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Set-up of a microfinance institution

Last update: Jul 16, 2015 Last update: Jul 16, 2015

Details

Locations:Bhutan
Start Date:Jan 1, 2011
End Date:Unknown
Sectors:Inst. Devt. & Cap. building, Micro-finance
Inst. Devt. & Cap. building, Micro-finance
Categories:Consulting services
Funding Agencies:
Date posted:Aug 20, 2013

Associated funding

Associated experts

Description

Bhutan – a kingdom situated between India and China with just over one million inhabitants. Money was not introduced here until the early 1960s and television arrived much later still in 1999. Seen from a purely statistical standpoint, the country is one of the poorest in the world. However, government policy does not aim to increase Gross National Product (GNP) but to achieve Gross National Happiness (GNH). Environmental protection and natural resource conservation play an important role.

As in many other countries, low-income households have particular difficulty in accessing financial services. The project therefore aims to strengthen the microfinance sector in Bhutan by setting up a microfinance forum and creating professional microfinance institutions. By establishing a target-group-oriented MFI that offers simple products in line with demand (savings and loans), the project hopes to reach wide sections of the population. People living in rural regions - who travel long distances to deposit their savings or to take out a loan to start up their business - stand to benefit most from this needs-oriented and sustainable service offer.

The project also teaches basic financial literacy to households and women entrepreneurs. This is certainly not an easy undertaking, as in rural regions especially the majority of customers can, at most, only write their name. At the same time, the more people know about basic financial processes, the better chance MFIs have of establishing a sufficiently wide customer base – something they have to have if they are to operate sustainably in rural regions, too.

Services provided

  • To strengthen the microfinance sector by professionalising operations at the partner institutions and ensuring their sustainability
  • To improve access to financial services for poor and disadvantaged members of society
  • To teach people the basics about (financial and) economic processes and their interrelations (financial literacy).
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