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Population (millions) |
24.1 |
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Gross domestic savings (% of GDP), 2002 |
11.3% |
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% Population under $2/day (PPP) |
83% |
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Size of informal sector |
86% |
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Regulated microfinance institutions |
Commercial banks, Development banks, Finance companies, Rural Development Banks (RDBs), Micro-Finance Development Banks (MFDBs), NRB-licensed Financial Intermediary Cooperatives (FINCOOPs), Financial Intermediary Non-Governmental Organizations (FINGOs) |
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Non-regulated sources of microfinance |
Cooperatives [Savings and Credit Cooperative Societies (SCCS)] (unlicensed), Non-Governmental Organizations (NGOs) (unlicensed) |
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Predominant informal finance mechanisms (ROSCAs, tontines, etc.) |
Moneylenders, followed by self-help groups, informal savings and credit organizations, traders, friends and relatives, "dhikuti" (informal groups that pool funds to extend informal credit among members |
» More country data from the Microfinance Information Exchange Market
General Approach to Regulating
Based on the Comparative Database on Microfinance Regulation by the IRIS Center of the University of Maryland|
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Banks |
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NBFIs |
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Cooperatives/Credit Unions |
Non-profit Institutions |
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Commercial Banks |
Development Banks |
Financing Companies |
Licensed Non-Governmental Organizations (FINGOs) | Licensed Cooperatives (FINCOOPs) |
Unlicensed Microfinance Organizations |
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Definition or description of institution |
Private, public, or foreign (joint-venture) institutions that engage in all forms of financial transactions |
Public and private institutions that focus upon the development of the rural sector, agriculture, industry, and microfinance | Private institutions that offer installment credit for the purchase of assets, for leasing financing, or for enterprise finance | Non-profit organizations licensed as financial intermediaries that provide micro-credit to low-income persons for income-generating purposes | Cooperative societies and unions for the social and economic development of farmers, artisans, landless or unemployed or low-income individuals, workers, general consumers, or social workers |
Savings & Credit Societies: Cooperative societies and unions for the social and economic development of farmers, artisans, landless or unemployed or low-income individuals, workers, general consumers, or social workers |
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Guidelines and restrictions on financial services | Class A Institutions: Full banking operations, including electronic transactions | Class B Institutions (most Development Banks): Full banking operations, except for issuance of loans taking securities as collateral
Class D Institutions (most Micro-Finance Development Banks): A variety of microfinance-related activities, including micro-lending, borrowing, deposit-taking, and mobilization of member savings | Class C Institutions (most Finance Companies): Real-estate business, project financing, merchant banking, consortium financing, transactions in Indian currency.
Prohibited: Loans taking securities as collateral are prohibited | Permitted: Provision of micro-credit; obtaining loans or grants from local organizations, foreign organizations, or the Central Bank for micro-credit and operating expenses
Prohibited: Deposit-taking and savings mobilization | Permitted: Savings deposits and term deposits (up to 3 years)
Prohibited: Off-balance-sheet transactions (letters of credit, guarantees, etc.), overdrafts, commercial sale/purchase of goods, credit without sufficient collateral; agricultural products, gold, or silver as collateral, accepting current deposits, transactions in foreign currency | Savings and Credit Societies: Provision of micro-credit, deposit-taking and savings mobilization |
» Download Country Profile of Microfinance Regulation
PACT's Women's Empowerment Program in Nepal, A Savings and Literacy Led Alternative to Financial Institution Building, 2001,
By: Jeffrey Ashe and Lisa Parrot
Pact's Women's Empowerment Program (WEP) strengthened the capacity of 6,500 savings and credit groups comprising 130,000 women members in rural Nepal. All of these groups started their training within months of beginning field operations. The method in which WEP reached a large number of groups in a rapid pace, the quality of the groups it trained, and the impact WEP has had on the women who are members of these groups is the subject of this evaluation. USAID's Office of Microenterprise Development, Freedom from Hunger, the Overbrook Foundation, and the Small Enterprise and Education Promotion Network (SEEP) financed the study.
Microsavings, Microcredit and Microinsurance Financial Products of Small Farmer Co-operatives Ltd. in Nepal, 2001 (256 KB, PDF)
By: Stefan Staschen
Rural Finance Nepal (RUFIN) is a joint Nepali-German project, implemented by the Agricultural Development Bank of Nepal (ADBN), with technical assistance from the German Agency for Technical Co-operation (GTZ). RUFIN aims at bringing sustainable financial services to the rural poor.
The financial technology employed by any microfinance institution in order to deliver services to its clients is probably the most important factor influencing profitability. Without appropriate loan, savings and insurance products, and the capability to regularly produce innovations, outreach to the poor and ultimately sustainability of microfinance institutions cannot be achieved.
This paper addresses these issues by examining the financial technology employed by selected Small Farmer Co-operatives Ltd. (SFCLs). They are an outgrowth of the Samll Farmer Development Project of ADBN; IFAD was the first major donor of the SFDP. Special emphasis is placed upon the design of savings and loan products, and the savings mobilization and credit delivery processes of these member-based grassroots organizations.
VYCCU
Serving Small Rural Depositors: Proximity, Innovations and Trade-offs, 2003 (104 KB, PDF)
By Madeline Hirschland
This paper examines how four organizations deliver convenient, financially sustainable deposit services: the Bangladeshi NGO ASA that provides 360,000 depositors with a voluntary service, the Nepali cooperative VYCCU that provides two services specifically for members who live far from its office; the CVECAs, a network of over fifty village banks in the Malian Sahel; and over 2000 Kupfuma Inshungu groups in rural Zimbabwe that provide a contractual product to about two-thirds of the women in their villages. The paper culls from these cases a menu of delivery options and staffing strategies that make these systems sustainable. Finally, after assessing the strengths and challenges of these delivery options, the paper will highlight the trade-offs inherent in making deposit services convenient for small rural depositors.
VYCCU
VYCCU is a cooperative in the plains of
- look at the promotional techniques VYCCU initially used to develop a market where potential customers had not been saving in cash;
- describe the changes required and challenges posed by becoming a regulated institution that mobilized deposits from the public; and<
- describe how VYCCU went on to use a promotional message, personal sales, sales promotions, advertising, public relations and its distinctive services to compete against larger commercial institutions to attract deposits from the public.
- describe the changes required and challenges posed by becoming a regulated institution that mobilized deposits from the public; and<
This case study can be found in Savings Operations for the Poor: An Operational Guide, edited by Madeline Hirschland, forthcoming from Kumarian Press (
See also:
Research on risk and vulnerability of rural women in Nepal, 2001, Simkhada, N., Gautam, S., Mishra, M., Acharya, I. & Sharma, N
Voluntary Savings Services: A Closer Look, 2001, by Madeline Hirschland
Banking on the Poor: Saving and Lending Groups for the Poor, 2005, Jeffrey Ashe
Asia Resource Centre for Microfinance - Nepal Country Profile
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