Microfinance, effective tool for the poor

Kathmandu, Feb. 9: Deputy governor of Nepal Rastra Bank Chinta Mani Siwakoti Thursday said that the micro-finance was the most effective instrument in providing financial services to those who had been deprived of them for years.

 “The central bank is focused on expanding the financial services to those people, and microfinance institutions have a major role to play in this regard,” he said while addressing a two-day seminar on ‘Learning from the Grameen Financial System’, which was jointly organised by the Centre for Self-help Development (CSD) and Grameen Trust, Bangladesh.

 Although there are 178 banks and financial institutions (BFIs), 50 microfinance development banks and 25 financial intermediaries non-government organisations (FINGOs) in the country, there are thousands of people who do not have access to basic financial services.

In his keynote speech, Siwakoti said that the microfinance had helped in income generation, community development, women empowerment, job creation and financial literacy at the grassroots level.

However, he remarked that the sector was facing challenges in terms of capacity building, adapting to new technology, unhealthy competition and shortage of funds.

Executive director of the CSD, Shankar Nath Kapali, said that microfinance was an effective tool to serve the under-privileged and marginalised families living in the remote areas in the country.

Managing director and deputy general manager of Grameen Trust Abdul Hai Khan and Mir Hossain Chowdhury respectively have been facilitating seminars on topics like Grameen financial services, loan and savings product, dealing with delinquency and default management, staff recruitment process, star system of Grameen Bank, creating zero unemployment and creating a second generation of members.

Till date, the Grameen model has been replicated in 52 countries, Khan said.

It helps to provide access to financial services to the poor and women.

Chairman of the CSD, Shankar Man Shrestha said that the objective of the programme was to learn from the Grameen experience.

“If we are not careful and continue giving unscrupulous loans, we may land in disaster, where both the institutions and members will collapse. If we continue to practice unhealthy competition and overburden our members, then disaster is sure to strike us,” Shrestha warned the microfinance bankers.