Grameen Model: Problems and Prospects
This paper traces the evolution of the Grameen banking system in Nepal, and describes its importance in the Nepalese context. Exploring ways in which the model can be expanded to the hills and remote areas, it also makes recommendations to policymakers, donors and implementing agencies that can make the model more inclusive, user friendly and financially sustainable.
The Grameen bank system was introduced in Nepal in the 1990s by the central bank. Nepal’s five private sector microfinance development banks and five regional level rural development banks are Grameen replicates, and cover over 60 percent of the microfinance market. Reasons for Grameen’s popularity in Nepal include its following features:
- Focus on poor people and women;
- Doorstep service;
- Less collateral;
- Repeated and increased loan volume;
- Good repayment.
The Grameen banking model in Nepal faces challenges in the areas of policy, costs, governance, institutional capacity, resource management and political insurgency.
