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UNCDF launches partnership with 10 financial institutions

May 10, 2017

The Himalayan Times, 10th May 2017, Kathmandu

The United Nations Capital Development Fund has signed partnership agreements with 10 banks and financial institutions (BFIs) to launch innovative financial products and services selected through a competitive Challenge Fund to increase access to finance for more than 250,000 low-income potential clients.

“The products and services will especially cater to smallholders and agriculture-based Micro, Small and Medium Enterprises (MSMEs) of eastern development region in Nepal,” according to UNCDF.

Though half of the adult population in the country is ‘banked’, lack of access to and use of financial services limits the capacity of people to mitigate risks, smooth consumption, accumulate assets and invest in productive activities.

UNCDF’s initiative to expand the scope of banks to reach excluded groups is part of the government’s Financial Sector Development Strategy (2016-17 to 2020-21) approved in January. The strategy aims to contribute to broader economic growth and accords high priority to financial access and inclusion.

United Nations Resident Coordinator Valerie Julliand, in her opening remarks, said that while 61 per cent of the adult population have access to formal finance, around 18 per cent of the adult population is completely excluded from financial services (both formal and informal).

“Despite this relatively high level of financial inclusion, actual usage of some financial products is low or inappropriate, and certain segments of market are underserved, such as agriculture, smallholder farmers, MSMEs, women and marginalised groups,” she added.

Amidst an event announcing the launch of the partnership, Governor of Nepal Rastra Bank, Chiranjibi Nepal, emphasised that extending financial services to the rural people is especially meaningful for inclusive growth of Nepal and that the government and the central bank have taken policy measures to increase access of financial services to the rural areas through different modalities. One such modality is project financing such as UNNATI Access to Finance (A2F).

He further reiterated that the Challenge Fund is a competitive grant to be provided to BFIs to absorb some of their risks associated with innovative business ideas that better meet the financial needs of smallholder farmers and MSMEs and encourage partner BFIs to put their utmost efforts to meet their targets to contribute towards the well-being of the poor and needy people.

Source: https://thehimalayantimes.com/business/united-nations-capital-development-fund-launches-partnership-10-financial-institutions/