Increase in financial access as banks go places
KATHMANDU:
The easier access to finance from formal financial intermediaries has reduced the dependency of Nepali households on money lenders for loans.
At present only 15.1 per cent of the total households borrowed from the local moneylenders, while fifteen years ago some 39.7 per cent of households were indebted to the moneylenders, according to the Nepal Living Standard Survey (NLSS)-III released by Central Bureau of Statistics (CBS).
The drastic drop in the householders’ borrowing from moneylenders can be attributed to easier access to finance in recent years due expansion of financial intermediaries.
The financial service providers lend money at sound interest rate with reasonable collateral unlike moneylenders that charge exorbitant interest rate, according to a banker.
The public are turning towards organised financial service providers such as commercial banks, development banks, finance companies, microfinance banks, credit and saving co-operatives and financial NGOs have reached to most of the rural areas.
The survey’s results indicated that the households are accessing more loans from co-operatives, micro-credit institutions and financial NGOs. In 1995-96, only 3.3 per cent households were borrowing from co-operatives and micro-credit organisations which has increased to 13.8 per cent in the 15 years.
The emergence of these micro-credit institutions has definitely helped the deprived people access the formal finance at reasonable interest rate.
“Though the growing number of financial intermediaries is not as successful as expected in increasing the financial accessibility, the expansion has definitely helped in general population’s access to finance,” said spokesperson for Nepal Rastra Bank (NRB) Bhaskar Mani Gyanwali.
Third NLSS report also revealed that 20 per cent of households have borrowed money from banks which was 16.2 per cent in the first survey conducted on 1995-96.
The households’ dependency on relatives as a source of finance has increased as borrowing from relatives has increased from 40.8 per cent to 51.1 per cent in last fifteen years.
Some 39.9 per cent households have access to commercial banks’ branch within 30 minutes walking distance at present against fifteen years ago’s only 20.7 per cent households had access to banks within the radius, according to the survey 2010-11.
The percentage has just doubled not only of the commercial bank branches but also of the co-operatives. The co-operatives within 30 minute walk radius has also increased from 25.9 per cent to 53.9 per cent in a decade-and-a-half.
But the householders’ indebtedness has not changed much in the last 15 years as in the first survey in 1995-96, some 61.3 per cent households had borrowed loans, which stands at 65 per cent at present,” the survey revealed.
“Increasing access to finance is one of the main roles of the central bank so that central bank is also encouraging the financial institutions to venture into unbanked areas through its policy measures,” GYanwali pointed out.
According to the Economic Survey 2010-11, the per capita loan of the commercial banks alone has reached Rs 18,000 by last fiscal year’s third quarter which was Rs 14,700 in mid-July 2009.
If all of the central bank licensed financial intermediaries are taken into consideration, the average number of people being served by a branch of financial institutions runs up to 11,000, according to central bank’s mid-April 2011 data.
Source: THT
The easier access to finance from formal financial intermediaries has reduced the dependency of Nepali households on money lenders for loans.
At present only 15.1 per cent of the total households borrowed from the local moneylenders, while fifteen years ago some 39.7 per cent of households were indebted to the moneylenders, according to the Nepal Living Standard Survey (NLSS)-III released by Central Bureau of Statistics (CBS).
The drastic drop in the householders’ borrowing from moneylenders can be attributed to easier access to finance in recent years due expansion of financial intermediaries.
The financial service providers lend money at sound interest rate with reasonable collateral unlike moneylenders that charge exorbitant interest rate, according to a banker.
The public are turning towards organised financial service providers such as commercial banks, development banks, finance companies, microfinance banks, credit and saving co-operatives and financial NGOs have reached to most of the rural areas.
The survey’s results indicated that the households are accessing more loans from co-operatives, micro-credit institutions and financial NGOs. In 1995-96, only 3.3 per cent households were borrowing from co-operatives and micro-credit organisations which has increased to 13.8 per cent in the 15 years.
The emergence of these micro-credit institutions has definitely helped the deprived people access the formal finance at reasonable interest rate.
“Though the growing number of financial intermediaries is not as successful as expected in increasing the financial accessibility, the expansion has definitely helped in general population’s access to finance,” said spokesperson for Nepal Rastra Bank (NRB) Bhaskar Mani Gyanwali.
Third NLSS report also revealed that 20 per cent of households have borrowed money from banks which was 16.2 per cent in the first survey conducted on 1995-96.
The households’ dependency on relatives as a source of finance has increased as borrowing from relatives has increased from 40.8 per cent to 51.1 per cent in last fifteen years.
Some 39.9 per cent households have access to commercial banks’ branch within 30 minutes walking distance at present against fifteen years ago’s only 20.7 per cent households had access to banks within the radius, according to the survey 2010-11.
The percentage has just doubled not only of the commercial bank branches but also of the co-operatives. The co-operatives within 30 minute walk radius has also increased from 25.9 per cent to 53.9 per cent in a decade-and-a-half.
But the householders’ indebtedness has not changed much in the last 15 years as in the first survey in 1995-96, some 61.3 per cent households had borrowed loans, which stands at 65 per cent at present,” the survey revealed.
“Increasing access to finance is one of the main roles of the central bank so that central bank is also encouraging the financial institutions to venture into unbanked areas through its policy measures,” GYanwali pointed out.
According to the Economic Survey 2010-11, the per capita loan of the commercial banks alone has reached Rs 18,000 by last fiscal year’s third quarter which was Rs 14,700 in mid-July 2009.
If all of the central bank licensed financial intermediaries are taken into consideration, the average number of people being served by a branch of financial institutions runs up to 11,000, according to central bank’s mid-April 2011 data.
Source: THT
