Rural Microfinance Development Centre (RMDC) is offering seed fund of Rs 1 million at the rate of two per cent to microfinance institutions that are willing to work in the remote hilly districts.
"Since microfinance institutions have not been interested to go to the remote hilly districts due to high cost of fund, we are providing them low-cost fund to go to the remote poors of Darchula, Jajarkot, Achham, Bhajang and Kalikot," said CEO of RMDC Shankar Man Shrestha, launching 'State of the Microcredit Summit Campaign Report 2011', in the valley today.
"The RMDC teams will go to the field and approve their loans -- without any charges -- so that they also donot need to bear the cost of coming to Kathmandu," he added.
The 1.65 million rural poor households in the country are getting the service of microfinance but in recent years, due to cut-throat competition, they are all overcrowded in accessible districts servicing the non-poor and deviating from the mission of the microfinance.
"RMDC is trying to help microfinance institutions also to make them responsible and not let them drift from the mission," he said, adding that overdebtness due to overlapping and lending concentration will create troubles in the whole sector, if unchecked on time.
"The microfinance institutions have to earn reasonable profit by charging the reasonable interest rates for its sustainable growth. Despite the growing interest rates due to liquidity crunch, the microfinance institutions have not raised their rates," Shrestha added.
Globally, more than 128 million of the world’s poorest families received microloan in 2009 — an all-time high, according to a report released today by the Microcredit Summit Campaign.
Assuming an average of five persons per family, the loans to 128 million poorest clients help some 641 million family members, which is greater than the combined population of the EU and Russia, the report said, adding that microloans are used to help people living in poverty start or expand a range of small businesses.
"Microcredit has very effectively lifted millions of poor women and their families out of poverty,” said US ambassador-at-Large for Global Women’s Issues Melanne Verveer."With the 100th anniversary of International Women’s Day being celebrated on March 8, it is gratifying to see that over 81 per cent of the very poor who received microloans were women – that is more than 100 million people.
However, Nepal has witnessed almost 100 per cent involvement of women in the sector, Shrestha said, adding that microfinance has also empowered the women.
According to the global report, overall more than 190 million people had a microloan in 2009, however, the Campaign focuses on the 128 million poorest. In the 12 years, since the Campaign’s founding, the number of very poor families with a microloan has grown more than 16-fold from 7.6 million in 1997 to 128 million in 2009, said the global report that included data from over 3,500 institutions with more than 93 per cent of the information collected last year and verified by a third party.
The report also announced the development of a Seal of Excellence for Poverty Outreach and Transformation in Microfinance which has been under discussion for 11 months and will continue to evolve throughout this year and beyond with input from a broad range of stakeholders.
"With such incredible growth in microfinance there is a need for some certification, some objective measurement that makes it clear to the outside world that these are the goals of those microfinance institutions that are committed to reducing poverty and these are the institutions reaching those goals,” said Chuck Waterfield, founder of MicroFinance Transparency.
Nobel laureate and Microcredit Summit Campaign co-founder Professor Muhammad Yunus hopes that microfinance institutions will remain committed to their mission of helping the poor by charging low interest rates and that appropriate laws will be adopted for MFIs to access local deposits and to be able to lend out those deposits rather than seeking loan funds from commercial investors.
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