Microfinance for woman empowerment (MWE)
Micro-finance programs in various forms were introduced in Nepal in the early 1970s. Small Farmer’s Development Program (SFDP) was the first of such programs implemented by Agricultural Development Bank in 1975. Nepal Rastra Bank (NRB), the central bank of Nepal, directed commercial banks to begin the intensive banking program which, involved commercial banks in micro credit in 1981. Then after Production Credit for Rural Women (PCRW) was introduced in 1992 under Ministry of Local Development focusing women as exclusive members. Since then number of other initiations has been done such include the Micro Credit Project for Women, Third Livestock Development Project, Poverty Alleviation Project in Western Terai, Participatory District Development Program, Local Governance Program etc. These programs, however, have been able to serve less than 10 percent of the targeted poor. The lessons of the past decades have shown that government owned and controlled institutions alone could not provide the desired level of micro-finance services to the poor. Therefore, various non-governmental organizations (NGOs) and financial institutions specialized in micro-finance have evolved in the past decade. Presently, institutions that are exclusively providing micro-credit to the poor are SFDP, Five Regional Rural Development Banks under the government umbrella and Nirdhan Utthan Bank Ltd., Swablamban Bikash Bank (SBB), DEPROSC Development Bank (DDB), Chhimek Bikash Bank (CBB) and some NGOs in the private sector. Five Regional Rural Development Banks, Nirdhan, SBB, DDB, CBB, CSD, DEPROSC and NRDCS are major organizations following the financial system of Grameen Bank of Bangladesh. In addition to that, several thousands indigenous savings and credit groups exist in Nepal, most of which have emerged over last ten years.
However, still a majority of the poor rural mass have no access to formal credit. Rural Credit Survey conducted by the Central Bank of Nepal (Nepal Rastra Bank) revealed (NRB/ADB, 1994) that, for 1991/92, of all borrowing rural households, about 20 percent were institutional borrowers and 86 percent were informal borrowers. This shows, the lack of financial services in rural areas of Nepal.
DEPROSC-Nepal initiated microfinance program since its inception. The program operates under the broad framework of the NGOs Financial Intermediary Act 1998 as per Nepal Rastra Bank’s (NRB) micro credit policy. It implements this program through two approaches
- Direct lending (group/center approach to women groups only) and
- Promotion of saving and credit organization (SCO approach).
DEPROSC Nepal implements direct lending model in 11 districts (3 Hill districts, 5 Terai districts and 3 districts of Kathmandu valley); Jhapa, Morang, Sunsari, Saptari, Bara, Lalitpur, Bhaktapur, Dhadhing, Makawanpur, Nuwakot, and Kathmandu. The center made of groups exclusively of women, is the financial service center under this program. The first loan was disbursed to Mrs. Tara Devi Dargi of Itahara ward No 5 of Morang district on 2054/04/07 (July 22, 1997).
DEPROSC-Nepal aims to build the saving credit to poorer sections of the society where the commercial and/or development banks don’t provide service. The deprived people don’t have collateral for getting loan from the commercial banks therefore; DEPROSC-Nepal has adopted strategy to disburse the loan with social capital as collateral. The program attempts to directly put the money in the hands to the women so that they can start some small scale business which ultimately helps to reduce their poverty. With their business, they start from a small credit capital provided by the program, they can earn their livelihood as well as pay the loan back in a short interval of time.