Nepal: Improving Access to Finance Sector Development Program

Sovereign Project | 40558-012

Summary

The proposed improving access to finance sector development program is to develop a market oriented effective microfinance sector to improve access to finance for the poor and low income population with a special focus on enhanced outreach in hills and mountain areas.

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Project Name Improving Access to Finance Sector Development Program
Project Number 40558-012
Country Nepal
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7777-NEP: Improving Access to Finance Sector Development Program
Japan Fund for Poverty Reduction US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Finance - Inclusive finance

Gender Equity and Mainstreaming Gender equity
Description The proposed improving access to finance sector development program is to develop a market oriented effective microfinance sector to improve access to finance for the poor and low income population with a special focus on enhanced outreach in hills and mountain areas.
Project Rationale and Linkage to Country/Regional Strategy

Access to finance in Nepal is limited, just about 30% of the Nepalese households are served by formal or semi-formal financial institutions, and the remaining population have access to only informal sources of credit. Also, remittance in Nepal provides a significant potential for economic growth and poverty alleviation but the bulk of the remittance to the country is transmitted informally due to limited development of the financial system particularly in the rural areas.

Through the years, the Government took various measures to enhance access to finance from creating institutions to undeserved population such as cooperatives and regional development banks until the establishment of the Rural Microfiannce Development Centre (RMDC) in 1999 which provides onlending support to microfinance institutions as well as capacity development support to the partner. The RMDC also supports transformation of partner MFI nongovernment organizations into regulated financial isntitutions. However, with the significant potential demand, financial outreach in Nepal is hugely inadequate and needs to be expanded by mobilizing resources from commercial sources of funding and public deposits. To facilitate this, the development of various aspects of the sector including supervision and regulation, supporting infrastructure, and technology is necessary.

Impact TBD
Project Outcome
Description of Outcome TBD
Progress Toward Outcome
Implementation Progress
Description of Project Outputs TBD
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Key stakeholders of the Program will involve microfinance NGOs, community based groups, cooperatives, women organizations and other organizations which provide microfinance services in rural areas; the microfinance wholesale organization; commercial banks and other formal financial institutions; Nepal Rastra Bank (the central bank); Ministry of Finance.
During Project Implementation During the PPTA fact finding, an initial consultation workshop was held with more than 60 microfinance NGOs. During PPTA, consultation workshops, discussions, roundtable meetings will be held with MFIs/NGOs; commercial banks, the central bank; the Government agencies; and development partners.
Business Opportunities
Consulting Services The TA will finance 12 person-months of international consulting services and 54 person-months of national consulting services. The consulting services are recruited through a firm.
Responsible ADB Officer Khalilah Karim
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of FinanceThe Government of Nepal
Singha Durbar
Kathmandu, Nepal
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 27 Jan 2011
Last Review Mission -
Last PDS Update 13 Nov 2012

TA 7777-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Jan 2011 21 Mar 2011 21 Mar 2011 31 Oct 2011 31 Aug 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 600,000.00 100,000.00 0.00 0.00 0.00 700,000.00 27 Jan 2011 485,179.27

Safeguard Documents

See also: Safeguards

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Evaluation Documents

See also: Independent Evaluation

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