The central bank also signed partnership agreements worth $1 million with eight micro-financial institutions -- Chhimek Bikas Bank, Center for Self-help Development, Forum for Rural Women Ardency Development, Jeevan Bikas Samaj, Nerude Laghubitta Bikas Bank, National Educational and Social Development Organization, Nirdhan Utthan Bank and Swabalamban Laghubitta Bikas Bank. [break]
“These institutions will cover 25 out of 38 priority districts, reaching out to the unreached population and contributing in poverty reduction” said Jhanka Narayan Shrestha, deputy technical advisor of the project.
The project is supported by the United Nations Development Program (UNDP) and UN Capital Development Fund (UNCDF), contributing $1.5 million each. NRB, the implementing agency, plans to induct more donors in the project, raising the total budget size to $10 million. The bank has also set a target for the eight partner institutions to reach 250,000 people by this year end.
The project will provide technical assistants and credit for the financial institutions, and technical assistance to reform state-owned micro-financial institutions (MFIs), among others. It will also support establishment of linkages between saving and credit groups and MFIs.
Speaking on the occasion, UNDP Country Director Anne-Isabelle Degryse-Blateau said the project was designed to start making difference in the lives of the people in rural areas and create opportunities for them.
Referring to the poor coverage of MFIs in hills and mountain areas, where only 4 percent of the people are covered by them, she stated that the project aims to bring the financial services and credit closer to the people and make it accessible for them.
“In the absence of formal access to finances, poor in the rural parts are forced to take loans at interest rate as high as 60 percent. This is pushing the poor people into unending cycle of financial dependency and poverty. With the project, we expect them to come out of this cycle,” she said.
NRB Governor Dr Yuva Raj Khatiwoda, on the other hand, highlighted challenges of operating in rural hills, where the cost of operations is higher and people´s loan affordability is low. “But since the money is being provided to MFIs as grant, we expect them to offer services at low cost,” he said.
Related story
World Bank approves $80 million development policy credit for N...
