MFIs. What are they and why are they important?

Micro Finanance Institutes in Nepal come in different shapes and sizes. Categorically, we can divide them in to: 1) Developmental Cooperatives (likes of Small Farmers and Women Development Cooperatives); 2) SACCOs; 3) Grameen Model MFIs and FINGOs. With financial access to only 25% (ADB) of rural households, the MFIs have pivotal role in extending finance services to the underserved.

Apart from just financial services, changing their behaviour to bank their financial resources is equally oppertunity. At current, as banks have not reached rural setting, some of the MFIs provide savings services as well (16 cooperatives have limited banking license). Though limited to savings only, this is still better than nothing.

Other aspect of MFIs that their broader membership base. In Small Farmers' case, each coop has in average of 600 Household members. With 250 such coops in 42 districts, yes do the math, the membership base just stagering. This can be leveraged for any service delivery in rural areas.