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Microfinance | Microcredit | - Everything you should know!!!!

Microfinance | Microcredit | - Everything you should know!!!! Nepal

Category of Banks in Nepal



Definitions: -
    • It is also know as Microcredit.
    • is a type of banking service provided to unemployed or low-income individuals or groups who have no other access to financial services.
    • is defined as a provision of financial services that's available to low-income people. This type of loan helps aspiring entrepreneurs generate income, build assets, manage risks and meet their household needs.
    • is an economic development tool whose objective is to assist the poor to work their way out of poverty. It covers range of services which include Credit, Saving, insurance, money transfer etc.
    • The World Bank estimates that more than 500 million people have benefited from microfinance-related operations. ( Source World Bank Article)
Principle of MFI’s according to G8 Summit CGPA:
    • The  poor  need  a  variety  of  financial  services,  not  just  loans.
    • Microfinance  is  a  powerful  instrument  against  poverty.
    • Microfinance means building financial systems that serve the poor.
    • Financial sustainability is necessary to reach significant numbers of poor people.
    • Microfinance  is  about  building  permanent  local  financial  institutions.
    • Microcredit  is  not  always  the  answer.
    • Interest rate ceilings can damage poor people’s access to financial services.
    • The  government’s  role  is  as  an  enabler,  not  as  a  direct  provider  of  financial  services.
    • Donor  subsidies  should  complement,  not  compete  with  private  sector  capital.
    • The  lack  of  institutional  and  human  capacity  is  the  key  constraint.
    • The  importance  of  financial  and  outreach  transparency.


Reasons/Scope of MFI in Nepal
  1. More than 30% of the total population of Nepal lives below the poverty line.
  2. Women are bound to spend most of their life maintaining the household activities.
  3. Currently Agriculture 27% , Industry 14% , services 59% where in GDP is heavily dependent on remittances 9.1% of foreign workers.
  4. Himalaya 15%, Pahad 68% and Terai 17% of total land area.
  5. Literacy 65%  where in Male 75% and Female 57% .
  6. There are an estimated 2.5 billion financially excluded adults today, with almost 80 percent of those living under $2 per day having no accounts at formal financial institutions – “World Bank "


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Location: Kathmandu 44600, Nepal

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