This document discusses NUBL Nepal's experience providing microfinance services in remote hilly and mountainous areas of Nepal. [1] It outlines the challenges of serving populations in these difficult terrains with poor infrastructure. [2] NUBL found that branches in remote areas took longer to become financially viable compared to those in easier to access regions. [3] Key lessons included adopting a balanced branch opening strategy, developing alternative service models like self-help groups, keeping costs low, and ensuring strong monitoring and supervision for long-term sustainability.

1. Cutting Edge for Microfinance in
Remote Areas:
An Experience from NUBL Nepal
-Dr. Harihar Dev Pant
ED, NUBL Nepal

2. Nepal:
•A mountainous country with 3 geographical region:
Plain, Terai region (64-500 m), hills (500-2000 m) and
mountain (2000-8848m, the Mt. Everest)
• About half of population live in the hills and mountains
• Hills and Mountains – very difficult terrain, low motorable
roads
• Out of 75 Districts 22 in the Terai region and rest 53 in
hills and mountains

3. Microfinance in the Hills and Remote areas in Nepal
• Poverty 27.43 in rural area and 15.46% in urban areas
•Terai region- better infrastructure, high economic activities
•Nepalese MFI, including NUBL started their service from Terai
•Nirdhan Utthan Bank Ltd (NUBL) started to serve in hills from
2005 after 13 years of its service
• The financial viability is the major hurdle to serve in remote hills
thin and scattered population, low economic activities, poor
infrastructure and lack of appropriate methodology hindered at
the beginning.

4. NUBL in the Hills and Remote Areas
• Currently 92 BOs in 37 Districts (current outreach 155,516)
•23 BOs in the hills with outreach of 26,713 (17.2%)
• 3 BOs in the mountainous district with
outreach 1,570 (1%)
• The southern region bordering to India is
plain Terai region, the mid region is hills
and northern is the high Himalayan range
including Mt. Everest.
12/13/2011 4

5. Operational Cost and Productivity in Easily Accessible
Areas Vs Remote Areas
• BOs in easily accessible Terai region reached BEP in 15 months
whereas hill BOs took 30 months.
• The per client loss before BEP in Terai BOs is NRs 1,409, in hills
Rs. 3,087 and Rs 5,717 in mountainous region.
• The average client per loan officer in Terai region is 747 whereas
the same is 448 in the hills and mountains.
• The loan portfolio per loan officer in Terai is NRs 9,836 thousand
whereas Rs 6,940 in the hills and mountain region.

6. Ways to manage Sustainability and providing
Services in Remote Hills- Lessons learned
• NUBL achieved BEP after 6 years of operation and since then
maintaining its financial sustainability.
• Adopting strategy to open BOs in balanced manner- opening
BOs in profitable as well as loss making remote areas.
• Ensuring atleast 10 % and maximum of 30% return to shareholders
•If possible, collaboration with donor partner while working in
remote areas
• Well managed computerized MIS, we are moving towards having
real time integrated MIS.

7. Lessons Learned (contd.)........
•Developed alternative model to serve in remote hills-
SRG Methodology
Under SRG Methodology, the bank provides wholesale lending,
capacity building, monitoring and supervision services. The clients
themselves manage the monthly collection meeting, disburse
loan within themselves, collect installment, submit installment
to bank, keep record, distribute dividend from their profit margin.

8. Lessons Learned (contd.)........
• Keep operational cost minimum, keep simple office layout
•Strong monitoring and Supervision system
• Prudential supervision from Regulatory bodies like central bank
enhances good governance
• Additional service could add value to poor people.

9. At last, but not the least, the bottom line is Financial
Sustainability,
the branch office serving in such remote place should
be viable within 5 years
otherwise it will threat institutional viability.
Provided, such situation microfinance can reach
in most of the inaccessible areas and any left could be
served by other mechanism.