Reaching Groups of Remote Areas with Microfinance Services - A Case Study of the Self-Reliant Group (SRG) Model
This paper describes the self-reliant group (SRG) model that Nirdhan Utthan Bank Limited (NUBL) developed to improve microfinance outreach to remote and hilly areas of Nepal.Although microfinance has demonstrated its potential as a poverty reduction tool, lack of infrastructure and market access, sparse population, less arable land and low levels of economic activity have marginalized its scope in Nepal's remote and hilly regions. The SRG model emerged as a solution to this problem by:
- Mobilizing targeted households;
- Providing training to members on roles and responsibilities;
- Developing systems;
- Monitoring and supervising group activities;
- Providing necessary on-lending wholesale funds to groups.
The first bank branches that piloted the SRG model were successful in improving outreach, efficiency and productivity, but proved unsustainable. They faced challenges of low outreach, low loan sizes and volumes, low interest rates and an unsuitable bank policy.The model's outstanding features are capacity building, group and credit discipline, and ownership transformation. With suitable policy measures regarding lending restrictions, interest rates and multiple product offerings, the SRG model could prove its viability and sustainability in the years to come.
