Nepalese bank bags a €0.1 million European Microfinance Award

By Laxman Datt Pant

Nepalese bank bags a €0.1 million European Microfinance Award

Muktinath Bikas Bank Ltd, a Nepal based bank, has bagged the 2020 European Microfinance Award (EMA) in recognition of its efforts to encourage savings and to serve low-income households and women in rural areas across the country. As the recipient of the EMA, the Bank will receive €100,000 from the Ministry of Foreign and European Affairs of the Grand Duchy of Luxembourg, Directorate for Development Cooperation and Humanitarian Affairs.

Tailoring a collective and shared savings model explicitly for low-income households and female customers and offering doorstep collection, the Bank has set up a special department dedicated entirely to that target population. Retirement savings plans, insurance plans, and savings schemes are some of the products it offers specifically for migrant workers and the families they have left behind in Nepal.

Realizing that for vulnerable, excluded, and low-income populations, savings help to secure a source of income and enable people to cope with setbacks and other unforeseen events, the bank has been facilitating savings accounts for these target populations. It also offers a safer way to manage their finances over the long term in order to empower them.

Stating that microfinance institutions do extraordinary work, Her Royal Highness the Grand Duchess of Luxembourg, President of the European Microfinance Award’s High Jury, remarked, “Microfinance institutions have designed amazing and vital savings solutions to avert the risk of millions of vulnerable people falling into extreme poverty, as they face the unprecedented upheaval we are currently seeing.” The savings theme is particularly pertinent this year as it promotes self-reliance, offers safe solutions, encourages development, and provides the means, particularly for women, to become the architects of change, she added.

Highlighting that in these challenging times, inclusive savings help mitigate the impact of the pandemic, Franz Fayot, Minister for Development Cooperation and Humanitarian Affairs of Luxembourg, said “Over the course of this year, savings have been key in creating resilience among millions of people. Families and businesses have come under financial strain due to the disruption of economic activities. I am confident that this year’s European Microfinance Award will draw attention to the value of savings as an essential financial service, and create a dynamic that will encourage its use, notably for the empowerment of women.”

The traditional activities of banks in Nepal include the collection of savings, the distribution of loans, and the provision of a means of payment. It is significant that micro-credit solutions were the first products to be developed in inclusive finance. Being more lucrative for the service provider, loans have long been the only type of product offered by banks.

One of the advantages that saving products carry is the minimal risk for the service provider, as savings offer a form of guarantee and this has led some financial and non-financial service providers to set up savings programmes alongside their traditional activities.

Launched and organized in Luxembourg since 2005, the EMA promotes innovative inclusive finance initiatives with the aim of rewarding excellence and to catalogue and disseminate the most suitable practices so that they can be replicated by others.