their growth. More specifically, it will enable Prabhu Bank to on board more than 9,000 loan beneficiaries with loan disbursal totalling NPR 2.9 billion.

As of September 2018, the bank has finalized the products to be rolled out using the Psychometric tool, identified branches for the roll-out and also purchased the ‘tablets’ to be used as a medium to carry out the test. Bank, in coordination with EFL (now LenddoEFL after its merger with Lenddo) will plan for training and orientation to key branches and then roll-out the ‘Live Score’ module of the test.