Known for his revolutionary work in Bangladesh, Nobel laureate and chairman of Yunus Center of Bangladesh, Muhammad Yunus recently highlighted the importance of micro finance for the advancement of rural poor people in the convention of the Confederation of Nepalese Industries (CNI).
In Nepal, only 15 percent people have access to banking services within a distance of 30 minutes while another 17 percent have been getting financial services from cooperatives for that distance, according to Gokul Pyakural, an expert at Micro-Enterprise Development Program (MEDEP).
In a country like Nepal, where the people living in the rural areas don’t have access to technology and banking services, the role of micro finance is even more important for the development of the nation. But the government is not giving proper attention to many of the problems of micro finance companies. Although the government has repeatedly been supporting micro finance, the lack of proper rules and regulations has hindered the overall progress of micro finance in Nepal.
MFIs (Micro Finance Institutions) have been doing a lot of government work, from raising social awareness to alleviating poverty. MFIs have contributed a lot for the overall gain of the nation.
But, these companies in Nepal are facing hard times due to the lack of specific and favorable rules. DEPROSC-Nepal (Development Project Services Center), an NGO working for the rural people, having transformed many lives of rural people, is among the many facing difficulties due to lack of clear government regulations.
Taxation is hindering a lot of progress of these companies that are working for the benefit of the rural-poor.
It is reported that approximately 1.8 million people of the rural areas have got direct benefits due to the hard work of micro finance organizations of the nation.
DEPROSC-Nepal, however, is not alone in the midst of difficulties.
“There are many issues in the Micro Finance Institutions which are deterring the progress of work of Micro Finance companies,” said Shankar Man Shrestha, Chief Executive Officer of Rural Microfinance Development Centre.
Micro Finance started in the country in the 2030s decade. After 2046, this sector saw a rapid growth. “Although the MFIs are providing major services to the rural people, they are going through serious troubles like unionism among the employees of MFIs, political interference, loan investment amounts, among others. Although the role of Nepal Rastra Bank for the development of MFIs has been positive but it should reconsider the rule to give loan up to 60 thousands on guarantees and increase it to 4-5 lakhs,” said Dr. Harihar Dev Pant, coordinator, Micro Finance Summit, which was held recently in Kathmandu.
“Micro Finance Institutions should identify their concrete problems first and then only make efforts towards the solution of the problems. The problem might be inside, so first that should be solved before pointing fingers at others,” said Governor Yubaraj Khatiwada at the Micro Finance Summit.
"Despite the problems, the micro finance institutions should venture into the new communities and serve the masses of people there," he added. "If we are not certain about your problems, we cannot be able to recommend to the policy makers about what sort of policy frameworks should be introduced."
He also highlighted that there might be problems in micro finance institutions, regulators, government, clients and donor agencies, but none the less, the micro finance should keep on serving the general public instead of complaining about the problem. "There is problem everywhere," he said, "Despite the problem the micro finance institutions should venture into the new communities and serve the mass people there.
He also identified the need to incorporate micro finance development bank, nongovernmental organizations, cooperatives and other donor agencies under the same roof as they have been working separately under the name of micro finance institutions.
Despite all the issues, micro finance development in Nepal is faster than in other South Asian countries. The experts of micro finance said that the sector had done best in Nepal as compared to the development of micro finance in other South Asian countries.
Still, a lots of work remains when the number of people that are in need of financial support are analyzed. The government, MFIs and all the concerned authorities should go hand-in-hand to push the nation towards a better future.