Institute of micro-finance and cooperative development.

Learning from the Grameen Financial System

On the morning of February 9, 2017 the Centre for Self-help Development (CSD) in joint collaboration with the Grameen Trust (GT), Bangladesh initiated a two-day program on the Grameen Financial System, in the capital city, Kathmandu. CSD’s objective in undertaking this joint program was to learn from the Grameen Bank, Bangladesh experience which is the pioneer microcredit organization in the world and to self-realize the areas for improvement in Nepali MFIs.

Managing Director, Mr. Abdul Hai Khan and Deputy General Manager, Mr. Mir Hossain Chowdhury of the Grameen Trust were the chief resource persons for the program.

Welcoming the distinguished gathering of 36 microfinance chiefs to the program, Mr. Shanker Nath Kapali, Executive Director of CSD highlighted that microfinance is an effective and proven tool to serve the under privileged and marginalized families living in the nooks and corners of the country and requires to be reviewed and upgraded to suit the changing situations.

The program was formally inaugurated by the Chief Guest of the ceremony Deputy Governor of the Nepal Rastra Bank Mr. Chinta Mani Siwakoti by lighting the traditional lamp, Panas.

Delivering his keynote speech, Mr. Chinta Mani Siwakoti highlighted the state of the Bank and Financial Institutions (BFIs) in Nepal. He mentioned that the Central Bank focused on expanding financial services to those who have been deprived of financial services for years. Chief Guest, Mr. Siwakoti said, “In Nepal, there are 178 BFIs and as of Poush 2073 there were 50 Microfinance Development Banks and 25 FINGOs.Yet, there are thousands of people who do not have access to the basic financial services and microfinance is the most effective instrument to provide financial services to those families.”

Currently, these MFDBs and FINGOs are serving 24,37,000 microfinance members and of them 15,30,000 are loanee members. Through their 1,541 branches they have outstanding loan of Nrs. 75 billion and provide employment to 8,400 staff.

He further said that microfinance helps in income generating, community development, empowerment of women, job creation and financial literacy among the grassroots. However, he added, there are many problems faced by the sector such as: issues of capacity building, how to develop and introduce new technology, unhealthy competition between MFIs, high tax issues/interest issues, shortage of funds etc.

According to Mr. Chinta Mani Siwakoti, “NRB’s new Monetary Policy that directs commercial banks to directly lend 2% of their portfolio to the deprived sector has posed a challenge to the MF sector in terms of availability of fund.”

MD of Grameen Trust, Mr. Abdul Hai Khan gave a brief introduction of Grameen Bank and Grameen Trust. He addressed, “Grameen Bank started as a brainchild of Nobel laureate Prof. Muhammad Yunusin Bangladesh in the year 1976. Micro Credit was conceptualized to enhance the empowerment of women, economic development of the poor people and to create income generating activities in the community. Till date, the Grameen model has been replicated in 52 countries and continues to create interest among many others.”

Speaking from the Chair, Mr. Shankar Man Shrestha, Chairman of Centre for Self-help Development gave a brief introduction about Nepal’s microfinance sector and said, “The basic objective of the two-day seminar is to learn from the Grameen Bank experience. The mission of microfinance is to solve the great problem of poverty. This is also a forum for us to learn from each other and through experience sharing. Our prime concern now should be how we can partner with our clients to improve their living standards. If we have any problems, they have been created by ourselves. Therefore, only we can solve them.” He cautioned, “If we are not careful and continue giving unscrupulous loans, we may land in disaster, where both the institutions and MF members will collapse. If we continue to practice unhealthy competition and over burden our members with excessive loans then disaster is sure to strike.”

The two-day program comprised of sessions on the Grameen Financial services, loan and savings products, dealing with delinquency and default management, staff recruitment process, star system of Grameen Bank, how to create zero unemployment and creating a second generation of members.

All the participants were fully satisfied, having met the objective of the seminar and unanimously agreed on the necessity of such programs to be held every second year. The attendants were impressed with the Grameen Star awarding system and the tips and techniques to reduce and avoid default and delinquency and have vowed to implement the best practices in their respective organizations.