This is presentation on microfinance

1. Understanding Microfinance in Nepalese context: Suppliers
of Financial Intermediation, Contextual factors and Clients:

2. “Group H” members
Bimala Kalathoki
Shreejana Dahal
Depa Sharma
Prabin Acharya
Shrishak Acharya

3. DEVELOPMENTS IN MICROFINANCE-NEPAL
It was started evolve in 1990s for providing credit only to the
agriculture sector, i.e micro finance sector in Nepal.
Co-operatives banks was established in 1963.
The milestone was Small Farmer Development Program (SFDP) in
1975 Within ADB , which covers the entire country to provide
credit without collateral to the farmers.
NRB introduce the Intensive Banking Program (IBP) in 1981.
Grameen Bikash Bank were initiated by the government sector,
crossing a milestone in rural micro financing in Nepal in 1992.

4. Understanding the country Context:
Suppliers of
financial
intermediation
* Formal sector
institutions
* Semi-formal sector
institutions
* Informal sector
institutions
Contextual factors
1. Financial sector policies and
legal environment
* Interest rate restrictions
* Government mandates
* Financial contract
enforcement
2. Financial sector regulation
and
supervision
3. Economic and social policy
* Economic stability
* Poverty levels
* Government policies
Clients
* Women
* Micro entrepreneurs
* Small farmers
* Landless and
smallholders
* Resettled persons
* Indigenous persons
* Low-income persons
in
remote or subsistence
areas

5. Formal Financial Sector:
• Formal financial institutions are Chartered by the government and are
subject to banking regulations and supervision.
• They Includes:
 Public and private Banks,
 insurance firms, & finance companies.
• Often ignores small farmers, lower income households, small scale
enterprise.
• Located in the cities and urban area.

6. Providers of Financial Intermediation
Services:
Formal Sectors
Central bank
Banks:
Commercial Banks
Merchant Banks
Saving Banks
Rural banks
Development Banks:
Other Non Bank Institution:
Finance Companies
Term lending institution.
Contractual Saving Institution:
Pension Funds
Insurance companies
Semi Formal Sector
Saving and credit
cooperatives
Multipurpose
cooperatives
Credit unions
Employees saving funds
Non Governments
Organization
Informal Sectors
Saving Associations
Informal financial Banks:
Indigenous Bankers
Investment Companies.
Non Registered self help
groups
Individual Money lenders
Traders and shopkeepers

7. SEMI-FORMAL SECTOR
• Usually licensed and supervised by other government
agencies
For examples: Credit unions
Cooperative banks.
Employees saving Funds.
• It provides product and services that fall somewhere
between those offered by formal sector & informal sector
institution.

8. INFORMAL SECTOR
• It operates outside the structure of government
regulation an supervision.
• They includes:
 Individual money lenders
 Self help group.
 Traders & shopkeeper
 Indigenous Bankers.

9. Contextual factors
Financial sector
policies and legal
environment
• Interest rate
restrictions
• Government mandates
• Financial contract
enforcement
Financial sector
regulation and
supervision
Economic and
social policy
• Economic
stability
• Poverty levels
• Government
policies

10. Financial sector policies and legal
environment
• Interest rate restrictions
• Government mandates
• Financial contract enforcement

11. Financial sector regulation and
supervision
• Helps to grow as a credible development tool
• Helps to remove market failures

12. Economic and Social Policy
Environment
• Economic and Political Stability
• Poverty Levels
• Government Policies

13. Economic and Political Stability
• Inflation

14. Cont.
• Growth Rate: Nepal economy expected to
recover and grow by 4.8% in FY2017.

15. Poverty Level
• Investment in Infrastructure and Human
Resource development
In Nepal, 25.2% of the population lives below
the national poverty line.

16. Government
• Government policies
Positive
• policies that minimize the costs of licensing
and registering

17. Government
Positive
• provide easy access to information about laws
and regulations

18. Cont.
Negative
-excessive regulation,
-prohibitive levels of taxation
-inadequate government protection
against cheap imported products, laxity
about black markets (which results in
unfair competition for the
microbusiness sector)

19. Cont.
Negative
-harassment by government officials for
operating businesses on the streets,
and inadequate services and high user
fees in public market structures.

20. Conclusions