Annual Report 2012/13

Transcription

1 Annual Report RMDC for Safe, Sensible & Sustainable Microfinance

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3 The Partner for Safe, Sensible & Sustainable Microfinance

4 Microfinance Development Banks Fingos Cooperative Societies Vision Emerge as a financially viable, operationally sustainable and professionally efficient institute for wholesale lending to microfinance institutions in Nepal.

5 Mission Reaching out to the largest number of the poor and disadvantaged households with appropriate microfinance services to enable them to realize their untapped potentials of development through the partner MFIs.

6 Goal Serving over 1.5 million poor families across the country with quality microfinance services through 150 partner organizations by the end of 2015.

7 Promoter Shareholders and Shareholding Pattern As of y 15, 2013 S.N. Name of Shareholders Amount (Rs.) % of Total Share Capital 1 Nepal Rastra Bank 21,045, % 2 Nepal Investment Bank Ltd. 33,810, % 3 Nabil Bank Ltd. 50,720, % 4 Nepal Bank Ltd. 29,355, % 5 Standard Chartered Bank Nepal Ltd. 52,190, % 6 Nepal SBI Bank Ltd. 18,895, % 7 Himalayan Bank Ltd. 48,000, % 8 Nepal Credit & Commerce Bank Ltd. 7,075, % 9 Rastriya Banijya Bank Ltd. 8,295, % 10 Bank of Kathmandu Ltd. 7,075, % 11 Nepal Bangladesh Bank Ltd. 4,531, % 12 Everest Bank Ltd. 3,120, % 13 Nepal Industrial & Commercial Bank Ltd. 25,231, % 14 Lumbini Bank Ltd. 1,534, % 15 Purbanchal Grameen Bikas Bank Ltd. 800, % 16 Madhyamanchal Grameen Bikas Bank Ltd. 1,000, % 17 Paschimanchal Grameen Bikas Bank Ltd. 2,900, % 18 Madhyapaschimanchal Grameen Bikas Bank Ltd. 1,154, % 19 Sudurpaschimanchal Grameen Bikas Bank Ltd. 800, % 20 Deposit Insurance & Credit Guarantee Corp. 1,370, % 21 Nirdhan Utthan Bank Ltd. 1,100, % 22 Siddhartha Bank Ltd 14,000, % 23 International Finance Corporation 30,000, % Total 364,000, %

8 Contents A. Message from the Chairperson i B. CEO s Reflections iii 1. Introduction Corporate Governance 03 General Body 03 Board of Directors 03 Board Members Profile 05 Audit Committee 07 Risk Management Committee 07 Management 07 Organization Structure Report of the Board of Directors Auditor s Report and Financial Statements 15 Auditor s Report 16 Balance Sheet 17 Profit & Loss Account 18 Profit & Loss Appropriation Account 19 Cash Flow Statement Wholesale Lending to Microfinance Institutions 21 Progress of Lending Program 21 Loan Products 22 Process of Lending to MFIs 25 Salient Features of Partner Organizations Credit Program Promotion and Capacity Building of Microfinance Institutions 31 Promotion of New MFIs 31 Capacity Building of MFI Officials and Staff 32 Onsite Technical Assistances to MFIs 41 Capacity Building of MFI Clients Growth and Performance of Partner Organizations 43 Outreach 44 Loan Portfolio 45 Members Savings 46 Operational Self Sufficiency 48 Staff Productivity Monitoring and Follow-up of Partner MFIs 51 Importance of monitoring 51 Monitoring Approach of RMDC 51 Risk based monitoring and supervision framework 52 Impact of RMDC s Monitoring, Supervision and Follow-up system Projects under Implementation 53 Community Irrigation Project (CIP) 53 YUWAccess Project International Cooperation and Exchange Program Challenges of Microfinance Sector in Nepal 61

9 Annexes Annex I Institutions which Received Training Supports from RMDC 65 Annex II Annual Training Progress of RMDC 73 Annex III RMDC Loan Portfolio with POs 75 Annex IV Year-wise Loan Portfolio of RMDC 80 Annex V Status of Partner Organizations 81 Annex VI Staff Biographies 85 Boxes Box 1 RMDC s Progress at a Glance 02 Box 2 RMDC s Eligibility Criteria for Lending 25 Box 3 RMDC s Parameters of MFI Appraisal for Lending 26 Box 4 Development Impacts of Microfinance at Client Level 27 Box 5 RMDC s Sequential Steps for Promotion of MFIs 31 Box 6 Resolution of Revisiting Nepal Microfinance Vision Box 7 Way Forward of Annual Review Workshops 38 Box 8 Performance of RMDC s Partner Organizations at a Glance 49 Figures Figure 1 Growth of Annual Loan Portfolio of RMDC 22 Figure 2 Annual Progress of MFI Staff Training 32 Figure 3 Annual Progress of MFI Client Training 41 Figure 4 Composition of RMDC s Partner Organizations 43 Figure 5 Growth in Number of RMDC s POs 44 Figure 6 Growth of Members & Borrowers POs 44 Figure 7 Growth of Outstanding Loan of the POs 45 Figure 8 Trend of Outstanding Loan per Borrower 46 Figure 9 Trend of Clients Savings of RMDC s POs 46 Figure 10 Trend of Savings Balance per Member 47 Figure 11 Trend of Savings-to-Loan Outstanding Ratio in POs 47 Figure 12 Trend of Operational Self Sufficiency (OSS) of POs 48 Figure 13 Trend of Staff Productivity of POs 48 Figure 14 Trend of Field Staff Productivity of POs 48 Tables Table 1 Number of Staffs in Different Fiscal Years 07

10 Abbreviations ADB Asian Development Bank ADBN Agricultural Development Bank of Nepal BoD Board of Directors CB Commercial Bank CIP Community Irrigation Project CLDP Community Livestock Development Project CSD Centre for Self-help Development DB Development Bank FIA The Financial Intermediary Act, 1998 FINGO Financial Intermediary NGOs FNCSI Federation of Nepal Cottage & Small Industries FY Fiscal Year GBB Grameen Bikas Bank GBR Grameen Bank Replicator GoN Government of Nepal IBP Intensive Banking Program JFPR Japanese Fund for Poverty Reduction MCPW Micro Credit Project for Women MFB Microfinance Bank MFDB Microfinance Development Bank MF Microfinance MFI Microfinance Institution MoF Ministry of Finance NBL Nepal Bank Ltd. NGO Non-Government Organization NPC National Planning Commission NRB Nepal Rastra Bank NUBL Nirdhan Utthan Bank Ltd. PCRW Production Credit for Rural Women PGT Pre-Group Training POs Partner Organizations PRA Participatory Rural Appraisal PWR Participatory Wealth Ranking RBB Rastriya Banijya Bank Ltd. RGBB Regional Grameen Bikas Bank RMDC Rural Microfinance Development Centre Ltd. RMP Rural Microfinance Project SBB Swabalamban Bikas Bank SCC Savings and Credit Cooperative SFCL Small Farmer Cooperative Limited SFDP Small Farmers Development Program SKBBL Sana Kisan Bikas Bank Limited TVETPs Technical and Vocational Education Training Providers VDC Village Development Committee WDD Women Development Department

11 Message from the Chairperson Microfinance sector has grown as an industry in the country with a significant increase in number of microfinance institutions serving the poor and deprived families since The power of microfinance is now well recognized as an instrument of the socio-economic enhancement of the poor and deprived specially the women. It has been contributing to the poor family in generation of income, raising of living conditions, impartation of education to their children, improving housing condition, supply of nutritious food and better clothing for their families. Microfinance institutions are becoming more professional and equipped with trained human resources required to implement their programs successfully. MFIs are developing various products for the social well being and sustainable development of the poor. Microfinance is a socio-economic endeavor for uplifting the living standard of the poor and enabling them gradually to get out of poverty. Rate of poverty and depth of the poverty along with the density of population structure varied in different parts of the country according to the NLSSIII report. However due to the absence of capable institutions to provide required financial services to the poor people living in remote and difficult areas, hills and mountains are still deprived of or having less access to microfinance services. Although Institutional micro credit started in the early 1970s, rapid growth of institutions and expansions of outreach took place in the decade of 2000s. However with the increased number of institutions, distortions also are surfaced in microfinance practices. Mission drift has been observed as a common phenomenon in last few years due to unhealthy competition among MFIs. It is now a high time for MFIs to self evaluate their performance rationally and check whether they are geared towards achieving their vision and mission. They should streamline their efforts to give right shape to their microfinance programs and direct them towards achieving social goals as well. Microfinance institutions need to focus on responsible microfinance and create visible impact in the lives of the poor and deprived. High profit in their financial statements alone will not be enough for the sustainability of their microfinance business. They should make sure that clients also attain sustainability and see that each one of them are moving upwards both economically and socially. I extend sincere thanks to all the concerned for their efforts and contribution to the growth of the microfinance industry in the country. Ashoke SJB Rana Chairperson i

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13 CEO s Reflections In the last one and a half decades, RMDC has successfully laid the foundations of a sustainable microfinance sector in Nepal by promoting and developing a significant number of financially sound institutional micro-lenders across the country. When RMDC began its journey in 1999, there were very few microfinance institutions (MFIs) in the country through which it could reach out to the poor with quality microfinance service. Most of the current large MFIs were in the form of small social organizations and microfinance was a completely new domain for them. Recognizing this gap, RMDC had to give its utmost focus on promotion and development of quality MFIs in its beginning years. And RMDC still continues this activity to improve capacities of the existing MFIs and to promote institutions in virgin areas. During the period, RMDC consistently worked on developing human and institutional capacities of its partner organizations, thereby enabling them to transform into financially viable microfinance organizations. Nepal, as in most other low income countries, has made a considerable success in expanding scale of microfinance outreach. Most of the MFIs seem to have been doing financially well at least for short-term. As they focus on enlarging their own market shares and volume of their businesses, unhealthy competition among the MFIs has been widespread especially in the easy-to-access areas; as a consequence multiplelending to clients has been prevalent in those areas which might lead to over-indebtedness among the clients over a period of time. MFIs still seem to be quite serious about the issue and show their concern in the growth of their clients, the poor households for whom they have actually been established. Hence, it is high time for MFIs and the stakeholders to give more attention towards the social performance as well in order to create a desirable impact on the clients, the poor households. RMDC, in its capacity, has been trying to sensitize its partner MFIs and their clients on the consequences of these issues so that the sector could move ahead on a right track. As a wholesale lender, RMDC makes sure that its partner organizations deliver the funds to the clients properly and the clients have utilized the loans in productive activities. Till the end of FY, RMDC has cumulatively disbursed loans amounting to Rs. 8.85bn to 136 MFIs which altogether now serve around 1.5 million families living in 67 districts in the country. And RMDC has been able to maintain its loan quality excellent with a hundred percent loan recovery from the very beginning. About 18,847 staff & officials and 6,47,177 clients of MFIs have also been trained with financial and technical supports of RMDC. I am grateful to the Government of Nepal, the Nepal Rastra Bank, the Board of Directors of RMDC, the Asian Development Bank and other agencies for their generous cooperation and supports. I am also thankful to our partner organizations for their hard work and dedicated effort in delivering quality microfinance services to the poor. Finally, I thank all staff for their tireless efforts to achieve the goals and objectives of the organization. Shankar Man Shrestha Chief Executive Officer iii

14 Introduction The Rural Microfinance Development Centre Ltd. (RMDC) is a wholesale lending organization in Nepal. It was registered on 30 October 1998 under the then Company Act, 1996 as a public limited company with the mandate to operate as a wholesale lending organization within the framework of the then Development Bank Act, RMDC was reregistered under the current unified banking law, the Bank and Financial Institution Act (BAFIA), 2006 as a class D financial institution. RMDC commenced its lending operation from January The main function of RMDC is wholesale lending to MFIs. Besides, it has been extending institutional capacity building supports to MFIs. Currently, RMDC is one of the prominent wholesale lending organizations for MFIs in the country. Its partners outreach shares nearly 70% of the entire microfinance industry s business in the country. The main objective of RMDC is to improve the socio-economic conditions of the poor, the landless and the assetless through increasing their access to institutional microfinance services for productive undertakings and self-employments. The specific objectives of RMDC are: to provide wholesale funds to microfinance institutions (MFIs) for on-lending to the poor, particularly the women of those families, for undertaking productive activities; to build and strengthen institutional capacities of its partner MFIs as well as potential institutions willing to implement microfinance program; to promote financially viable and sustainable MFIs by providing adequate wholesale funds and necessary technical supports to the existing as well as potential microfinance institutions including NGOs and cooperatives; 01

15 to support or undertake studies and research works in products and services, impact, delivery and recovery system, innovation etc; to assist POs and potential POs in improving organizational capacities and occupational skills of their clients; and to play the role of a financial intermediary to channelize international and national resources to the poor (the ultimate beneficiaries). RMDC has completed fifteen years of its operation and has been providing microfinance services to around 1.5 million poor families through its 136 partner organizations (POs). RMDC has been continuously exploring prospective institutions and identified over 300 institutions (NGOs and Cooperatives) having potentials of implementing microfinance program. RMDC made all out efforts to build and strengthen institutional capacities. It is also training human resources of the institutions willing to commence microfinance operation. It organized various needbased capacity building programs, such as onthe-job training, on-site technical assistance, classroom training on different subjects, study visits and interactive workshops. RMDC had already provided training to 18,847 staffs and officials, and 647,177 clients of MFIs, by the end of fiscal year. In a decade or more, over hundred MFIs have developed their capacities required to operate their microfinance Box 1: RMDC s Progress at a Glance As of y 15, 2013 Districts Covered 67 Partner Organizations 136 Loan Approved (NRs.) billion Loan Disbursed (NRs.) 8.85 billion Loan Recovered (NRs.) 6.52 billion Outstanding Loan (NRs.) 2.33 billion Non Performing Assets (NRs.) Nil Repayment Rate 100% Loan Loss Reserve Ratio 4.0% Operational Self Sufficiency 277.8% Yield on Loan Portfolio 8.2% Return on Equity 12.9% Return on Assets 3.5% Capital Adequacy 33.1% No. of MFI's staffs trained 18,847 No. of MFI's clients trained 647,177 No. of Institutions receiving training 319 programs in a sustainable manner. As a natural process microfinance program is moving towards maturity. People are now aware of the importance of microfinance programs and as a viable financial program in the country capable of serving the needs of the large masses of the poor and deprived. 02

16 Corporate Governance General Body In the Corporate structure of RMDC, General Body is the supreme authority. It comprises all the promoter banks and financial institutions and public shareholders. Through Annual General Meeting, the General Body gives overall policy guidelines and directions to the Board of Directors and the management for smooth functioning of the Centre. The General Meeting approves audited financial statements, appoints an auditor and fix audit fee, elect the Board of Directors, makes required amendment in the Memorandum of Association and the Article of Association and takes other key policy decisions of the organization. Board of Directors The Board of Directors of RMDC is comprised of nine directors. Among the nine directors - one represents the Nepal Rastra Bank (NRB), five represent the shareholder commercial banks, two represents the public shareholders (elected by AGM) and one independent professional. The Chairperson of the Board is elected from among the directors of the Board. All the directors including chairperson has a four year tenure. The Board formulates necessary policies and procedures and issue directives to the management to pursue effective implementation of plans and programs, and achieve organizational goals and objectives. It is basically involved in making decisions with regard to business plan, annual program and budget, financial and operational plan, approval of larger amount of loan to MFIs. It also reviews the organization s performance, and statutory and regulatory compliance and the matters related to capital structure of the organization. 03

17 Board of Directors with CEO

18 Board Members Profile Mr. Ashoke SJB Rana Chairperson Mr. Rana represents the Himalayan Bank Limited. He is the Chief Executive Officer of the Bank. He holds a bachelor s degree in Economics from the George Mason University, Fairfax V. A., USA. He has over 21 years of work experience in commercial banking. Mr. Ramjee Regmi Director Mr. Regmi represents the Nepal Rastra Bank (the central bank of Nepal). He is the Executive Director of the Financial Management Department of NRB. He possesses the degree of M.A. Economics and MPA from Tribhuvan University of Nepal. He has already completed 28 years of service in the Bank. Mr. Anil Kumar Shrestha Director Mr. Shrestha represents the Standard Chartered Bank Nepal Ltd. He is the head of Financial Institutions Origination & Client Coverage in the bank. He holds a Master degree in Business Administration (MBA). He has worked for 16 years in banking sector.

19 Mr. Rajan Kumar Amatya Director Mr. Amatya represents the Nepal Investment Bank Ltd. He is the Deputy General Manager in the bank. He holds a master s degree in Commerce from Tribhuvan University of Nepal and worked for over 36 years in banking sector. Mr. Kiran Kumar Shrestha Director Mr. Shrestha represents Nepal Bank Ltd. He is the General Manager in the bank. He has an MPA degree from Tribhuvan University, Nepal. He has over 26 years of working experience in the bank. Mr. Anil Kumar Khanal Director Mr. Khanal represents Nabil Bank Ltd., He is the Chief Risk Officer in the bank. He has an MBA degree from Tribhuvan University, Nepal. He has over 25 years experience in the banking sector. Ms. Sadhana Upadhyay Director Ms. Upadhyay is an independent professional Director. She has an MBA degree from University of the East, Manila and 30 years of work experience with the Nepal Rastra Bank.

20 Audit Committee The Audit Committee is formed with of three directors of the Board. The Committee reviews internal audit reports, external audit report, NRB Inspection report, financial performance reports of RMDC. Based on the reviews and findings, the Committee, provides necessary recommendations and guidance to the management for necessary improvements in operation and makes suggestions to the Board for policy changes or improvements. The internal auditor of RMDC submits its internal audit reports directly to the Audit Committee. Risk Management Committee The Risk Management Committee is also formed with three directors of the Board. This committee holds quarterly meetings to update and discuss on current issues related with microfinance sector. It reviews the reports on the risk management, related with regard to the operation of the Centre and its activities. It is concerned with the identification of the risk, appropriateness of the management system, evaluation of risk, internal control and monitoring, risk bearing capacity, policy and guideline related and it also give suggestions to the board on the problems related to the microfinance that can affect the activities of the Centre keeping in view of the economy of the country. Management RMDC is led by the Chief Executive Officer (CEO) with different department heads responsible for carrying out day-to-day activities as directed by CEO. The CEO is assisted by a number of experienced and professional staff to carry out departmental functions. Including the CEO, RMDC has a total of 22 staff; 16 professional staff and 6 support staff (see Table 1). RMDC has maintained thin staffing from the very beginning of its operation. Which has helped reducing in its cost of operation and maintain operational efficiency. Table 1: Number of Staffs in Different Fiscal Years Fiscal Year Professional Staff* Support Staff Total Staff Includes the Chief Executive Officer 07

21 Organization Structure Board of Directors Audit Committe Chief Executive Officer Microfinance Service Department Supervision Department Financial Management Department Human Resource Management Department Institutional & Social Development Department Planning & Research Department Internal Audit Department

22 Report of the Board of Directors Dear Shareholders, Ladies and Gentlemen, On behalf of the Board of Directors and on my own, I would like to welcome all the shareholders, delegates and invitees at this Fifteenth Annual General Meeting of the Rural Microfinance Development Centre Ltd (RMDC). RMDC has successfully completed its 15 years operation on October 29, It has been successfully implementing its business plan aiming to promote stable and steady growth of microfinance sector in the nation. On this special occasion, I take the privilege to present the status, progress and financial position of the Centre comprising balance sheet, profit and loss account, profit and loss appropriation account, cash flow statement and other financial statements of the fiscal year and the programs in the current fiscal year on behalf of the Board of Directors of RMDC. 1. Operational Status of the Centre Over the year the Centre has expanded paid up capital by 13.8% with the investment in the equity by International Finance Corporation (IFC) and Siddhartha Bank Limited. Loan investment and borrowing have increased by 22.4% and 18.7% respectively. The Centre has been maintaining zero NPA from its inception. The number of partner organizations increased to 136 from 102 and their beneficiaries also increased to 1.49 million from 1.33 million. The comparative status of the two fiscal years is given below: 09

23 S.No. Particulars FY FY 2011/12 Increase (%) 1. Paid up Capital 364, , % 2. Share Premium 49, General Reserve 131, , % 4. Retained Earning 325, , % 5. Borrowings 3,032,519 2,555, % 6. Loans and Advances 2,332,400 1,905, % 7. Other Investment 1,910,427 1,402, % 8. Net Profit 145, , % 9. Capital Adequacy % 33.11% 31.52% 5.0% 10. Partner Organization % 11. No of Members (000') % 12. NPA % The progress of the first quarter of the current fiscal year has been noted satisfactory. The share apportioned for the public issue units amounting to Rs.156 million which is 30% of the paid up capital were issued within mid y After the allotment of public share the Centre has been able to maintain authorized capital, issued capital and paid up capital of Rs 1 billion, Rs.520 million and Rs. 520 million respectively in the mid August The Centre has increased its loan portfolio and other investment to Rs.2.43 and Rs.2.23 billion from Rs.2.33 and Rs.1.91 billion respectively compared to the figures of mid y Likewise, retained profit and net profit also increased to Rs.325 and Rs.68 million from Rs.268 and Rs.41 million compared to the corresponding quarter of the last year. NPA in this quarter also has remained zero as before. 2. Change in Capital Structure In FY 2010/11, the authorized capital, the issued capital and the paid up capital were increased to Rs.1000 million, Rs.520 million and Rs.520 million respectively in accordance with the decision of 11th annual general meeting of the Centre. In FY the Centre was able to raise paid up capital to Rs. 364 million in y 15, 2013 after selling out 3,00,000 and 1,40,000 units of Kha category of promoter s share to International Finance Corporation and Siddhartha Bank Limited respectively. The share apportioned for the public issue 15,60,000 units amounting Rs.156 million which comprise 30% of the paid up capital was not booked in the share capital account as the allotment could not take place within the fiscal year although the issue and subscription was completed within the fiscal year. 10

24 3. Change in the Board of Directors There has been minor change in the Board of Directors in the fiscal year. The board member representing the Nepal Rastra Bank Mr. Man Mohan Kumar Shrestha was replaced by Mr. Ramjee Regmi. The Board extends sincere appreciation and thanks to Mr. Shrestha for his valuable contribution to the success of the Centre. 4. Audit Committee The audit committee comprising three members of the Board of Directors-Mr. Ramjee Regmi as the Chairperson, Mr. Rajan Kumar Amatya and Mr. Anil Kumar Shrestha as the members had 5 meetings in the fiscal year and it has been providing necessary directions to the Management and also making suggestions to the Board of Directors on policy matters. 5. Internal Control System The Centre has built up effective internal control system. It has developed all policies and procedures such as, credit policy, staff loan policy, loan write-off policy, internal audit procedure, risk management guidelines and other operational and finance related guidelines required to keep smooth operation of the Centre. The internal audit function has been discharged on time. 6. Monitoring of the Partner Organizations RMDC conducts regular monitoring and follow-up of the operations of the partner organizations and thereby help them to move towards achieving operational and financial self-sufficiency without flaws. Most of the partner organizations (POs) of the Centre are operating in line with the standard of corporate governance set by Nepal Rastra Bank and Department of Cooperatives. All POs have maintained good recovery of their loans and are able to achieve operational self-sufficiency. 7. Personnel Management The Centre has been adopting a rational staff recruitment policy maintaining optimum productivity of the employees from its inception. The Centre has now been functioning with a total of 24 employees including the Chief Executive Officer. 8. Progress and Achievements a. Loan Disbursement and Outreach Expansion The Centre has approved loans amounting Rs billion to 136 MFIs till the end of the fiscal year. Out of which the Centre has disbursed Rs billion to 114 MFIs. These MFIs have been providing microfinance services to about 1.5 million poor households of 67 districts in the country. The Centre has been able to collect 100 percent of its loan dues on time from its partner organizations with an outstanding loan balance of Rs billion at the end of FY. b. Institutional Development of MFIs and Training Programs With the objective of developing institutional capacities of MFIs, the Centre has been organizing numerous seminars, workshops and training 11

25 programs for the partner organizations officials, staff and clients. The Centre organized a two day long conference Revisiting Nepal Microfinance: Vision 2015 on Dec 20-21, 2012 with the participation of over 250 participants comprising MFI leaders, policy makers, development specialists, bankers, and the representatives of the central bank and the Government of Nepal. The conference was revisited the relevance of the vision and the goal set by the previous conference and also reviewed the progress made by MFIs and identified the challenges and problems faced by them on their way to achieve the goal. On December 21, 2012, a seminar namely Microfinance and Social Business also was organized. The forum was addressed by Nobel Laureate Professor Muhammad Yunus of Bangladesh as a keynote speaker. The occasion was graced by the then Prime Minister of Nepal Mr. Babu Ram Bhattrai as the chief guest. The Centre has organized a total of 67 trainings and seminars in the fiscal year. A total of 2,306 officials and staff of MFIs participated in those programs. Till the end of the fiscal year, the Centre provided training to 18,847 officials and staff of MFIs. These training supports have significantly enhanced the capacities of the partner organizations and their clients, and boosted up their loan portfolio quality resulting in over 98 percent repayment rate. Under the financial and technical supports of the Centre, the partner organizations have been conducting various training and seminars for their staff and also skill development training, capacity building and leadership development training, workshops of center chiefs and pre-group training to their new clients with a view to enhance their organizational capacities and incomegenerating skills. In the fiscal year, a total of 66,947 clients of the partner organizations participated in various training programs. Till the end of the fiscal year, the Centre provided training support to 647,177 clients of 319 MFIs of the country. 9. Status of the Microfinance Sector It is estimated that 1.7 million deprived families have been served by the microfinance institutions. Out of which around 1.5 million families have been served by RMDC s 136 partner MFIs alone. The technical, financial and capacity building supports of the Centre has contributed to raising the institutional capacity of the POs. They have been equipped with trained manpower. Microfinance also had enhanced the socio economic empowerment of the women which comprises 95% of the beneficiaries. It has not only raised their income but also helped them to raise their living standard, children s education, housing condition and food and nutrition. The special model and approach of microfinance also have helped it to reach the poor and deprived families. The beneficiaries also have been engaged in productive activities; which has enabled them to make loan repayments on time. However, in last few years due to the proliferation of MFIs, there are seen unhealthy competition among MFIs resulting in overlapped and over financing to clients which has led to numerous problems and flaws in the microfinance sector. The Centre has been sensitizing the concern stakeholders on the possible consequences of such competition for the last few years. 10. Financial Condition of the Centre As regards to the financial condition of the Centre, the fiscal year recorded the total income of Rs million nearly at par with the FY 2011/12. The total expenses including personnel, office operation, and interest expenses have decreased by 10 %, amounting Rs million. As per the Bonus Act, 10% staff bonus amounting Rs million has been provisioned out of the profit before bonus and 30% corporate tax amounting Rs million has been provisioned out of the profit after bonus. Out of the Net-Profit- After-Tax amount of Rs million, 20 percent amounting Rs million has been appropriated to the compulsory General Reserve and Rs. 2 million have been allocated for the Microfinance 12

26 Development Fund. The dividend of 15% amounting Rs.78 million has been proposed for the distribution to shareholders in the fiscal year. After overall adjustments as stipulated above, the remaining balance of Rs million has been proposed to be transferred to the Balance Sheet. 11. Current Year s Program Now, I would like to briefly highlight the Centre s major programs in the current fiscal year. a) There will be continuation of the wholesale lending to the microfinance banks, the FI-NGOs and the registered savings and credit cooperatives and small farmers cooperatives after appraising their performances and institutional capabilities. b) The Centre will extend capacity building and institutional development supports to the existing and prospective MFIs in the project districts of the Community Irrigation Project funded by Asian Development Bank. c) Credit will be channeled through MFIs and Cooperatives for the self employment of youths who have acquired skills and training under YUWAccess Project. d) The Centre will give special focus on the microfinance programs targeted to the poor living in the hills and mountains. It will continue to identify potential local cooperatives and develop their institutional capacities to discharge microfinance services in their respective areas and a certain amount of loan will be provided at lower interest rate. e) The Centre has set a goal of reaching out to a total of 1613 thousand poor families with microfinance services by the end of the current fiscal year, through extension of the services to additional 120 thousand poor families in this year. The Centre will identify new partner MFIs and encourage them to lend loans of small size to the poor and unserved population. f) The Centre will continue institutional capacity building supports to its partner organizations from the resources of its own. It will review its training, workshop and seminar programs to enhance their effectiveness in the future. It will also work for resolving the problem of over financing caused by the overlapped lending of MFIs through promotion of mutual understanding by way of regular dialogue among MFIs and intensive monitoring and follow up of their operations by the Centre. g) The Centre also plans to extend micro enterprise loans to the graduated clients of MFIs and to other individual micro entrepreneur clients of savings and credit cooperatives. As there is difficulty in augmenting microfinance services in the hills and remote areas due to the very limited number of microfinance institutions in such areas, the Centre plans to identify potential local cooperatives and provide financial and technical support for developing their institutional capacities to discharge microfinance services in their respective areas. h) The Centre will undertake training programs on risk management to the MFIs to draw their attention to increasing risks due to haphazard lending. i) The Centre from the fiscal year 2013/14 has planned to introduce loans to clients, such as a) Agriculture loan, b) Livestock loan, c) Clean energy loan and d) Housing loan. j) The Centre will further extend support to the MFIs to provide financial literacy training to their clients. 12. Vote of Thanks Lastly, I would like to express my sincere gratitude to all shareholders institutions and public shareholders, the Government of Nepal, the Nepal Rastra Bank, the Asian Development Bank and the Centre s partner organizations for their support and cooperation. On behalf of the Board of Directors, I would also like to place in record my heartfelt thanks to the Chief Executive Officer and the staff of the Centre for their contribution to the growth and professional development of the Centre and its partner organizations. Likewise, I am grateful to the media for their coverage of the Centre s activities and to all other well-wishers of the Centre. As usual, I look forward to receiving your valuable suggestions and supports for improving the operational capacity and service quality of the Centre in the future as well. Thank You! Ashoke SJB Rana Chairperson Board of Directors Kathmandu, January 13, 2014, Monday 13

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28 Auditor s Report and Financial Statements

29 J.B. RAJBHANDARY & ASSOCIATES CHARTERED ACCOUNTANTS 2nd Floor (North Wing), Sherpa Mall, Durbar Marg, P.O. Box:23725, Kathmandu, Nepal Tel: (01) , (01) , Fax: Annual Report INDEPENDENT AUDITOR S REPORT THE SHAREHOLDERS OF RURAL MICROFINANCE DEVELOPMENT CENTRE LTD. Report on Financial Statements We have audited the accompanying financial statements of Rural Microfinance Development Centre Ltd, which comprise the balance sheet as at 31st Ashad 2070 corresponding to 15th y 2013, and the Profit & Loss Account, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Nepal Accounting Standards so far as applicable in compliance with prevailing Acts and laws. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Nepal Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Report on Other Legal and Regulatory Requirements (Bank and Financial Institution Act 2063 and Company Act 2063) On examination of the financial statements as aforesaid, we report that: a. We have obtained all information and explanations asked for, which to the best of our knowledge and belief were necessary for the purpose of our examination. b. In our opinion, proper books of account as required by law have been kept by the company, in so far as appears from our examination of those books of account and the financial statements dealt with by this report, prepared in the format prescribed by Nepal Rastra Bank are in agreement with the books of accounts. c. In our opinion and to the best of our information and according to the explanations given to us and from our examination of the books of accounts of the company, we have not come across the cases where the Board of Directors or any member thereof or any employee of the company has acted deliberately contrary to the provisions of the law relating to accounts or caused loss or damage to the company or committed any misappropriation or violated any directive of Nepal Rastra Bank or acted in a manner to jeopardize the interest and security of the company and its depositors d. In our opinion, adequate capital fund and provisions for losses have been made and the business of the company has been conducted within its authority. Opinion on the financial Statements In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with the notes attached thereon give a true and fair view of the financial position of the company as of Ashad 31st, 2070 (15th y, 2013) and of the results of its financial performances and its cash flows for the year then ended in accordance with Nepal Accounting standards so far as applicable in compliance with the prevailing Laws. CA, Jitendra B. Rajbhandary Proprietor Date: 1 st Novembar 2013 Place: Kathmandu,

30 Balance Sheet As at Asar 31, 2070 (As at y 15, 2013) SN Capital and Liabilities Schedule This Year (Rs) Previous Year (Rs) 1 Share Capital ,000, ,000, Reserve and Funds ,611, ,788, Debenture and Bonds Borrowings 4.4 3,032,518, ,555,161, Deposit Liabilities Proposed Cash Dividend 78,000, Income Tax Liabilities 59,100, ,245, Other Liabilities ,165, ,628, Total Liabilities 4,498,395, ,750,824, SN Assets Schedule This Year (Rs) Previous Year (Rs) 1 Cash Balance (with Coins) - 14, , Nepal Rastra Bank Balance - 43,999, ,176, Bank Balance at Bank and Finance ,917, ,347, Money at Call and Short Notice Investments 4.8 1,910,427, ,402,865, Loan Advances 4.9 2,239,104, ,829,257, Fixed Assets ,030, ,345, Non Banking Assets Other Assets ,902, ,830, Total Assets 4,498,395, ,750,824, Megh Raj Gajurel Senior Manager (FMD) Shankar Man Shrestha Chief Executive Officer Ashoke SJB Rana Chairman Directors: Ramjee Regmi Anil Kumar Shrestha Rajan Kumar Amatya Kiran Kumar Shrestha Anil Kumar Khanal Sadhana Upadhyay As per our attached report of even date CA Jitendra B. Rajbhandary J.B. Rajbhandary & Associates Chartered Accountants

31 Profit and Loss Account Annual Report For the period Shrawan 1, 2069 to Asar 31, 2070 (y 16, 2012 to y 15, 2013) SN Particulars Schedule This Year (Rs) Previous Year (Rs) 1 Interest Income ,023, ,567, Interest Expenses ,271, ,381, Net Interest Income 241,751, ,186, Commission and Other Operating Income ,635, ,793, Exchange Fluctuation Income Total Operating Income 261,387, ,980, Personnel Expenses ,226, ,270, Other Operating Expenses ,675, ,466, Exchange Fluctuation Losses - - Operating Profit before Loss Provision 232,485, ,242, Provision for Losses ,076, ,583, Operating Profit 215,408, ,659, Non-Operating Gain/Loss Reversed from Provision Expenses ,668, ,416, Profit from Regular Operations 228,077, ,076, Extraordinary Operational Gain/Loss 4.22 Net profit from Whole Operation 228,077, ,076, Provision for Employees Bonus 20,734, ,461, Income Tax Provision 62,026, ,094, This year 59,100, ,245, Previous Year 46, , Deferred Tax (Income)/Expense 2,879, (15,284,075.13) Net Profit/Loss 145,316, ,519, Megh Raj Gajurel Senior Manager (FMD) Shankar Man Shrestha Chief Executive Officer Ashoke SJB Rana Chairman Directors: Ramjee Regmi Anil Kumar Shrestha Rajan Kumar Amatya Kiran Kumar Shrestha Anil Kumar Khanal Sadhana Upadhyay As per our attached report of even date CA Jitendra B. Rajbhandary J.B. Rajbhandary & Associates Chartered Accountants

32 Profit and Loss Appropriation Account For the period Shrawan 1, 2069 to Asar 31, 2070 (y 16, 2012 to y 15, 2013) SN Particulars Schedule This Year (Rs) Previous Year (Rs) Income 1 Retained Earning up to Previous Year 268,242, ,242, ,123, Deferred Tax Reserve up to previous Year 3 Net Profit of This year 145,316, ,519, Exchange Equalization Fund 5 Dividend Return of F/Y 2009/10 39,656, Total 453,216, ,643, Expenditure 1 Net Retained Losses up to Previous Year 2 Net Losses of Current Year 3 General Reserve Fund 29,064, ,304, Contingent Reserve Fund 5 Microfinance Development Fund 2,000, ,000, Dividend Equalization Fund 7 Employee Related Fund Proposed Dividend 78,000, Proposed Bonus Share Issue 10 Special Reserve Fund 11 Exchange Equalization Fund 12 Capital Redemption Fund 13 Capital Adjustment Fund 14 Previous Years Tax Adjustment 15 Deferred Tax Reserve (2,879,345.65) 15,284, Investment Adjustment Fund 21,875, ,812, Total 128,059, ,400, Retained Earning/(Loss) 325,156, ,242, Megh Raj Gajurel Senior Manager (FMD) Directors: Ramjee Regmi Anil Kumar Shrestha Rajan Kumar Amatya Kiran Kumar Shrestha Anil Kumar Khanal Sadhana Upadhyay Shankar Man Shrestha Chief Executive Officer Ashoke SJB Rana Chairman As per our attached report of even date CA Jitendra B. Rajbhandary J.B. Rajbhandary & Associates Chartered Accountants

33 Cash Flow Statement For the period Shrawan 1, 2069 to Asar 31, 2070 (y 16, 2012 to y 15, 2013) Annual Report SN Particulars This Year (Rs) Previous Year (Rs) (A) Cash Flow from Operating Activities 1 Cash Inflow 343,659, ,361, Interest Income 324,023, ,567, Commission and Discount Income Foreign Exchange Transaction Income Income from Loan Write-off Other Income 19,635, ,793, Cash outflow (193,286,676.91) (187,897,695.98) 2.1 Interest Expense (82,271,803.00) (72,381,307.29) 2.2 Personnel Expense (17,226,120.42) (18,270,838.69) 2.3 Office Operating Expense (11,655,483.65) (6,444,635.05) 2.4 Income Tax Payment (61,398,975.00) (71,339,453.35) 2.5 Other Expense (20,734,294.84) (19,461,461.60) Cash Flow Before changes in Working Capital 150,372, ,463, Increase and Decrease in Current Assets (901,955,932.58) (218,064,701.32) 1 Increase and Decrease in Money at Call and Short Notice Increase and Decrease in Short Term Investments (476,187,079.00) (539,204,443.00) 3 Increase and Decrease in Loan and Bills purchase (426,924,050.00) 335,422, Increase and Decrease in Other Assets 1,155, (14,283,158.32) Increase and Decrease in Current Liabilities 17,754, ,884, Increase and Decrease in Deposits Certificate of Deposits Increase and Decrease in Short-term Borrowings Increase and Decrease in Other Liabilities 17,754, ,884, (B) Cash Flow from Investing Activities (31,668,323.96) (3,946,909.82) 1 Increase and Decrease in Term Investments (31,375,000.00) (3,312,500.00) 2 Increase and Decrease in Fixed Assets (293,323.96) (634,409.82) 3 Income from Long term Investments Dividend Income 5 Others - - (C) Cash Flow from Financing Activities 611,902, ,347, Increase and Decrease in Long Term Borrowings (Bond, Debenture etc.) 477,356, ,460, Increase and Decrease in Share Capital 44,000, Dividend Refund 39,656, Increase and Decrease in Other Liabilities 1,409, ,886, Share Premium 49,480, Increase and Decrease in Subsidized / Refinance Loans from NRB - - (D) Income/Loss from change in Exchange Rate in Cash and Bank Balance - (E) Cash from Total Activities of the year (153,595,254.91) 193,684, (F) Opening Cash and Bank Balance 392,526, ,842, (G) Closing Cash and Bank Balance 238,931, ,526, Megh Raj Gajurel Senior Manager (FMD) Directors: Ramjee Regmi Anil Kumar Shrestha Rajan Kumar Amatya Kiran Kumar Shrestha Anil Kumar Khanal Sadhana Upadhyay Shankar Man Shrestha Chief Executive Officer Ashoke SJB Rana Chairman As per our attached report of even date CA Jitendra B. Rajbhandary J.B. Rajbhandary & Associates Chartered Accountants

34 Wholesale Lending to Microfinance Institutions The core function of RMDC is wholesale lending to retail microfinance institutions which provide micro-credit to the poor households. RMDC has been striving to build partnership with the existing financial intermediaries, microfinance financial institutions and cooperatives to extend its services to the nooks and corners of the country. Progress of Lending Program RMDC is the largest wholesale lending institution for microfinance in terms of its share in the wholesale microfinance market in Nepal. It had approved Rs billion and disbursed Rs.8.85 billion of loan amount to 114 retail MFIs operating in 67 districts of the country till mid-y The borrowing institutions include 7 microfinance development banks (MFDBs), 10 development banks (DBs), 24 financial intermediary NGOs (FI-NGOs) and 95 cooperative societies. RMDC s loan outstanding balance with its partner organizations (POs ) at the end of the fiscal year was Rs billion. RMDC has been able to maintain excellent loan portfolio quality with a hundred percent loan recovery rate from the very first year of its operation. This has been possible due to prudent lending criteria & process it has adopted and close supervision and follow up of its partner organizations. The POs are also advised to follow the best practices of microfinance so that they can deliver quality lending and have good portfolio quality. RMDC s POs have also maintained near hundred percent loan recoveries. The loan portfolio growth of RMDC is at increasing trend except in the FY RMDC has made a considerable growth in its loan portfolio in FY disbursing Rs billion amount of loans to its POs in the same fiscal year. There were also addition of 34 new POs in the fiscal year. The annual portfolio growth of RMDC of the last five years has been portrayed in the figure 1. 21

35 Figure 1: Growth of Annual Loan Portfolio of RMDC 2,500 2,000 Rs. in million 1,500 1, Annual Loan Disbursed Annual Loan Recovered Outstanding Loan RMDC has been making all possible efforts also to expand microfinance operations in the hills and mountain districts across the country. It makes onsite visits to the remote and isolated geographical areas, identify potential local cooperative societies, build their institutional capacities and give start-up fund to commence microfinance operation. RMDC also encourages its larger POs to expand their microfinance operations in the hitherto un-served areas by providing them with one million rupees of loan fund per branch at 2% interest rate. Through its existing and new partners, RMDC has expanded its operation to most of the remote hill and mountain districts. The districts not yet reached by RMDC s POs are Humla, Mugu, Dolpa, Manang and Solukhumbu. Loan Products RMDC offers a variety of loan products to MFIs, such as i) Microfinance Operation Loan, ii) Microfinance Promotion Loan, iii) Micro-enterprise Loan, iv) Bridge Loan, v) Special Loan, vi) Seed Fund Loan vii) Agriculture Loan, viii) Livestock & Poultry Loan, ix) Clean Energy Loan and x) Housing Loan. The products have been briefly described below. Microfinance Operation Loan Microfinance Operation Loan is the main loan product of RMDC offered to retail MFIs. The purpose of the loan is to finance a broad range of incomegenerating activities of the ultimate borrowers 22

36 who mainly comprise the poor women who need relatively less amount of loans for initiating income generating activities. With this loan fund, an MFI may disburse up to Rs.100,000 to a borrower as per the client s need and capacity to utilize the loan. Microfinance Promotion Loan The main purpose of the Microfinance Promotion Loan is to promote small microfinance institutions to commence microfinance operations. This loans product is targeted at the MFI which have not outreached over 10,000 clients yet and have not borrowed any loan from any other banks or financial institutions except from the Nepal Rastra Bank (the central bank of Nepal). Micro-enterprise Loan RMDC offers Micro-enterprise Loan to its partner MFIs to finance micro - and small enterprises (MSEs) for their graduated clients. Receiving this loan fund, an MFI may disburse up to Rs. 300,000 to a graduated client. Generally, an MFI takes physical collateral against the loan from the clients. Bridge Loan This is a short term loan provided to current POs to fulfill its urgent need of fund while loan application for a new loan is under the process of approval at RMDC. This loan is later adjusted with the main loan when it is approved. An MFI can obtain 20% of its outstanding loan amount with RMDC under this loan and the term of this loan product is up to six months. To avail this loan facility from RMDC, a PO should have utilized at least three loan facilities and have maintained a good track record. Special Loan RMDC has introduced this loan product to solve a liquidity problem of its partner MFIs. A partner MFI of RMDC can apply for this loan facility as and when it needs and can repay the whole loan amount in one installment or in a number of installments as agreed within its maximum term of one year. The amount of this loan an MFI can obtain is upto 10% of its current loan outstanding with RMDC. To avail this loan facility, partner MFIs should have already utilized at least five loan facilities from RMDC and have fulfilled all those criteria required for borrowing a Special loan. Seed Fund Loan In view of the fact that the people in the remote 23

37 hills and mountain areas of the country have very limited access to microfinance services, RMDC has been offering a special loan product Seed Fund Loan to MFIs operating in the nineteen remote hills and mountain districts in the country, namely Achham, Bajhang, Bajura, Bhojpur, Darchula, Dolpa, Humla, Jajarkot, Jumla, Kalikot, Khotang, Manang, Mugu, Mustang, Okhaldhunga, Sankhuwasabha, Solukhumbu, Taplejung and Tehrathum. Under this scheme, RMDC provides a loan fund up to one million rupees to a local microfinance cooperative or an MFI branch which is operating in any of the aforementioned districts. RMDC charges just 2% annual interest rate on this loan product. It is hoped that this soft loan will help an MFI to meet at least two local staff cost and to have a marginal surplus to conduct its operation. Agriculture Loan This loan product is offered to the retail MFIs to cater the needs of clients for agriculture crops. The loan specially focuses on the agriculture sector. It will help to increase the agriculture productivity. Livestock & Poultry Loan This loan is for the promotion and development of the livestock and poultry business of the country. It is provided to the MFIs to lend to their clients for livestock and poultry related business and industry such as goat rearing, buffalo rearing, fish farming, pig farming, veterinary shop etc. Clean Energy Loan The main purpose of introducing this loan product is to promote natural and environmental conservation through microfinance. Balance environment contribute a lot on poverty reduction but much efforts in this line have not seen in the microfinance sector, so RMDC add this new loan product to cater the growing needs of energy finance. The partner MFIs disburse this loan to their clients in the areas of environmental conservation such as - bio-gas, solar, improved cooking stove, micro hydro-electricity etc. Housing Loan This loan is provided to the MFIs to provide housing loan to their clients. Through this loan MFIs shall lend to their clients to construct new house or repair and maintain their existing house. Housing problem generally produce mental and psychological pressure in an individual and family as a whole that reduce the productivity. This loan option will help to relief the poor from such pressures. RMDC charges an annual interest rate of 8% on this loan. 24

38 Process of Lending to MFIs RMDC offers wholesale loan funds to institutions having a valid license to implement microfinance program, such as specialized microfinance development banks (MFDBs) 1, savings and credit cooperatives (SCCs) and financial-intermediary NGOs (FI-NGOs) or any financial institution legally allowed to implement a microfinance program. RMDC has also provided loan funds to some development banks 2 for financing small scale livestock farming and the related enterprises under the Community Livestock Development Project (CLDP) funded by the Asian Development Bank. For a loan fund, an eligible MFI submits a loan application along with a set of required documents to RMDC. (The criteria for determining an institution s eligibility for borrowing from RMDC are given in Box 2.) After receiving a loan application, RMDC makes off-site and on-site investigations of the applicant institution. After making a detailed appraisal of the institution, the decision of loan approval or disapproval is taken (See Box 3 for the key parameters of RMDC s appraisal). Business plan and institutional capacities of the MFIs are also taken into account while determining loan size and repayment schedule. After agreeing on the necessary terms and conditions by the applicant MFI and signing of the legal documents by both parties, RMDC releases the approved amount on installments. Box 2: RMDC s Eligibility Criteria for Lending An organization willing to borrow a loan from RMDC should fulfill the following requirements: (i) be registered under an appropriate act and received a license for microfinance operation; (ii) have minimum of one year experience in operating microfinance activities; (iii) have savings balance at least 5% of the total loan outstanding in the 1st year, 10% in the 2nd year, 15% in the 3rd year and 20% in the 4th year and onward; (iv) have attained minimum 90% loan recovery rate for the first loan and 98% for the second loan onwards; (v) have committed and dynamic executive committee; (vi) have active and professional management; (vii) have appropriate management information system; (viii) have an appropriate business plan; (ix) have adopted modern accounting system; (x) have appropriate policies and procedures for implementing and monitoring its credit program; (xi) have at least 50 active borrowers; (xii) have at least 25 percent female borrowers; (xiii) Having minimum net-worth of Rs. 100,000; (xiv) have minimum financial resource of Rs. 250,000; (xv) have a trend towards operational self sufficiency as per the last three years financial position; and (xvi) have been audited in time 1 MFDBs are class D financial institutions as per Bank and Financial Institution Act (ABFIA), 2006 and are established solely for microfinance operation. 2 Development Banks are class B financial institutions as per the BAFIA,

39 Box 3: RMDC s Parameters of MFI Appraisal for Lending Institution s legal identity and historical background Viability and applicability of business plan Governance and management Human resource policy and management Credit policy and operational procedure Accounting policy and practices Internal control, auditing and risk management system Financial management policy and systems Loan portfolio quantity and quality Financial status Capital and financial resources Management information system Institutional culture Feasibility of microfinance operation in the planned area Market competition RMDC makes off-site and on-site monitoring and follow ups of the borrower MFIs to ensure that the disbursed loans are being properly utilized by the MFI and the institution s overall loan program as well as financial progress are on right track. RMDC charges an annual interest rate of 2-8% on its loans disbursed to MFIs. The borrower MFIs are free to set their own lending rate to their clients. However, RMDC advises them to have an appropriate interest rate so as to cover their financial and operational costs as well as to earn some profit in order to attain financial viability and sustainability over a reasonable period of time. Regarding loan term, RMDC gives a period of two years for the first loans and three years period for the second and subsequent loans based on the previous repayment records of the MFI and the nature of loan. A grace period of three to six months is given to each loan for repayment. About repayment of loan installments, the MFIs are required to repay the interest dues and the principal installments quarterly. 26

40 Salient Features of Partner Organizations Credit Program The main features of the partner organizations micro-credit programs are as follows: The partner MFIs of RMDC target the poor, the landless, the assetless or the low-income families. To identify the poorer households in a community, the MFIs use a methodology, such as Participatory Rural Appraisal (PRA), Participatory Wealth Ranking (PWR) or household survey. Most of the partner MFIs practice the Bangladeshi Grameen Bank s group lending methodology with a slight modification to suit local conditions. Only a woman member from each poor family is allowed to join an MFI s micro credit group. Women of poor households are identified and are then invited to participate in a week-long pre-group training (PGT) organized in a nearby place of the village. During the training, a field staff of the respective MFI teaches the participating women about MFI s products and services (loan, savings, insurance, etc.), their delivery procedures, and about institutional norms and values. At the end of the training, the interested trainee women organize themselves into small solidarity groups (five members each), which are then organized into a Center under the facilitation of the facilitator field staff. Clients are provided up to Rs. 100,000 amount of loan without any physical collateral. This facility has encouraged the women of poor households to join a microcredit program. All members of the groups or the whole center are jointly liable for payment of the due amount of a member in case the member fails to repay her loan installment for any reason. Some partner MFIs have been offering micro-enterprise loans (up to Rs.300,000) to the graduated clients, who could show an excellent track record of loan repayment in the past, a capacity of utilizing loans and a considerable experience in managing microenterprises. Some MFIs are also taking physical collateral against the micro enterprise loans. The MFIs charge an annual interest rate of percent on their loans disbursed to their clients. The repayment period is generally one year, and the installments are paid weekly, Box 4: Development Impacts of Microfinance at Client Level A number of success stories collected by RMDC and its POs indicate that microfinance has created the following impacts on the clients: Increased household income and assets of the poor Improved entrepreneurship and occupational skills of the clients and the family members Created self- employment opportunities for the poor Enhanced confidence level of the clients Developed leadership capability of the clients Boosted dignity of the women borrowers in their families and communities Improved food security for the poor households Increased school enrollment of the clients children Improved sanitation and health conditions of the children and women of the beneficiary households 27

41 bi-weekly or monthly depending on local situations and clients demand and choice. The repayment period of micro-enterprise loans may be 2-3 years depending up on the sizes of loan and the nature of enterprise. Compulsory member savings is one of the basic savings products offered by the MFIs. Some MFIs have also offered personal voluntary savings, pension fund savings and educational savings schemes to their members. Savers get 6-8 percent of annual interest on their savings deposits. In addition to providing microfinance services, the MFIs conduct training programs for their clients in order to improve the latter s confidence and occupational skills. The MFIs also make necessary efforts to link their clients with the related government or private development agencies for necessary skills development, market supports, health services, non-formal education, etc. Most of the partner MFIs have been able to maintain over 99 percent loan repayment rate. On average they have maintained nearly 98 percent repayment rate. Most of the MFIs have crossed the operational self-sufficiency level and are on the way to reach financial self sufficiency.

42

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44 Promotion and Capacity Building of Microfinance Institutions Promotion of New MFIs RMDC has been identifying potential MFIs from among the existing NGOs or cooperatives based on their institutional work profile, capital, performance and visions & commitments of their leaders towards operating sustainable microfinance for reduction of poverty, and the feasibility of microfinance program in their planned geographical areas. RMDC officials also make a number of visits to different districts for identification and development of such institutions. There is still a greater need to promote MFIs that are committed to expanding microfinance services particularly in the remote hills and mountain areas in the country. The sequential steps that are followed by RMDC is presented in the box 5. Box 5: RMDC s Sequential Steps for Promotion of MFIs (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Potential institutions (NGOs, cooperatives, banks) are identified based on their institutional work profile, experience and commitment towards microfinance; An exposure visit program is organized for the executive committee members of the interested potential organization to have a self-study of best practices of microfinance; After the visit, the participating members are invited to take part in a three-day interactive orientation program, where participants share their experiences and resource persons facilitate discussions on the major issues, such as essentials of microfinance, steps of implementing microfinance program, factors affecting viability and sustainability of MFIs, and process of determining appropriate interest rate. A few field staff of the selected institutions are provided with a two-month long on-site practical training on operational systems at field offices of successful MFIs; The staff of the institutions are also trained on PRA/PWR methodologies, which they can use to assess problems and potentialities for implementing microfinance programs in an area, and to identify poorer households to include as members or clients; A few officials of the institutions are provided with training and on-site guidance on preparing their own three-year business plans; The institutions are given on-site consultancy on establishing appropriate operating systems (e.g. accounting, MIS, reporting, monitoring and supervision, internal control, etc.) and on organization of pregroup training and centers of members or clients; Regular off-site and on-site monitoring and supervision of the borrowing institutions are undertaken; and Special on-site technical assistance is also given to an MFI as per its need and demand. 31

45 Figure 2: Annual Progress of MFI Staff Training 2,500 2,000 No. of Staff 1,500 1, No. of Staffs Fiscal year Capacity Building of MFI Officials and Staff RMDC offers a wide range of capacity building programs to its partner MFIs for upgrading knowledge and skills of their staff and officials on different subjects. In the FY , RMDC conducted a total of 32 national level training programs for MFI staff and officials in which altogether 1,190 MFIs staff and officials participated. Similarly in this fiscal year, 29 in house training programs were also organized by MFIs with supports from RMDC, in which 1,057 staff and officials had participated (see Annex II for the detailed information on the training program). The annual progress trend of the MFIs staff training program of last five years has been shown on Figure 2. The major MFI staff and officials training programs completed during the reporting fiscal year have been briefly described below. 32

46 Revisiting Nepal Microfinance Vision 2015 RMDC in collaboration with NMBA, MIFAN and NEFSCUN organized a national conference, Revisiting Nepal Microfinance Vision 2015, on December 20-21, 2012 in Kathmandu. The main objective of the national conference was to review the goal set by the national conference Nepal Microfinance Vision 2015 held on October 28-29, 2010 in Kathmandu. The conference was inaugurated by Mr. Deependra Bahadur Kshetry, then Vice Chairman of National Planning Commission. The inaugural ceremony was chaired by Mr. Ashoke SJB Rana, Chairman of RMDC. Deputy Governor of Nepal Rastra Bank Mr. Gopal Prasad Kaphle and Executive Director of Nirdhan Utthan Bank Ltd., Dr. Harihar Dev Pant were present on the occasion as special guests. The conference was participated by over 250 microfinance practitioners operating all over the country. There were bankers, regulators, planners and policy makers also among the participants. After the formal opening ceremony, the first day of the conference witnessed four presentations on private microfinance banks, Grameen Bikas Banks, Financial Intermediary NGOs (FINGOs) and microfinance cooperatives. The presentations were focused on the progress, issues and strategies of the each category of microfinance institutions. During the presentations, participants expressed their queries, comments and suggestions on the presented papers making the discussions vibrant and informative. The second day started with discussions of participants in groups to analyze the challenges and problems faced by the micro-finance sector in Nepal and chalking out the possible measures to resolve them. The problems and challenges which were identified in the previous day were divided among the participants in four groups and the group members interacted on each problem, its causes and possible solutions along with identification of authorities or institutions responsible for implementing the solutions. Another session started with the presentations on the findings made by the group. The program was ended with closing session, chaired by Mr. Ashoke SJB Rana, Chairperson of RMDC. In the session Governor of the Nepal Rastra Bank Dr. Yubraj Khatiwada was the chief guest and Mr. Mahesh Prasad Dahal, Joint Secretary, Ministry of Finance, was the special guest. On the occasion, welcoming the dignitaries Mr. Shankar Man Shrestha, CEO of RMDC said that the MFIs should pay attention to the growth and sustainability of their clients, not just focus on their own growth and profitability. Dr. Rabindra Kumar Shakya, former secretary of Nepal Government presented conference findings as the rapporteur of the conference. The revised goal for the Nepal Microfinance vision 2015 is to outreach 2.5 million households by the end of It was based on the tabulation made by each group of presenters during the first day of the event, whereas previously set vision and mission for 2015 were kept intact as set by 2010 conference. 33

47 Box 6:Resolution of Revisiting Nepal Microfinance Vision 2015 We microfinance practitioners take a vow to carry out following activities for the social and economic transformation of target community by implementing quality microfinance services. 1. Identify the left out deprived family of own s operation area and include them in microfinance services with first priority. 2. Provide microfinance services in the remote districts, each MFI having more than members, shall include one unserved remote district under its area of operation from the year 2013 to deliver microfinance services. 3. Shall regularly measure income level of members, who have completed five years as borrowers and promote them as entrepreneurs. 4. Sensitize and train staff and clients on cons of multiple lending to reduce multiple financing problem. 5. Spend a certain portion of profit of MFIs for capacity building and other welfare program of clients. 6. Give emphasis on financial literacy of the clients. 7. Build up coordination and cooperation between MFIs. 8. Provide financial access to the unemployed youth and create self employment for them. 9. Initiate self evaluation process by MFIs. 10. Emphasize on internal resource mobilization. 11. Organize public audit in the VDC under MFIs jurisdiction to get feedback from local communities, beneficiaries and other concerned on the products and services provided to clients and educate them on organization s policy, procedures and achievement. 12. Reduce multiple lending and unhealthy competitions through effective credit reporting system among MFIs. 13. Develop and implement proper action plan to increase borrowers to members ratio. 14. Develop effective communication mechanism and build enhanced relationship and trust between management and operation staff. 15. Improve the products and services regularly on the basis of feedback from clients. 16. Develop and implement proper working strategy for improvement in quality of centers and groups. 17. Provide loan to the client only after making appraisal of loan requirement of clients, their capacity and track record to avoid over indebtness of clients. 18. Ensure effective and regular monitoring and follow up of clients. 19. Top management of MFIs to act as a role model to inculcate culture in the staff suited to the values and principles of microfinance. 20. Prepare career development plan of employees. 21. Establish a separate training department to provide required training to staff and clients in the MFIs having more than ten thousand clients. 22. Conduct a study on client drop out by each MFI and share information with other MFIs. 34

48 Felicitation of Nobel Laureate Prof. Muhammad Yunus Nobel Laureate Prof. Muhammad Yunus was felicitated by the fraternity of microfinance in Nepal on December 21, 2012 in Kathmandu, during a seminar on Microfinance and Social Business. The felicitation inscribed in a brass plate within magnificent wooden frame were offered to Prof. Yunus by then Honorable Prime Minister Dr. Baburam Bhattarai in the gorgeous function right after his keynote speech. Prof. Yunus was given a standing ovation by the audience after his grand thoughtful speech on microfinance and social business. The felicitations addressed Prof. Yunus as the pioneer of microcredit and social business and loudly appreciated his efforts to bring socio-economic improvement in the lives of the poor and the deprived women all over the world. The seminar on Microfinance and Social Business was jointly organized by the Rural Microfinance Development Centre Ltd. (RMDC) and the Confederation of Nepalese Industries (CNI) in collaboration with Microfinance Association of Nepal (MIFAN) and Nepal Microfinance Bankers Association (NMBA) on December 21, It was inaugurated by then Honorable Prime Minister Dr. Baburam Bhattarai. The seminar was graced by Nobel Laureate Prof. Muhammad Yunus as a guest of honor. The program was participated by other personalities such as Mr. Dipendra Bahadur Kshetry, Vice-Chairman of National Planning Commission; Dr. Yubraj Khatiwada, Governor of Nepal Rastra Bank; Prof. H.I. Latifee, Managing Director of Grameen Trust, Bangladesh; Mr. Ashoke SJB Rana, Chairperson of RMDC; Mr. Shankar Man Shrestha, CEO of RMDC and Mr. Binod Chaudhari, President of CNI. Prof. Yunus delivered a keynote speech on microfinance & social business in the gathering of more than 300 participants consisting of diplomats, microfinance practitioners, bankers, professionals, policy makers and business communities. Prof. Yunus in his keynote speech stressed the need of social business. According to him, social business means a business for the benefit of the society, to transform the life of the people, to give back its return to the people by revolving the investment. It is the business which is not for making money. He said making money from business gives happiness but making other people happy gives super happiness. According to him the happiness we can get from making 10 families happy, cannot be matched with happiness from making millions and billions of money. Charity money have one life cycle once it goes, do not come back again he said but if we invest in social business, it comes back and it revolves and revolves.

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50 Regional Annual Review Workshops of Partner MFIs RMDC organized four regional annual review workshops for its partner MFIs, in four different development regions. The main objective of the workshops was to review the progress of partner MFIs of FY , give them an opportunity to share good and bad experiences with each other and jointly sketching better strategies and approaches to solve problems, enhance quality of microfinance program and make remarkable progress. The Eastern Regional Annual Review Workshop was held in Biratnagar during November 9-10, The workshop was attended by 42 participants from 12 partner MFIs from Eastern Development Region. The Central Regional Review Workshop was held in Kathmandu during November 22-23, 2012 and had witnessed 26 participants from 10 partner MFIs of the Central Development Region. Similarly the Western Regional Annual Review Workshop was organized in Pokhara during September 14-15, 2012, which was participated by 35 participants from 13 MFIs of Western Development Region. Similarly, the Regional Annual Review Workshop for the Mid & Far Western Region was held in Nepalgunj on September 27-28, 2012, which was attended by 46 participants from 18 partner MFIs. The workshops were attended by Board Members and CEOs of the partner MFIs. The participants made identifications of problems and issues, which were discussed in groups and each group made recommendations for resolving the problems and fixed responsible authority for the same. At the end, each of the workshop came up with a pledge to improve the system of microfinance and deliver quality services to the target families. The workshops had followed new approach of progress presentations. Each of the participating MFI team had visited a peer MFI and studied its operations critically. The team had reviewed its progress and achievements and also identified innovations and strategies of the concerned MFI and presented their finding in the forum. This approach had been widely hailed by the participants and opined that it had opened their inner eyes and helped to realize their own shortcomings and weaknesses. In the presentations, they had highlighted the strengths and weakness of the MFI visited and presented their lessons learnt from the visits. The participants of the MFIs which had been assessed by the peers also had motivated and had realized their short comings and vowed to take corrective measures. All the workshops had been chaired by Mr. Shankar Man Shrestha, Chief Executive Officer of RMDC. Senior officials of RMDC participated as the facilitators. The RMDC officials had led them to widely discuss on the issues of microfinance and sensitized them to avoid multiple financing and over indebtedness of clients. Mr. Shrestha had emphasized on the need for lending to the poorest, lending right amount of loan based on clients need and capacity and avoid clients poaching and multiple lending resulting in over indebtedness of clients. He also urged the MFIs to visit the doors of the clients and ensure that the clients socio economic conditions are being improved. The workshops concluded with way forward to be followed by all participating MFIs. All the participating MFIs vowed to bind by the jointly outlined way forward and contribute for the safe, sensible and sustainable microfinance operation in Nepal. 37

51 Training on Internal Audit RMDC organized training on Internal Audit for the members of the Account Committees of its partner cooperatives. The training was held in Kathmandu from June 19-20, 2013, and was attended by 17 participants from 7 partner cooperatives. The main objectives of the program were to explain the participants the duty, role & responsibility of the account committee and its members, to provide them theoretical and practical knowledge & skill on internal audit, to enable them to conduct internal audit and prepare internal audit report independently in their organizations. The resource persons of the training were Mr. Roop Bahadur Khadka, Manager of RMDC and Mr. Roshan Kumar Adhikari, Training Consultant to CPI project. The major contents of the training were role & responsibility of account committee, concept and scope of internal audit, internal audit vs external audit, risk management, financial indicators, fraud management etc. During the closing ceremony, CEO of RMDC Mr. Shankar Man Shrestha distributed certificates to the participants. In his remarks, Mr. Shrestha highlighted the importance, role & responsibility of account committee for the healthy growth of cooperatives. He also urged the participants to apply the knowledge and skill gained from the training in their own institutions. Box 7: Way Forward of Annual Review Workshops 1. Accord top priority to unserved destitute families in the extension of microfinance services, 2. Formulate and implement graduation of micro credit clients to promote them as entrepreneurs. 3. Initiate microfinance expansion in new areas only after market survey. 4. Educate employees and members on disadvantages of multiple lending. 5. Expend a certain portion of profit of MFIs for capacity building and other welfare program of clients. 6. Upgrade products and services to clients regularly on the basis of feedback from them. 7. Develop and implement proper working strategy for improvement in quality of centers/ units/ groups. 8. Develop and implement proper action plan to increase borrowers to members ratio. 9. Organize public audit in the VDCs under MFIs jurisdiction to get feedback from local communities, beneficiaries and other concerned on the products and services provided to clients and educate them on organization s policy, procedures and progress. 10. Reduce multiple lending and unhealthy competitions through effective credit reporting system among MFIs. 11. Provide loan to a client only after making appraisal of his/ her loan requirement, capacity and track record to avoid overindebtness. 12. Ensure effective and regular monitoring and follow up of clients. 13. Develop effective communication mechanism and build enhanced relationship and trust between management and operation staff. 14. Establish a separate training department to provide required training to staff and clients in the MFIs having more than ten thousand clients. 15. Conduct pre-group training (PGT) and refresher trainings to clients regularly to upgrade their knowledge of microfinance operation. 38

52 and taken them to the field for practical exercise of credit appraisal of microenterprise at Manushi Nepal, a microfinance NGO at Kathmandu. After the field visit, on the next day, the participants made group presentations about their field experiences. Training on Credit Appraisal of Microenterprise RMDC organized a training program on Credit Appraisal of Microenterprise Loan for its partner cooperatives. The program conducted in Kathmandu from April 16-18, It was participated by 25 officials from 25 partner cooperatives. The resource persons of the training were manager duo of RMDC, Mr. Pritha Bahadur Thapa and Mr. Roop Bahadur Khadka. The objective of the training was to provide participants with knowledge & skill on credit appraisal of microenterprise loan. The major contents of the training were principles of lending, lending procedure & loan limit, methods of individual lending, advantage & disadvantage of individual lending, process of credit appraisal, analysis of enterprise, cash flow, collateral etc. The participants were divided into four groups The closing session of the training was chaired by Mr. Shankar Man Shrestha, CEO of RMDC. Mr. Shrestha stressed that loan must be provided on the basis of credit need and capacity of a client to utilize loan and the cash flow of the project concerned. He said haphazard lending should be stopped. At the end of the program Mr. Shrestha distributed the certificates to the participants. Interaction with Prospective Cooperatives under CIP Project RMDC organized four one day interaction program with potential cooperatives under Community Irrigation Project (CIP), in four different cities. The objective of the program was to share the status of cooperatives among the concerned, interact on the role of cooperatives on poverty alleviation, disseminate the objectives laid by CIP project, communicate about RMDC, explain the importance of cooperative standards for effective operation and management of cooperative, identify problems and solution measures for cooperatives, share each other s experiences and formulate the way forward. 39

53 The first interaction program was held in Bhairahawa on 8 August The program was attended by 37 participants from 13 cooperatives based on Dang and Kapilvastu districts. Similarly the second interaction program was held in Nepalgunj on 26 September 2012, which was participated by 57 participants from 21 cooperatives based on Kailali, Kanchanpur, Bajhang, and Doti districts. Likewise the third program was organized in Dang on May 20, The third interaction program was attended by 41 officials from 14 cooperatives based on Rukum, Rolpa, Salyan, Pyuthan and Kailali districts including two officials from Community Irrigation Project district office Dang. The fourth or the last interaction was held in Kohalpur on May 24, 2013, which was attended by 24 officials from 9 cooperatives based on Kailali, Kanchanpur, Kapilvastu, Dang and Doti districts. First two programs were facilitated by Mr. Ram Dayal Rajbanshi, Senior Manager of RMDC and Mr. Pritha Bahadur Thapa & Mr. Roop Bahadur Khadka duo Manager of RMDC. Remaining two programs were facilitated by Mr. Roop Bahadur Khadka Manager of RMDC and Mr. Rosan Kumar Adhikari, Training Consultant of RMDC. In the programs, each participating cooperatives made their presentation on progress status, experiences, issues and challenges they have faced and ways the problem have been solved. During the program facilitators from RMDC made presentation about RMDC, its objectives, products and services. Similarly, they also made presentation on cooperative standard required to be followed by Cooperatives. In the concluding session, officials from RMDC presented the list of problems laid out in the presentations from participating cooperatives and they also discussed about the solution measures related with the problems. The programs were ended with way forward, which were vowed to be followed by all the participants. Interaction with SFCLs RMDC organized three interaction programs with the officials of the Small Farmer Cooperatives (SFCLs), on role of SFCLs on poverty reduction. The main objective of the program was to explore and exchange problems, challenges, experiences and new innovations and to discuss on the contribution and role that can be played further by SFCLs on poverty reduction. First interaction program was held in Bhairahawa on 6 and 7 August, 2012, in which 58 officials 40

54 from 24 SFCLs attended the program. Similarly second interaction program was held in Pokhara on 12 September 2012, in which 15 participants from 5 SFCLs attended the program. Likewise the third program was organized in Nepalgunj on 24 September 2012, which was attended by 15 participants from 5 SFCLs. All the program were coordinated by Ms. Annanpurna Shrestha, Manager of RMDC and chaired by Mr. Shankar Man Shrestha, CEO of RMDC. Mr. Ram Dayal Rajbanshi, Senior Manager of RMDC and Mr. Pirtha Banadur Thapa, Manager of RMDC served as facilitators in the programs. During the program, after the opening session, each participating SFCL made their presentation highlighting their performance status, problems and challenges they have faced, the initiatives they have taken to solve the problem and new innovations they have adopted. Mr. Ram Dayal Rajbanshi, made presentation about RMDC whereas Mr. Pritha Bahadur Thapa presented different financial indicators and its uses. In the interactive session, Mr. Thapa come up with the list of problems identified during individual organization s presentations. Mr. Shankar Man Shrestha, CEO of RMDC discussed with participants on the possible solutions of each of the identified problems. All the programs approved the way forwards which all the participants vowed to follow. Onsite Technical Assistances to MFIs In addition to the classroom training, workshops and exposure visits, RMDC provides onsite technical assistance particularly to the start-up MFIs. The main purpose of the technical assistance is to help them establish essential microfinance operational systems and procedures in their offices, and develop required operational knowledge and skills of their staff. The onsite consultancy services are mainly given on: (i) maintaining accounts and records, (ii) preparation of program reports and financial statements, (iii) formulation of simple business plan, and (iv)preparation of operational manuals, etc. These programs have been found extremely helpful for the beginner MFIs. Capacity Building of MFI Clients RMDC offers financial and technical supports to its partner MFIs to organize need-based training/ workshops/exposure visit programs for their clients in order to strengthen groups cohesion, improve capacities of the members and upgrade their entrepreneurial as well as occupational skills. During the FY , a total of 66,947 MFI clients participated in different training, exposure visits and interaction programs under the financial and technical supports of RMDC (see Annex II for the detailed information on client training programs). Figure 3: Annual Progress of MFI Client Training 80,000 70,000 No. of Clients 60,000 50,000 40,000 30,000 20,000 10, No. of Clients 39,839 46,616 54,246 55,110 66,947 41

55 The annual progress trend of the MFIs client training program of last five years has been shown on Figure 3. The major MFI clients training programs completed during the fiscal year are mentioned below. a) Financial Literacy Training In the microfinance operation, before enrolling the members into the group, financial literacy training also called pre-group training is provided to the member. During the training, members are given orientation about microfinance program, information on different loans and savings products and its features, rules and regulations they have to comply as a microfinance client. They are also taught to write their name which helps to increase their self confidence. RMDC is providing support to partner organizations for conducting pre-group training as well. During the fiscal year a total of 745 pre-group training were conducted, which were attended by 17,964 members. b) Refresher Training RMDC from the beginning of its operation has been supporting its partner organizations financially and technically to conduct refresher training for their members. Refresher training is provided to the existing members to review the microfinance rules and regulations and reinforce them to comply. Refresher training has helped to energize members to maintain center discipline as well as financial discipline. With the financial support of RMDC, partner organizations organized a total of 1,462 refresher trainings during the fiscal year , in which 35,151 clients had participated. with the center related issues and problems. During the fiscal year, with supports from RMDC, 173 center chiefs workshops were organized by partner organizations, in which altogether 12,062 center chiefs had participated. d) Skill Development Trainings During the fiscal year , with the funding supports of RMDC, the partner organizations organized 52 skill development training programs for their clients. All together 1540 members benefitted from those training programs. The major types of skill development training organized during the year were on subjects such as animal husbandry, vegetable farming, pig/goat rearing, poultry rearing, pickle making, candle making, incense-stick making, mushroom farming, soap making, etc. c) Center Chiefs Workshop Generally MFIs organized center chiefs workshops once in a year in each branch to have interaction among center chiefs and between MFIs and center chiefs. These forum have been used for sharing experiences and learn from each other. These workshops were fruitful to develop leadership quality of center chiefs and make their role effective in managing their centers and dealing 42

56 Growth and Performance of Partner Organizations As a wholesale lending organization for microfinance, RMDC has been partnering with microfinance development banks (MFDBs), development banks (DBs) implementing microfinance programs, cooperatives (COOPs) and financial-intermediary NGOs (FINGOs). It had started partnership from y 2000 with 2 MFIs and till mid-y 2013, the total no of partner organization had reached 136, out of which 7 are MFDBs, 10 DBs, 24 FINGOs and 95 cooperatives. Till the date, the POs have been providing microfinance services in 67 districts out of 75 districts of the country. The composition of partner organization and the growth in number of RMDC s partners from the beginning till y 2013, is depicted in the Figures 4 and 5 respectively. Figure 4: Composition of RMDC s Partner Organizations 10 DBs 7 MFDBs 24 FI-NGOs 95 COOPs 43

57 Figure 5: Growth in Number of RMDC s POs Outreach With the increment in the number of partner organizations of RMDC and their scale of operation, the number of members and borrowers served by them also has been increasing every year. Till mid-y 2013, the partner organizations of RMDC had been providing microfinance services to 1.49 million members through their 876 branch offices. Among the 1.49 million members 1.03 million were borrowers. Most of the members and borrowers of the POs were from terai & plain areas of the country. The outreach expansion in hills and mountainous districts was low due to poor infrastructure, less economic activities, scattered and sparse population. The average annual growth of members and borrowers of the POs in FY was 12 percent and 11 percent respectively. All most all members of the POs are women but SFCLs have higher percentage of male members. On an average, the borrowers-to-members ratio among the POs is 69 percent. Figure 6: Growth of Members & Borrowers POs No. in Thousand

58 Figure 7: Growth of Outstanding Loan of the POs 25,000 Rs. In Million 20,000 15,000 10,000 5, Loan Portfolio Providing financial access to the poor to their doorstep and help them to get out of the poverty trap is the main mission of an MFI. Partner MFIs of RMDC are serving their clients with various types of client friendly loan products to fulfill the wide range of their credit needs. The microfinance members use the loan for a numbers of income generating activities, such as retail grocery, poultry farming, fruit and vegetable trading, fruits and vegetable farming, cycle repairing, tailoring, shoe making, tea shop, livestock raising, etc. The most common type of loan products of MFIs to clients are general loan, seasonal loan and emergency loan. Many MFIs have already introduced micro-enterprise loan for their graduated clients, who required little bigger size loan for their micro-enterprise project. Some POs have also introduced housing loan, bio gas loan, education loan, foreign employment loan as well. As the number of partner organizations and their operations are increasing in increasing trend, total outstanding loan portfolio of the POs with their borrowers is also increasing fast and reached Rs billion as of mid-y 2013, with an annual increment of 36 percent in the FY. Most of the POs have maintained good portfolio quality. On an average, arrear rate of the POs remained less than 2 percent throughout the period. The growth trend of the POs outstanding loan is shown in the Figure 7. In the microfinance program loan size of the borrowers gradually increased as the borrowers passed through different loan cycle. At the same time many POs have increased the initial loan size and also introduced some new loan products with bigger size loan. Due to all these factors, every year there has been gradual increment in the outstanding loan of the POs per borrower. By the end of the FY, the average outstanding loan of the POs per borrower reached Rs thousand which was only Rs. 4 thousand as of y Up-to FY 2007/08, growth rate of average outstanding loan was slow and after that the 45

59 Figure 8: Trend of Outstanding Loan per Borrower 25,000 20,000 15,000 10,000 5, growth rate was increasing in the increasing trend, Pension savings, Education savings, Festival savings which is portrayed in the figure 8. are voluntary savings. Because of the MFIs savings Members Savings Besides credit services, microfinance institutions also provide savings services to their members, which is one of the main services provided by MFIs. Savings mobilization is one of the prominent sources of fund for MFIs and it is a process of assets creation by the members for future needs and enhancing their financial security. The partner MFIs are accepting various types of compulsory and voluntary savings from their members. Group savings and Center Fund savings are compulsory savings whereas Personal savings, Child savings, service, the habit of making savings among the members has been inculcated. The members savings balance with MFIs has been increasing every year due to increment in the number of members associated with the MFIs, introduction of the various types of members friendly long term savings by MFIs, increment in the income level and habit of saving among the members. As of mid-y 2013, the total member savings balance with the POs reached Rs. 12 billion (see Figure 9) which was only 75 thousand as of y The huge amount of members saving balance indicates that the poor also can save. Figure 9: Trend of Clients Savings of RMDC s POs 14,000 12,000 Rs.In Million 10,000 8,000 6,000 4,000 2,

60 Figure 10: Trend of Savings Balance per Member 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, The saving balance of members has been increasing every year, along with the increment of the savings balance per member. This shows that the savings capacity of the members also has been increasing year after year (See Figure 10). The average savings balance per member of the POs as of mid- y 2000 was Rs.1.1 thousand which reached Rs. 8 thousand by the end of the FY. The growth rate in the average saving balance per members is 33%, in the FY, which is very encouraging. As mentioned earlier members savings is one of the prominent source of fund for MFIs for on lending loan to the members. More than half of the fund requirement of the MFIs for lending has been fulfilled from their members savings. The percentage of members savings balance to outstanding loan has reached 51% by the end of the FY. Due to increment in the members savings POs dependency on the borrowed fund also has decreased to a large extent. Figure 11: Trend of Savings-to-Loan Outstanding Ratio in POs

61 Figure 12: Trend of Operational Self Sufficiency (OSS) of POs 140 OSS % Fiscal Year Operational Self-Sufficiency Except some newcomers, most of the POs of RMDC have attained operational self-sufficiency (OSS) in microfinance operation and most of them are moving towards attaining the financial selfsufficiency (FSS) level. On an average OSS of the POs stood at 127 percent in the fiscal year which was slightly higher than the last year. Staff Productivity Partner organizations of RMDC are providing employment to 4,757 persons in microfinance operation among them 2,840 are field staff. The percentage of field staff-to-total staff among the POs stands at around 60 percent. The staff productivity of POs was increasing till FY 2009/10, after that it seems somewhat stable. As of mid y 2013, the staff productivity was on an average 314 members and 216 borrowers per staff (staff includes all staff: from chief executives to field staff and messenger). The outstanding loan per staff was Rs million. In case of field staff productivity, the average number of members and borrowers per field staff was 526 and 362 respectively at the end of fiscal year. The average outstanding loan amount per field staff was Rs million at that point of time. Figure 13: Trend of Staff Productivity of POs Figure 14: Trend of Field Staff Productivity of POs Members per Staff Borrowers per Staff Members per F. Staff Borrowers per F. Staff 48

62 Box 8: Performance of RMDC s Partner Organizations at a Glance Outreach As of mid-y 2013 Total no. of members 1,492,947 Total no. of borrowers 1,027,924 Total members' saving balance (Rs. in million) 12,015 Total loan outstanding (Rs. in million) 23,465 Total Overdue loan (Rs. in million) 287 Staff Productivity No. of members per staff 314 No. of borrowers per staff 216 Outstanding Loan per staff (Rs. in million) 4.93 No. of members per field staff 526 No. of borrowers per field staff 362 Outstanding Loan per field staff (Rs. in million) 8.26 Branch Productivity Ratios No. of members per branch office 1,704 No. of borrowers per branch office 1,173 Outstanding Loan per branch office (Rs. in million) Loan Portfolio Quality Current Repayment Rate 98% Cumulative Repayment Rate 99% Past due Rate 1.2% Profitability Interest Yeild on Portfolio 20% Operational Selfsufficiency 127% Others Borrowers Rate 69% Loan outstanding per borrower (Rs.) 22,828 Savings balance per member (Rs.) 8,048 Savings to Loan Outstanding 51% 49

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64 Monitoring & Follow-up of Partner MFIs Importance of monitoring Monitoring of partner MFI means the routine collection and analysis of various information of their operations. Generally monitoring can be divided into two parts, off-site and on-site. Off-site monitoring refers to the monitoring of an MFI s performance without actually visiting the location of the operations, while on-site monitoring requires direct visits to a branch or clients of an MFI. The purpose of monitoring and follow-up is to review whether the actions have taken place in conformity with the stated plan and programs. It enables the management to assess the progress of both quantitative and qualitative aspects of the program. Regular monitoring and follow-up provide timely feedback to the management and the concerned for making appropriate decisions. POs (Partner Organisations) of RMDC provide collateral free loans to the poor families. Thus, monitoring and follow-up plays a crucial role to reduce and minimize different operational risks. It also reduces the cost of lending and misuse of loans that leads to delinquency. Effective monitoring system helps MFIs to improve its performance. It detects areas such as timely implementation plan, checking shortfalls and irregularities, minimizing mistakes, building staff capacity, raising staff consciousness, maintaining performance standards, good governance and self regulation. Monitoring and follow-up of POs is considered as a high priority activity of the Centre. Monitoring Approach of RMDC Supervision Department of the Centre is responsible for carrying out the monitoring of POs activities. It has developed its own system for monitoring its POs on the basis of outcome of various workshops and trainings, consultation with different department. Supervision Department annually prepares monitoring plan for each partner MFIs, which linked to the areas of high risks identified through the risk assessment process and the deficiencies noted in the previous checks. Moreover, POs are segregated on the basis of their size, existing internal control system, complexity and risk profile. RMDC s monitoring involves examining different operational activities followed by the indicators logically analyzed on the basis of their status. The last stage of monitoring function is followup of findings and recommendations made by the supervisors. Generally, the Centre s monitoring starts with the visit to the branch office or group of an MFI and concludes with sharing and discussion with field staff and members of management and Board of Directors of the concerned PO. RMDC s supervisors give priority to visit centre or group meeting and the clients and their enterprises at first. At operational level main areas of monitoring are selection of the group member, quality of pre-group training and group meeting, savings collections, loan proposal and approval procedures, disbursement of loan, loan utilization, impact on client, errors, fraud, bank reconciliation, passbook and collection sheet, interest calculation etc. The supervising officer monitors the activities of field worker and group level activities and note down the status. At the branch level the supervisor examine accounting transactions and analyse various financial ratios, like portfolio quality and selfsufficiency, operational efficiency, profitability, PAR, YOP etc. During the POs visit the supervisor assesses the governance and strategy of POs, which depends on the quality and appropriateness of the board composition, its role and overall organizational strategy. Management system is rated on the basis of quality of human resources and the strength of accounting and management information. The performance of the POs on staff productivity and 51

65 ensuring compliance is also assessed. Under financial performance evaluation, aspects like repayment performance, asset quality, liquidity and profitability are thoroughly assessed. He also identifies weaknesses and training needs and makes recommendations accordingly. Risk based monitoring and supervision framework The risk based monitoring and supervision methodology reflects a continuous and dynamic process. RMDC has adopted risk based monitoring framework and it has own methodology for this purpose. The main objective of the framework is to evaluate the POs risk levels and trends associated with current and planned activities, assessing the management processes to identify, measure, monitor and control risks. RMDC s monitoring procedure assesses the POs financial conditions, compliance with applicable laws and regulations. In post monitoring phase RMDC communicate findings, directives, and recommendations in a clear and timely manner, and obtain commitments by the Board of directors and management to correct the deficiencies. It is vital to make follow-up on implementation of corrective actions to ensure that all the deficiencies are rectified on time and in a right manner. During the follow-up the implementation of the recommendations made to the POs thoroughly reviewed and analyzed. The concerned officer at supervision department stay in touch with officials of the concerned partner MFIs and ask them for timely submission of response letter to the Centre. On-going critical issues of partner MFIs are regularly reported to the CEO of the Centre. Impact of RMDC s Monitoring, Supervision and Follow-up system The impact of the RMDC s monitoring and supervision system is immense and multidimensional. It has contributed a lot to maintaining the near hundred percent recovery rate by the partner MFIs. It has contributed in professional assessment of the risk involved in lending to the clients, which is helpful in lowering the appraisal and transaction costs. It has helped to increase the creditworthiness of the MFIs and sensitizes the staff on the best practices of microfinance operations. Monitoring system of the Centre facilitates about how the partner MFIs can balance between its social mission and commercial mission. Due to effective monitoring and follow-up from the Centre institutional governance, office management, portfolio quality, accounting system of the POs have improved considerably. Their own monitoring the internal control mechanism is being strengthened and corporate governance and management quality, client supervision in many POs have improved. The member of the Board of Director, senior managers and field staff and even clients of the POs are now more aware and accountable to their roles and responsibilities. As the industry strives to retain its relevance in the face of big challenges, the unique aspect of RMDC s monitoring and follow-up system is to enlighten the microfinance community on ethics and moral values for enhancing the image and reputation of overall microfinance industry in the country. 52

66 Projects under Implementation RMDC had successfully completed projects such as Rural Microfinance Project (RMP), Aus Aid Project, Japanese Fund for Poverty Reduction (JFPR) Project, Community Livestock Development Project (CLDP) within the stipulated time frame. At present the Centre is implementing two projects Community Irrigation Project (CIP) and YUWAccess Project. The brief highlights of these on-going projects are as follows: Community Irrigation Project (CIP) The Community Irrigation Project (CIP) is a grant project of US$26.4 million from the Asian Development Bank (ADB), which was signed between the Government of Nepal (GON) and the Asian Development Bank (ADB) on February 8, The subsidiary agreement between GON and the Rural Microfinance Development Centre Ltd. (RMDC) was signed on April 19, RMDC is the implementing agency for Microfinance Training Component of Community Irrigation Project. The grant budget for this component is US$540,000. The objective of the Community Irrigation Project is to develop or improve small-scale irrigation systems in 12 districts in Nepal through a community-driven process targeted to the poor, women, and other disadvantaged groups. Under the Community Irrigation Project the microfinance training component aims to facilitate access to micro-credit for agricultural inputs, irrigation equipment, and irrigation infrastructure operation and maintenance by enabling local microfinance organizations to offer savings and credit services to the project areas. The project component includes; (i) identification of new MFIs (Microfinance Institutions) in the project districts, (ii) capacity building and strengthening of potential MFIs, (iii) technical assistance to MFIs, (iv) provide training, organize interaction programs and exposure visits for MFIs. Under the CIP project, RMDC has identified 127 potential cooperatives by the end of FY. RMDC organized exposure visit to successful MFI for identified MFIs to enhance their knowledge about microfinance operation. In total 31 board members representing 11 MFIs participated in exposure visits. After the exposure visit, the participants are found very positive and they are willing to improve the governance and financial operation of their respective organizations. Furthermore, RMDC arranged four interaction programs for 55 MFIs under which 157 board members of MFIs did participate in the programs. During this period, RMDC has also conducted 4 interaction programs for water user farmers. The interaction program was attended by altogether 91 participants, including WUA members, representatives of CIP and MFIs. Major subject matters of the interaction program were saving products, loan products, cooperative membership, roles and responsibilities of WUA members etc. These interaction programs were found to be very fruitful for learning importance of savings and credit, cooperative management, role of cooperative in socio-economic activities, process of CIP operation etc. Upto the end of the FY, altogether 16 MFIs have applied for the loan, among them one MFI has been able to get loan approved and appraisal procedure is ongoing for remaining MFIs. 53

67 Monitoring of MFIs is one of the major functions of RMDC, so along with regular checks and verification, it is also a kind of training and onsite consultancy to MFIs under CIP project. RMDC monitors MFIs through on-site visit to MFIs office and beneficiaries where operation and activities are checked and confirmed they are performing as per the prescribed norms. Under off-site monitoring RMDC regularly obtain progress reports from MFIs which are compiled and analyzed regularly to assess the progress achieved by each of the MFI. Progress of Community Irrigation project looks satisfactory in terms of both quantity and quality of achievement. YUWAccess Project YUWAccess is a project funded by European Union (EU) and jointly implemented by PlaNet Finance Nepal, Rural Microfinance Development Centre Ltd. (RMDC) and the Federation of Nepal Cottage & Small Industries (FNCSI). The project is being implemented in three districts of Nepal via. Ramechhap, Dolakha and Dang. The project was started on May 2011 and will end on May The specific objective of the project is to upgrade and strengthen technical and managerial capacities of Nepalese Technical and Vocational Education Training Providers (TVETPs) of the targeted districts so that the unemployed youths of the project districts will obtain vocational training and then get job in the country or abroad. If they could not get job opportunities, they will be given the necessary entrepreneurial and occupational skills on Micro and Small Enterprises (MSE) and loan will be provided through the local financial institutions to start or expand their own businesses. The MSE loan products designed and adopted by the financial institutions (FIs) will be friendly to the targeted unemployed youths to operate new or already established small and microenterprises. districts and establish counseling and placement unit in each project district which will be a meeting point for the employer and employment seeking youths. The total grant amount to be received by RMDC during the project period is EUR 1,02,287 which includes a revolving fund of EUR 56,250. RMDC is involved in capacity building of the microfinance institutions (MFIs) and in providing them wholesale funds for on lending to the target beneficiaries. The ultimate beneficiaries of the Project are the unemployed or the very low income women and the youths from the vulnerable communities (Tharus, Tamangs, Magars, Kamis, Thamis, Muslims and Dalits) in the Project districts-dolakha, Ramechhap and Dang. Similarly, the Project also aims to improve capacity of local MFIs to ensure the availability of financial services to the general public in the Project districts. Under the project period RMDC identified and surveyed 181 Cooperatives providing microfinance services in three project districts. District level workshops were organized in each district to disseminate the findings of the survey. On the basis of survey and project need, RMDC prepared a Micro and Small Enterprises (SME) loan manual for Cooperatives and MFIs. RMDC organized workshops in three project districts to interact with potential Cooperatives and MFIs about their role in the project and process for partnering with RMDC. Altogether Five Cooperatives/MFIs became partner of RMDC and RMDC disbursed them Rs. 12 million for MSE lending. RMDC has planned to organize training to cooperatives/mfis staff in each district on MSE loan and also a workshop with the partner cooperatives of the project district. Planet Finance is mainly involved in promoting vocational skills and strengthening the capacity of Technical and Vocational Education Training Providers (TVETPs), RMDC is mainly involved in providing youth friendly microfinance services through technical assistance and wholesale lending, whereas FNCSI is responsible for selecting potential unemployed youths of the respective 54

68 International Cooperation and Exchange Program RMDC has been conducting numbers of international trainings, exposure visits to the MFIs board members, officials to learn and observe best practices in other countries. Likewise MFIs officials of other countries also have great deal of interest to have exposure visits in Nepal. As a result officials of the various countries have already visited RMDC and its partner MFIs. These types of exchange visit and training programs provide an ample opportunity to improve microfinance sector. In the FY , RMDC organized following programs for foreign delegates and RMDC Officials. Bangladesh Microfinance Official s Visits to RMDC and its Partner MFIs RMDC organized three exposure visit programs for the microfinance officials from Bangladesh. The participating officials were from the Palli- Karma Sahayak Foundation (PKSF) and its partner organizations. PKSF is a wholesale lending organization in Bangladesh. The purpose of the visit program was to observe and get acquainted with the ongoing practices of microfinance in Nepal. Among the three visit programs two programs were coordinated by Mr. Pritha Bahadur Thapa and Ms. Annapurna Shrestha, managers of RMDC and third program was coordinated by Ms. Annapurna Sharestha and Mr. Roop Bahadur Khadka, managers of RMDC. The first exposure visit program was held from March 29 - April 5, 2013 for a team of thirteen officials. The team comprised of six officials from PKSF and seven officials representing their seven partner organizations. The team was led by Mr. Akond Mohammad Rafiqul Islam, Deputy General Manager of PKSF. Similarly the second program was organized from 55

69 May 26 - June 2, 2013, which was attended by fourteen officials. The team, comprising five officials from PKSF and nine officials from their partner organizations was led by Mr. Dilip Paul, Assistant General Manager of PKSF. Likewise the third visit program was held from June 23-30, It was attended by nine officials including four from PKSF and five from its partner organizations. Mr. Md. Abul Kashem, Deputy General Manager of PKSF was the leader of the third team. On the first day of the visit program, the teams were given a brief introductory presentation at the RMDC office about the microfinance sector in Nepal focusing on microfinance outreach, and problems & challenges. They were also briefed on RMDC s role in the development of MF sector in Nepal. During their visit, the teams visited head offices as well as branch offices of various partner MFIs of RMDC, where they interacted with the field staff, branch manager as well as senior officials about the microfinance modality and practice. During the visit, they also observed the center meetings of those MFIs and had interaction with microfinance clients about microfinance and their projects and had also visited some micro-enterprises of the clients. The teams were overwhelmed by the reception and cooperation they received during the visit. At the end of the program, each of the teams made a separate presentation on their observation and findings in a session chaired by Mr. Shankar Man Shrestha, CEO of RMDC. According to them, they were impressed with the operational process of microfinance and high level of discipline among the MFI field staff and clients. They observed that the savings to loan ratio was high among the clients and the clients were utilizing their loan amounts in income generating activities. However, they suggested that the microfinance programs should deepen their services down to the poorest of the poor and adequate monitoring & supervision needs to be carried out. The teams left Kathmandu with new learning experiences and good memories of Nepal microfinance. RMDC Partner MFIs Officials Visits to MFIs in Bangladesh RMDC organized two exposure visit programs to Microfinance Institutions in Bangladesh for the officials of its partner MFIs. The visit programs were from March and April 22- May 1, The programs were facilitated by the Integrated Development Foundation (IDF), a well known microfinance NGO, in Bangladesh. The objective of the visits was to get acquainted with the microfinance operation, process and practices in Bangladesh. 56

70 The first team comprised of eight board members from seven partner MFIs namely Mr. Narendra Tharu, UNYC Nepal, Bardiya, Mrs. Sharada Sharma, NWCSC, Dang, Mr. Shyam Kant Chaudhary, Mahuli Community Development Center, Saptari, Mr. Padmanath Sharma and Ms. Sita Sharma, CYC Nepal, Baglung, Mr. Shyam Kumar Shrestha, Srijana Community Development Center, Siraha, Mr. Min Prasad Gurung, Muktinath Bikas Bank Ltd., Pokhara, Mr. Upendra Prasad Olee, Sahara Nepal Savings and Credit Cooperative Society, Jhapa and two officials from RMDC Mr. Ram Dayal Rajbanshi, Senior Manager and Mr. Govinda Prasad Paudel officer. The team was coordinated by Mr. Rajbanshi, Senior Manager of RMDC. Likewise the second team comprised of seven officials from six partner MFIs namely Ms. Aasmani Chaudhary and Mr. Shogat Bir Chaudhary, Rural Women Development Centre, Dang, Mr. Bishnu Bhakta Sharma, Kisan Bahuuddeshiya Sahakari Sanstha Ltd., Kailali, Mr. Purna Bahadur Chand, Udayadev Multipurpose Cooperative Ltd., Kanchanpur, Mr. Ash Narayan Chaudhary, FORWARD, Sunsari, Ms. Shanti Devi Dhakal, Mahila Upakar Manch, Banke, Mr. Bed Nath Adhikari,Chhimek Laghubitta Bikas Bank Ltd., Kathmandu and two officials from RMDC Mr. Pritha Bahadur Thapa, Manager and Mr. Bharat Kumar Singh, officer. The team was coordinated by Mr. Thapa, Manager of RMDC. uring the visit, the teams visited center meeting, branch office of Grameen Bank, IDF, ASA and BURO. The participants have observed and discussed about operational modality, MIS, accounting, loan and saving products and operational & financial efficiency of the MFIs. They also visited and interacted with the clients of those MFIs. The interactions on various matters with the clients, branch staff and officials of these institutions have been insightful and informative. The major places of visit were Dhaka, Chittagong, Cox s bazaar and Bandarban. From the study visit, the participants particularly learned that close and regular monitoring of clients is essential to make a microcredit program successful and sustainable. They found that even branch manager of the MFIs spends most of their 57

71 time (around 80% of their time) in the field. Hundred percent verification of clients mostly before loan approval is found in almost all MFIs. Because of these approaches, even larger microenterprise loans are provided to clients without collateral. Flexibility and creativity (innovations) are other features of the Bangladeshi microcredit program. Staffs of the MFIs are found well oriented, trained and motivated to their jobs. Chief Executives of RMDC s Partner MFIs Visit to MFIs in Indonesia RMDC organized an exposure visit program for the Nepalese Microfinance Institutions to Indonesia, from June 17 to 22, The purpose of the visit program was to observe and get acquainted with the ongoing practices of microfinance in Indonesia. The visit was coordinated by the Microfinance Innovation Center for Resources and Alternatives (MICRA), an Indonesian development agency for microfinance. The team of ten officials, comprised of eight chief executives from eight MFIs namely Mr. Mani Kumar Arjyal, Nerude Laghubitta Bikas Bank Ltd., Biratnagar, Ms. Bhagbati Chaudhary, FORWARD, Sunsari, Mr. Yogendra Mandal, Jeevan Bikas Samaj, Biratnagar, Mr. Mahendra Kumar Giri, Sahara Nepal Cooperative Society Nepal, Jhapa, Mr. Prabhu Narayan Chaudhary, Mahuli Community Development Centre Ltd., Saptari, Mr. Chandi Prasad Sharma, CYC Nepal, Baglung, Ms. Shova Bajracharya, Manushi, Kathmandu, Mr. Bir Bahadur Adhikari, Srijana Development Centre, Pokhara and two officials Mr. Tirtha Ratna Konajo, Senior Manager and Ms. Annapurna Shrestha, manager of RMDC. The team visited, Amartha, a cooperative at Bogor; Bank Indonesia, the central bank of Indonesia, in Jakarta; BPR Citra Artha Sedana, a rural bank and BPR Supra Artapersada another rural bank in Bangung. The organizations had made presentations of their organizational history, functions and activities. The team had fruitful interactions with the presenters and also interacted with the field staff as well as senior officials about the microfinance modality and practice. During the visit, the team observed the center meetings of the MFIs and also had visited some microenterprises of the clients. Indonesia as a fast moving country towards economic development, microfinance programs were found exciting by the visiting team. They said It was exciting to see all the clients maintaining greenery around their homes and plantation of fruit trees in their premises. Another important point the participants have noticed that clients were able to maintain neat and clean homes though the homes were small but the floor were surfaced with the tiles. BPR Supra Artapersada, Bangung, a rural bank presented with the information directly derived from their software, they were able to satisfy the queries of the participants instantly accessing from the software database. The BPR Supra is also providing microenterprise loan to the police families on the collateral of their certificates of appointments. 58

72 RMDC s Board of Directors Exposure Visit to MFIs and Central Bank of Indonesia In coordination of Microfinance Innovation Center for Resources and Alternatives (MICRA), the members of the Board of Directors of RMDC had made a study visit to the Indonesia from September 1-8, The team led by Mr. Ashoke SJB Rana, Chairperson comprised of other board members namely Mr. Manmohan Kumar Shrestha, Mr. Anil Kumar Shrestha, Mr. Rajan Kumar Amatya, Mr. Kiran Kumar Shrestha, Mr. Anil Kumar Khanal and Ms. Sadhana Upadhyay and CEO Mr. Shankar Man Shrestha. During the visit the team observed prevailing microfinance practices of Indonesia. The team made visit to Rural Banks, Microfinance Cooperatives, a wholesale lending institution - Bank Andara and the Central Bank of Indonesia, where the team observed and discussed with senior management & board on microfinance operation, organizational structure, monitoring & supervision procedure etc. The team also made field visit to some borrowers & groups of MFIs and interacted with the clients about microfinance and their projects. Participation in Clean Energy Business Planning Training Program in Lucknow With funding of United Nations Capital Development Fund (UNCDF), the Seattle based Microenergy Credits team conducted a training program on Clean Energy Business Planning for Nepalese banks and microfinance institutions (MFIs) from April 24 to 28, 2013 in Lucknow, India. Nine banks/mfis of Nepal including RMDC and the Alternative Energy Promotion Centre (AEPC), a government agency for energy program, participated in the program. RMDC s officials Mr. Ram Dayal Rajbanshi and Mr. Jay Ram Khadka participated in the program. The main objective of the training program was to train the financial institutions on preparation of a business plan for clean energy lending. Lead trainer Mr. Aimthy Thoumoung taught about the concepts, steps and process of business planning for clean energy program. AEPC officials highlighted the roles and functions of the organization on clean energy promotion and development in the country. During the program, the participants were taken to villages where clean energy products solar home systems and improved cook stoves-were used. The participants had an opportunity to talk with the clients who had used the products and to meet officials of financier banks. There were also presentations from Aryavart Kchetriya Grameen Bank, Bank of India, National Housing Bank, SKDRDP, which have financed energy products in India. Moreover, suppliers of improved cook stoves and solar home systems had shared their products and services to the participants. The program gave participants some idea about how clean energy financing program has been implemented in the neighboring country. It was found that state-owned banks and microfinance NGOs were actively involved in energy lending 59

73 program. A number of quality suppliers of the energy products are also available in the Indian market. Microcredit Summit Campaign Report Release As a representative of Microcredit Summit Campaign for Nepal, RMDC has been releasing report of the Microcredit Summit Campaign each year. The Microcredit Summit Campaign is a project of RESULTS Educational Fund, a U.S.-based advocacy organization committed to creating the will to eliminate poverty. The Campaign brings together microfinance practitioners, advocates, researchers, investors, donors, and stakeholders to promote best practices in the field, to stimulate the interchange of knowledge, and to work towards reaching the Campaign s goals. In FY, RMDC released the Microcredit Summit Campaign Report 2013 on February 5, 2013 in presence of media people. The report title to Vulnerability, highlighted that in 2011, 13 million fewer of the world s poorest families received access to microcredit and other financial services than in It marked that it was the first time since 1998 when the Campaign began tracking this data that the total number of clients and the number of poorest families reached had declined. The total number of clients was reported to have fallen from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, from 137 million to 124 million. The report argues that getting the industry back on track will require a new understanding of clients needs, preferences, and aspirations, as well as designing new tools for delivering products and services to them at lower costs. During the press meet Mr. Shankar Man Shrestha, CEO of RMDC, highlighted the main findings of the report such as outreach of the microfinance, its growth rate, issues and challenges faced by global microfinance industry, its quality and contribution in reducing the poverty across the world. 60

74 Challenges of Microfinance Sector in Nepal Microfinance sector in Nepal, as in most other developing countries, has made a considerable progress particularly in scale of outreach in spite of many challenges it has been facing. Quite a number of institutional micro-lenders in the form of microfinance banks, financial-intermediary nongovernment organization (FINGOs or microfinance NGOs), savings and credit cooperative societies have been established across the country. And these organizations have been able to reach out to over 18 million poor households with microfinancial services, particularly microcredit and savings services. Most of these organizations have been performing well financially maintaining high loan portfolio quality and desirable operational self-sufficiency. However, they lag behind in social performance indicators. Focus on clients protection and economic growth seems to be almost ignored from the side of MFIs and the concerned agencies. Microfinance programs are concentrated in easily accessible areas, but the remote hilly/mountain areas are still deprived of the institutional microfinance services. Mission-drift among the MFIs and multiple lending to clients are on increase in the country. For the sustainable growth of the microfinance industry, essential financial infrastructures, such as specialized Credit Information Bureau (CIB) for microfinance, availability of appropriate micro-insurance services, suitable information technologies, etc are generally lacking in the country. Hence, in order to expand quality and comprehensive microfinance services to the majority of the poor households and to make the microfinance industry more responsible and sustainable over a reasonable period of time, a lot of efforts still need to be made by all stakeholders including regulator, investors and practitioners. The major challenges facing by the microfinance industry have been briefly described Limited capacity of institutional micro-lenders Although there is quite a number of institutional microlenders in the country in different corporate form, most of them still have limited institutional capacities to deliver quality and broad microfinance services (not only the existing savings and credit services but also the payment transfers (remittance transfer), micro-insurance services, and the like) to the poor households living across the country. Majority of the institutions do not have an adequate number of competent and committed human resources essential for effective delivery and management of their services as per the best microfinance practices. The medium and bigger MFIs are still struggling to have friendly and well-forming computer software to have an automated operating system and management information systems (MIS) required to implement and manage their complex operations effectively and efficiently. Most of them do not also have own capacity to formulate medium and long-term business plan. Governance and top management of these organizations are also not up to the desired standard. Moreover, most of the microfinance banks do not still have right operational policies and systems of risk management, asset and liability management, cash management in place. In spite of such lacking, most micro-lenders disburse loans to as many clients as possible as they have easy access to loan funds from banks and financial funds. 61

75 Poor physical and economic infrastructures Poor physical and economic infrastructures are found as the major constraints for limited access of microfinance in the remote rural and hill/ mountain areas of the country. These areas have very poor road networks and transport facilities. Economic infrastructures, such as presence of banks, telecommunication offices, post offices, etc are lacking in the areas. These factors have caused difficulty to both MFIs and clients. MFIs operating in hill/mountain districts find difficulty in managing their cash as the banks branches are not existed nearby their operating areas and even in the district headquarters. Likewise, the clients living very far from the market centers due to lack of poor road network and transport infrastructures cannot produce as much as they can even though they have quality land and favorable environment to grow crops in their localities. Easy availability of funds to the poor families could not make much difference unless the infrastructures for economic development are improved in such areas. Lack of appropriate training institute for microfinance There are a few training institutes in the country which offer some theoretical microfinance courses occasionally; but none of them are conducting need-based practical or operational skills development training programs with the purpose of developing suitably qualified human resources for MFIs. In order to run an MFI smoothly, the organization s staff should have adequate knowledge and skills in microfinance operation, such as identification of poor households in a community, orientation of eligible members before enrolling them as members into a microfinance program, conducting regular group meeting, supervision and monitoring of operations, internal control, credit operation management, branch management, etc. So far, the MFIs have learned the operating skills from each other. RMDC s one-and-a half-decades long experience in institutional capacity building of MFIs shows that need-based practical training programs, for instance on-the-job training, onsite technical assistance, well organized exposure visit to best practices, interactive problem solving workshops, etc. are essential to develop right human resources required to run an MFI efficiently and effectively. Mere theoretical courses conducted in class-rooms will not help much to the MFIs particularly to the beginner ones. Although RMDC has fulfilled the training needs of MFIs to a larger extent in the earlier years, the growing training needs of MFIs could not be fulfilled by its resources alone. Hence, the microfinance industry needs a specialized training institute which could conduct such practical training courses. Limited essential financial infrastructures Essential financial infrastructures for sustainable growth of the microfinance industry, such as specific credit information bureau (CIB) for microfinance, easily available appropriate micro-insurance services and suitable information technologies for effective delivery of microfinance services, are still lacking in the country. In the absence of a specialized CIB for microfinance, a frontier micro-lender in the country finds difficult to assess actual credit history of a client while making its decision of loan approval for her/him. Although taking credit information while doing appraisal of bigger loans is mandatory for the micro-lenders regulated by the central bank, they could not comply with it due to unhealthy or unfriendly behaviors of their neighboring financial institutions. There has been a growing mistrust or unhealthy competition among these institutions, which has made almost impossible in exchange of correct credit information among the MFIs. And, this has aggravated the current scenario of increasing undesirable multiple lending to clients. Similarly, proper micro-insurance services, such as life or health insurance services for the poor and insurance of micro-enterprises (livestock insurance, crop insurance, etc.) are limited or almost lacking in most part of the country. In the lack of such services, the low-income entrepreneurs do not have confidence to venture into high-return economic activities, for instance raising high yielding cow or buffalo, cultivation of high-breed crops and high 62

76 quality fish farming etc. Likewise, most MFIs do not have automated operation and management information systems for effective delivery and management of microfinance services as yet. In dearth of this capacity, the institutions could not have expanded their operations effectively and efficiently. Poor supervision and monitoring of financial cooperative societies Cooperative societies have been recognized as one of the important institutions for rural development and poverty reduction in the country. Banks and financial institutions, in the recent years, have been disbursing their mandatory deprived sector (microcredit) funds to the poor populace also through financial cooperative societies 1 as the microfinance NGOs and specialized microfinance banks are in very limited number. The financial cooperative societies, if they can perform well financially, could also be a right vehicle to channel a large amount of deprived sector funds to the rural and remote areas in the long run as these institutions are in large number 2 and are found in every nook and corner of the country. Structurally these institutions are self regulated as they are locally owned and managed. It is observed that most of the financial cooperative societies are not even up to the basic standard in terms of governance and management, accounting and financial management, credit operation, internal control and monitoring, etc. Offsite and onsite supervision and monitoring of these institutions from the concerned regulatory and supervisory bodies, which is essential to improve their institutional capacities, is found very poor in the country. MFIs focus on short-term viability of their institutions Nepali MFIs in general have become profit centric in order to please their investors and staff. To obtain higher profit, they have been making utmost efforts for increasing their market shares and volume of their businesses. They try to keep interest spread wider and staff productivity higher with the aim of earning higher interest income. But, the institutions have not given their attention towards the socio-economic growth of their clients, for which they have been actually established. With the purpose of achieving periodic target, field staffs of the institutions concentrate their efforts on increasing number of borrowers, volume of loan outstanding, savings, etc. The field staffs are not being incentivized for their work on monitoring of loan utilization by clients, building up entrepreneurial capacity of clients, linking them with markets, and so on for growth of clients. It seems that the MFIs are not so serious about long term financial sustainability of their institutions. Limited business development services to microfinance clients MFIs in the country offer only financial services, such as micro saving, micro-credit and few of them also provide remittance services linking with commercial banks. Few MFIs occasionally organize few training on agriculture or livestock from their own resources or donor funds. But, none of the MFIs has been providing systematically designed business development services to the clients although the institutions recognize the importance of entrepreneurial skills development of clients which will ensure the growth of clients as well as the sustainability of the microfinance industry in the country. Supply of deprived sector funds in the market It is mandatory for class A, B and C type banks and financial institutions to disburse at least 4.5%, 4% and 3.5% of their total loan portfolios respectively to the deprived sector (the poor masses). In order to meet the obligatory requirement, these financial institutions either lend directly to the poor households or disburse the fund to the target group through MFIs (microfinance NGOs, specialized microfinance banks or financial cooperative societies). 1 Financial cooperatives includes the savings and credit cooperative societies and other cooperative societies having a license to deliver savings and credit services. 2 There are over 12,000 savings and credit cooperative societies in the country. 63

77 Since these commercially-oriented banks and financial institutions do not have their own experience in micro-lending, they are found not following the best microfinance practices while lending directly to the poor. As a result, outcomes and impact of the direct lending program of these financial institutions have been generally observed negative or harmful to the microfinance industry. Wholesale lending to MFIs also appears challenging for the banks and financial institutions as there are a very limited number of credit-worthy MFIs in the country. This situation has caused unhealthy competition among the banks and financial institutions for lending to the few viable MFIs. It has been observed that most of the institutions lend to MFIs even at negative interest rate 3 in order to meet their mandatory targets and thereby to get escaped themselves from the high penalty charge from the regulatory body. The financial institutions do not also undertake an in-depth appraisal of an MFI before lending to. These unhealthy behaviors of the financial institutions would definitely distort the whole financial systems. Microfinance Mission Drift A particular MFI states in its preamble that its objective is poverty reduction. In order to achieve the objective, the institution has to reach out to a large number of poorer households including the ultra-poor families with quality and appropriate microfinance products and services. Having a large number of poorer clients, such type of MFI would definitely have a lower loan size. And these MFIs can meet their operational costs and maintain their desired financial health by increasing staff productivity in terms of number of borrowers per staff and operational efficiency. Maximization of institutional profitability should not be the sole objective of these organizations. They can maintain reasonable profit through charging appropriate interest rate to the clients. But, in recent years, particularly the larger MFIs or microfinance banks in the country have been found deviated from their original mission of poverty reduction by offering most of their services to nonpoor and less poor clients with higher loan size with the objective of increasing their volume of businesses and thereby raising up their institutional profitability. It has been observed that the very poor or ultra-poor households have been left-out from their microfinance programs because of their larger loan size and inappropriate operating modality not suited to the poor clients. Besides, the staff are geared up toward reaching physical target by poaching clients of other MFIs. This scenario has been found largely in the microfinance programs being implemented directly by the development banks or commercial banks or by the microfinance banks owned by the banks. Over-indebtedness of microfinance clients Over-indebtedness is currently one of most serious risks of microfinance, endangering both social impact and industry stability. It has the potential to push customer further into poverty. It could also put the MFIs, their portfolio quality and institutional sustainability at risk. Moreover, its consequences can spill over to investors, donor and the whole microfinance sector. The situation of over-indebtedness arises when a microfinance client borrows such an amount which is beyond her or his capacity. This scenario has been widely observed in recent years in the country, particularly in the geographical areas where there is presence of large number of microlenders. Field offices of the MFIs, in order to meet their periodic target, try to disburse loans to many clients without making detailed appraisal of the clients. And the clients having no idea about the consequences of over-indebtedness borrow a larger amount of loan when they are offered easy loans from different MFIs. As a result, some MFIs have already started facing the loan default problem. It is high time to take necessary steps by the MFIs, the regulators and the lenders to protect the clients and thereby to minimize the risks to the microfinance industry. 3 The bank and financial institutions are also found lending at 3-5% APR, which is very low compared to public savings rate and inflation in the country. 64

78 ANNEX I Institutions which Received Training Supports from RMDC As of y 15, 2013 SN Name of Organizations Microfinance Development Banks 1 Chhimek Laghubitta Bikas Bank Ltd., Hetauda 2 Deprosc Laghubitta Bikas Bank Ltd., Bharatpur 3 Madhyamanchal Grameen Bikas Bank Ltd., Janakpur 4 Madhyapaschimanchal Grameen Bikas Bank Ltd., Nepalganj 5 Nerude Laghubitta Bikas Bank Ltd., Biratnagar 6 Nirdhan Utthan Bank Ltd., Bhairahwa 7 Paschimanchal Grameen Bikas Bank Ltd., Butwal 8 Purbanchal Grameen Bikas Bank Ltd., Biratnagar 9 Sana Kisan Bikas Bank Ltd., Kathmandu 10 Sudurpaschimanchal Grameen Bikas Bank Ltd., Dhangadhi 11 Summit Laghubitta Bikas Bank Ltd. Jhapa 12 Swablamban Bikas Bank Ltd., Janakpur 13 Mahila Sahayatra Microfinance Bittiya Sanstha Ltd., Chitlang Development Banks 14 Gaurishankar Bikas Bank Ltd., Kawasoti 15 Triveni Bikas Bank Ltd., Narayanghat 16 Bageswori Bikas Bank Ltd., Nepalganj 17 Siddhartha Bikas Bank Ltd., Butwal 18 Muktinath Bikas Bank Ltd., Pokhara Cooperatives 19 Aguali Samajik Uddhyami Mahila Cooperative Ltd., Aguali, Danda 20 Aekrikrit Savings and Credit Cooperative Ltd., Pyuthan 21 Aerawati Multipurpose Cooperative Ltd., Pyuthan 22 Ananda Saving & Credit Cooperative Ltd., Kathmandu 23 Andhakar Mukti Saving and Credit Cooperative Ltd., Palpa 24 Arunodaya Saving & Credit Cooperative Ltd., Parsa 25 Atma Nirbhar Tarkari Uttapadan Cooperative Ltd., Kavre 26 Baghkhor Samajik Uddhyami Mahila Cooperative Ltd., Chitwan 27 Batabaran Sudhar Multi-purpose Cooperative Ltd., Surkhet 28 Batawaran Sangrakshan Multipurpose Cooperative Ltd.,Masuriya, Kailali 65

79 SN Name of Organizations 29 Bhimkul Saving & Credit Cooperative Ltd., Gorkha 30 Bikas Bahuuddyesha SCO Ltd., Shankarnagar, Rupandehi 31 Bindhbasini Saving & Credit Cooperative Ltd., Kavre 32 Bishawajoyti Mahila Bikas Multipurpose Cooperative Ltd., Kailali 33 Bishazari Samajik Uddhyami Mahila Cooperative Ltd., Gitanagar, Chitwan 34 Biswasilio Saving & Credit Cooperative Ltd., Bardiya 35 Bouddha Grameen Saving and Credit Cooperative Ltd., Latikoilee, Surkhet 36 Bramahapuri Saving & Credit Cooperative Ltd., Lalitpur 37 Chameli Saving and Credit Cooperative Ltd., Sarlahi 38 Chatreshwori Krishi Upabhokta Sahakari Sanstha Ltd., Salyan 39 Chaturbhujeshwor Multipurpose Ship Mahila Cooperative Ltd., Sarlahi 40 Chetna Samajik Udhyami Sahakari Sanstha Ltd., Salyan 41 Dana Grameen Saving & Credit Cooperative Ltd., Jhumka, Sunsari 42 Deurali Multipurpose Cooperative Ltd., Panchthar 43 Deurali Saving and Credit Cooperative Ltd., Lamjung 44 Dhnanjaya Multipurpose Cooperative Ltd., Surkhet 45 Digo Kosh Sanchalan Saving and Credit Cooperative Ltd., Rolpa 46 Digre Sai Kumari Saving & Credit Cooperative Ltd., Rukum 47 District Federation Office of SFCLs Ltd., Dhading 48 Dolkha Multipurpose Cooperative Ltd., Dolkha 49 Ekta Saving & Credit Cooperative Ltd., Kumaripati, Lalitpur 50 Everest Cooperative Ltd., Pokhara 51 Everest Saving & Credit Cooperative Ltd., Banke 52 Gadilekh Savings and Credit Cooperative Ltd., Rolpa 53 Gaditakura Devi Mahila Bikas Savings and Credit Cooperative Ltd., Dang 54 Gangamala Cooperative Ltd., Surkhet 55 Gorkha Cottage & Small Industries Cooperative Ltd., Jhapa 56 Gorkhkali Saving & Credit Cooperative Ltd., Gorkha 57 Gosaikunda Multipurpose Cooperative Ltd., Nuwakot 58 Grameen Bikas Multipurpose Cooperative Ltd., Dailekh 59 Grameen Jagaran Saving & Credit Cooperative Ltd., Surkhet 60 Hadhdeva Agriculture Cooperative Ltd., Taplejung 61 Hamro Bank Saving & Credit Cooperative Ltd., Kavre 62 Hamro Thailee Saving & Credit Cooperative Ltd., Lalitpur 63 Hari Tara Saving & Credit Cooperative Ltd., Arghakhanchi 64 Hatemalo Mahila Multipurpose Cooperative Ltd., Kathmandu 65 Hatemalo Saving & Credit Cooperative Ltd., Accham 66 Helping Saving & Credit Cooperative Ltd., Lalitpur 67 Himalaya Swabalamban Savings and Credit Cooperative Ltd., Bhalbari, Kapilbastu 68 Himchuli Krishi Cooperative Ltd., Kalikot 69 Ideal Cooperative Ltd., Rajbiraj 70 Indragram Punarmilan Saving & Credit Cooperative Ltd., Chitwan 66

80 SN Name of Organizations 71 Indrapur Multipurpose Cooperative Ltd., Morang 72 Jagaran Saving & Credit Cooperative Ltd., Kathmandu 73 Jagriti Saving & Credit Cooperative Ltd., Achham 74 Jai Ambe Swabalamban Savings and Credit Cooperative Ltd., Manpur, Kapilbastu 75 Jana Jagriti Tarkari Utpadan Cooperative Ltd., Dhulikhel 76 Janabikas Swabalamban Savings and Credit Cooperative Ltd., Thunihaya, Kapilbastu 77 Janachetana Multipurpose Cooperative Ltd., Doti 78 Janahitkari Saving & Credit Cooperative Ltd., Surkhet 79 Janahitkosh Saving & Credit Cooperative Ltd., Ramechhap 80 Janajagaran Saving & Credit Cooperative Ltd., Dolkha 81 Janajyoti Swabalamban Savings and Credit Cooperative Ltd., Udaypur, Kapilbastu 82 Janakalika Saving & Credit Cooperative Ltd., Baitadi 83 Janakalyan Saving & Credit Cooperative Ltd., Dolkha 84 Janakalyan Saving & Credit Cooperative Ltd., Makwanpur 85 Janakalyan Saving & Credit Cooperative Ltd., Malekhu, Dhading 86 Janakalyan Saving & Credit Cooperative Ltd., Sunsari 87 Janakalyan Savings and Credit Cooperative Ltd., Rolpa 88 Janakalyankari Saving & Credit Cooperative Ltd., Baitadi 89 Janamukhi Saving & Credit Cooperative Ltd.,Dolkha 90 Janamukhi Savings and Credit Cooperative Ltd., Dang 91 Janasachetan Saving & Credit Cooperative Ltd., Dolakha 92 Janasewa Saving & Credit Cooperative Ltd., Kanchanpur 93 Janasewa Saving & Credit Cooperative Ltd., Khotang 94 Janata Savings and Credit Cooperative Ltd., Bhimdatt, Kanchanpur 95 Jankalayan Multipurpose Cooperative Ltd., Bara 96 Janupkar Saving & Credit Cooperative Ltd., Dolakha 97 Jaya Durge Multipurpose Cooperative Ltd., Doti 98 Jeevanjyoti Mahila Bikas Multipurpose Cooperative Ltd.,Malakheti, Kailali 99 Jeevanpayogi Saving & Credit Cooperative Ltd., Doti 100 Jilla (District) Saving & Credit Cooperative Ltd., Achham 101 Jyoti Mahila Development Cooperative Ltd., Chitwan 102 Kailash Saving & Credit Cooperative Ltd., Achham 103 Kalidevi Multipurpose Cooperative Ltd., Lalitpur 104 Kalika Multipurpose Cooperative Ltd., Rasuwa 105 Kalyankari Saving & Credit Cooperative Ltd., Lalitpur 106 Kamalamai Multipurpose Cooperative Ltd., Sindhuli 107 Kanchanjanga Agriculture Cooperative Ltd., Taplejung 108 Kanchanjanga Samudayik Multipurpose Cooperative Ltd., Taplejung 109 Kanchanjunga Saving & Credit Cooperative Ltd., Fidim, Panchthar 110 Kapurkot Krishi Sahakari Sanstha Ltd., Salyan 111 Karai Khola Agri.Cooperative Ltd., Surkhet 112 Karnali Saving & Investment Cooperative Ltd., Jhapa 67

81 SN Name of Organizations 113 Karpureshwor Saving & Credit Cooperative Ltd., Lamjung 114 Kasturi Multipurpose Cooperative Ltd., Jajarkot 115 Kawasoti Samajik Uddhyami Mahila Cooperative Ltd., Kawasoti, Nawalparasi 116 Kedarnath Saving & Credit Cooperative Ltd., Darchula 117 Khairenitar Mahila Bikas Multipurpose Cooperative Ltd., Tanahu 118 Kisan Kalpan Saving & Credit cooperative Ltd., Sunsari 119 Kisan Multipurpose Cooperative Ltd., Kailali 120 Kola Samaijee Mahila Bikas Multipurpose Cooperative Ltd.,Dadeldhura 121 Kolmateshowr Saving & Credit Cooperative Ltd., Thali, Kathmandu 122 Koseli Saving & Credit Cooperative Ltd., Bardiya 123 Krishak Jagaran Upvokta Cooperative Ltd., Lamjung 124 Lagani Multipurpose Cooperative Ltd., Lalitpur 125 Lagansheel Samajik Uddhyami Mahila Cooperative Ltd., Shaktikhor, Chitwan 126 Laliguras Multipurpose Cooperative Ltd., Tanahu 127 Madiganga Mahila Multipurpose Cooperative Ltd., Tanahu 128 Mahaprabhu Savings and Credit Cooperative Ltd., Lalmatiya, Dang 129 Mahila Jagaran Cooperative Ltd., Salyan 130 Mahila Jagaran Saving & Credit Cooperative Ltd., Makwanpur 131 Mahila Kalyan Saving & Credit Cooperative Ltd., Bajhang 132 Mahila Kalyan Saving & Credit Cooperative Ltd., Makwanpur 133 Mahila Prayas Saving & Credit Cooperative Ltd., Kathmandu 134 Maitri Multipurpose Cooperative Ltd., Gulmi 135 Maitri Saving & Credit Cooperative Ltd., Baluwatar, Kathmandu 136 Manmaiju Samaj Kalyan Multipurpose Cooperative Ltd., Kathmandu 137 Marsyangdi Community Development Multipurpose Cooperative Ltd., Tanahu 138 Mayadevi Mahila Multipurpose Cooperative Ltd., Tilaurakot, Kapilbastu 139 Mhepi Saving & Credit Cooperative Ltd., Kathmandu 140 Mirmire Mahila Savings and Credit Cooperative Ltd., Badhganga, Kapilbastu 141 Mohanyal Savings and Credit Cooperative Ltd.,Pahalmanpur, Kailal 142 Nakarodh Ghodaghodi Multipurpose Cooperative Ltd., Darakh, Kailali 143 Namaste Savings and Credit Cooperative Ltd., Dhangadi, Kailali 144 Namuna Mahila Agriculture Cooperative Ltd., Taplejung 145 Narayan Multipurpose Cooperative Ltd., Dailekh 146 Navachetan Saving & Credit Cooperative Ltd.,Parbat 147 Navapragati Saving & Credit Cooperative Ltd., Pragatinagar 148 Navapratibha Saving & Credit Cooperative Ltd., Nawalparasi 149 Navin Bikas Savings and Credit Cooperative Ltd., Chainpur, Bajhang 150 Navodaya Multipurpose Cooperative Ltd. Topgachhi, Jhapa 151 Nawadeep Multipurpose Cooperative Ltd., Kathmandu 152 Nawajagaran Saving & Credit Cooperative Ltd., Dadeldhura 153 Nawasiddhartha Saving & Credit Cooperative Ltd., Pyuthan 154 Nhakanda Saving & Credit Cooperative Ltd., Lalitpur 68

82 SN Name of Organizations 155 Ninglashaini Multipurpose Cooperative Ltd., Mahendranagar, Kanchanpur 156 Nobel Samudayik Agriculture Cooperative Ltd.,Taplejung 157 Palpa Rara Saving and Credit Cooperative Ltd.,Palpa 158 Palung Multipurpose Saving & Credit Cooperative Ltd., Makwanpur 159 Pathibhara Agriculture Cooperative Ltd., Taplejung 160 Pokhara Royal Cooperative Ltd., Mahendrapul, Pokahara 161 Prabhat Savings and Credit Cooperative Ltd., Krishnapur, Kanchanpur 162 Pragati Mahila Bikas Multipurpose Cooperative Ltd., Godavari, Kailali 163 Pragati Saving & Credit Cooperative Ltd., Salyan 164 Radha Krishna Saving and Credit Cooperative Ltd., Kailai 165 Ranitar Multipurpose Cooperative Ltd., Kavre 166 Royal Cooperative Ltd., Syangja 167 Rural Multipurpose Cooperative Ltd., Morang 168 Sagarmatha Mahila Bikas Savings and Credit Cooperative Ltd., Taulihawa, Kapilbastu 169 Sahaj Savings and Credit Cooperative Ltd., Shivpur, Kapilbastu 170 Sahara Women Saving & Credit Cooperative Ltd., Dhading 171 Sahara-Nepal Saving & Credit Cooperative Ltd., Charali, Jhapa 172 Samjhauta Multipurpose Cooperative Ltd., Rampur Bilaspur, Kanchapur 173 Samudayik Apangata Savings and Credit Cooperative Ltd., Gajehada, Kapilbastu 174 Samudayik Saving & Credit Cooperative Ltd., Rukum 175 Samudayik Sewa Cooperative Ltd., Kathmandu 176 Samuhik Multipurpose Cooperative Ltd., Sindhupalchowk 177 Sana Kisan Agriculture Cooperative Ltd., Khadbabangai, Rupandehi 178 Sana Kisan Cooperative Ltd., Surkhet 179 Sarasawotisthan Multipurpose Cooperative Ltd., Doti 180 Sarveshwori Mahila Savings and Credit Cooperative Ltd., Dang 181 Sarwagin Samajik Uddhyami Mahila Cooperative Ltd., Chitwan 182 Saving & Credit Association, Siraha 183 Sayaptri Saving & Credit Cooperative Ltd., Dharan 184 Seshmati Multipurpose Cooperative Ltd, Kathmandu 185 Seti Devi Multipurpose Cooperative Ltd., Ilam 186 Seti Devi Multipurpose Cooperative Ltd., Kavre 187 Sewa Saving & Credit Cooperative Ltd., Sunsari 188 Shaileshwori Savings and Credit Cooperative Ltd., Kailali 189 Shantikunj Samajik Uddyami Mahila Cooperative Ltd., Ratnanagar, Chitwan 190 Shramajibi Saving & Credit Cooperative Ltd., Siraha 191 Shree Nayapati Saving & Credit Cooperative Ltd., Kathmandu 192 Shreejana Savings and Credit Cooperative Ltd., Chandani, Kanchanpur 193 Shreejanshil Mahila Bikas Multipurpose Cooperative Ltd., Shripur, Kailali 194 Shubhalaxmi Savings and Credit Cooperative Ltd., Salyan 195 Shuvalabh Saving and Credit Cooperative Ltd., Taplejung 69

83 SN Name of Organizations 196 Siddhartha Saving & Credit Cooperative Ltd., Kapilvastu 197 Sidhababa Sahakari Sanstha Ltd., Shripur, Kanchanpur 198 Sikhar Samaijee Saving & Credit Cooperative Ltd., Dadeldhura 199 Silsila Bahudeshiya Saving & Credit Cooperative Ltd., Arghakanchhi 200 Small Farmer Agri. Cooperative Ltd. (SFCL), Agyauli, Nawalparasi 201 Small Farmer Agri. Cooperative Ltd. (SFCL), Anandaban, Rupandehi 202 Small Farmer Agri. Cooperative Ltd. (SFCL), Banjariya, Nawalparasi 203 Small Farmer Agri. Cooperative Ltd. (SFCL), Birendranagar, Chitwan 204 Small Farmer Agri. Cooperative Ltd. (SFCL), Chisapani, Banke 205 Small Farmer Agri. Cooperative Ltd. (SFCL), Deunne Devi, Nawalparasi 206 Small Farmer Agri. Cooperative Ltd. (SFCL), Devdaha, Rupandehi 207 Small Farmer Agri. Cooperative Ltd. (SFCL), Godardiha, Dang 208 Small Farmer Agri. Cooperative Ltd. (SFCL), Hadhikhola, Makwanpur 209 Small Farmer Agri. Cooperative Ltd. (SFCL), Jahada, Nawalparasi 210 Small Farmer Agri. Cooperative Ltd. (SFCL), Kanchanpur, Banke 211 Small Farmer Agri. Cooperative Ltd. (SFCL), Karhiya, Rupandehi 212 Small Farmer Agri. Cooperative Ltd. (SFCL), Khairahni, Chitwan 213 Small Farmer Agri. Cooperative Ltd. (SFCL), Kumarbati, Nawalparasi 214 Small Farmer Agri. Cooperative Ltd. (SFCL), Kumroj, Chitwan 215 Small Farmer Agri. Cooperative Ltd. (SFCL), Latikoili, Surkhet 216 Small Farmer Agri. Cooperative Ltd. (SFCL), Lekhpharsa, Surkhet 217 Small Farmer Agri. Cooperative Ltd. (SFCL), Madhbaliya, Rupandehi 218 Small Farmer Agri. Cooperative Ltd. (SFCL), Makar, Nawalparasi 219 Small Farmer Agri. Cooperative Ltd. (SFCL), Malakheti, Kailali 220 Small Farmer Agri. Cooperative Ltd. (SFCL), Motipur, Kapilbastu 221 Small Farmer Agri. Cooperative Ltd. (SFCL), Panchnagar, Nawalparasi 222 Small Farmer Agri. Cooperative Ltd. (SFCL), Rampur, Dang 223 Small Farmer Agri. Cooperative Ltd. (SFCL), Saljhandi, Rupandehi 224 Small Farmer Agri. Cooperative Ltd. (SFCL), Satakhani, Surkhet 225 Small Farmer Agri. Cooperative Ltd. (SFCL), Satbariya, Dang 226 Small Farmer Agri. Cooperative Ltd. (SFCL), Saudiyar, Dang 227 Small Farmer Agri. Cooperative Ltd. (SFCL), Shankarnagar, Rupandehi 228 Small Farmer Agri. Cooperative Ltd. (SFCL), Shripur, Kailali 229 Small Farmer Agri. Cooperative Ltd. (SFCL), Tikuligadh, Rupandehi 230 Small Farmer Agri. Cooperative Ltd. (SFCL), Triveni, Nawalparasi 231 Small Farmer Agri. Cooperative Ltd. (SFCL), Valkarpur, Kapilbastu 232 Small Farmers Cooperative Ltd (SFCL) Chtatredeurali, Dhading 233 Small Farmers Cooperative Ltd (SFCL) Sriantu, Ilam 234 Small Farmers Cooperative Ltd (SFCL) Uttarganga, Surkhet 235 Small Farmers Cooperative Ltd. (SFCL) Dumarbana, Bara 236 Small Farmers Cooperative Ltd. (SFCL) Nawalparasi 70

84 SN Name of Organizations 237 Small Farmers Cooperative Ltd. (SFCL) Parroha, Rupandehi 238 Small Farmers Cooperative Ltd. (SFCL) Semlar, Rupandehi 239 Sudur Paschim Saving & Credit Cooperative Ltd., Dadeldhura 240 Surya Multipurpose Cooperative Ltd., Kailali 241 Suryadaya Saving & Credit Cooperative Ltd., Parsa 242 Swargadwari Savings and Credit Cooperative Ltd., Narayanpur, Dang 243 Tamor Mahila Agriculture Cooperative Ltd., Taplejung 244 Tapkhola Jalbidhut Cooperative Ltd., Khotang 245 Taplejung Multipurpose Cooperative Ltd.,Taplejung 246 Trishakti Mahila Savings and Credit Cooperative Ltd., Pyuthan 247 Trishakti SwabalambanSavings and Credit Cooperative Ltd., Balrampur, Kapilbastu 248 Udayadev Multipurpose Cooperative Ltd., Kanchanpur 249 Uma Devi Multipurpose Cooperative Ltd., Kavre 250 United Saving & Credit Cooperative Ltd., Lalitpur 251 Upahar Samajik Uddhyami Mahila Cooperative Ltd., Bijaynagar, Chitwan 252 Upkar Saving & Credit Cooperative Ltd., Waling, Syangja 253 VYCCU Saving & Credit Cooperative Ltd., Gaindakot, Chitwan 254 Women Cooperative Ltd., Kathmandu 255 Women Support Cooperative Ltd., Kathmandu 256 Yuwa Savings and Credit Cooperative Ltd., Mahendranagar, Kanchanpur Non-Government Organizations (NGOs) 257 Adarsha Youth Club, Bhaktapur 258 Ama Samaj Sangh, Chitwan 259 Association for Rural Women Development, Dang 260 Bhagawan Youth Club, Kathmandu 261 Centre for Self-help Development (CSD), Kathmandu 262 Centre for Women Rights & Development, Kathmandu 263 Chartare Yuwa Club (CYC), Baglung 264 Chetana, Sarlahi 265 Community Women Development Center (CWDEC), Saptari 266 Creative Institute Nepal, Butwal 267 CWEDA, Kathmandu 268 CWIN, Kathmandu 269 Dhanusha Sewa Samiti, Janakpurdham 270 Dhaulagiri Community Resources Development Center (DCRDC), Baglung 271 Economic Development Council, Minbhawan, Kathmandu 272 ENSAVE, Jhapa 273 Forum for Rural Women Ardency Development (FORWARD), Sunsari 274 Grameen Mahila Utthan Kendra, Dang 275 Institute for Community Dedelopment (ICD), Kathmandu 276 Institute for Integrated Development Studies (IIDS), Kathmandu 277 Jagriti Yuwa Club, Kaski 71

85 SN Name of Organizations 278 Jan Utthan Pratisthan, Kathmandu 279 Jeevan Bikas Samaj, Morang 280 JMC/Nepal, Bharatpur 281 Khurkot Yuwa Club, Parbat 282 Mahila Adarsha Sewa Kendra, Kathmandu 283 Mahila Saghan Bikas Kendra, Chitwan 284 Mahila Swablamban Samaj, Bharatpur 285 Mahila Upkar Manch, Kohalpur, Banke 286 Mahuli Community Development Center, Saptari 287 Manasalu Devt. Centre, Gorkha 288 Manushi, Kathmandu 289 Matyr Saroj M. Club, Simara 290 Nari Utthan Kendra, Bharatpur 291 Nari Utthan Tatha Balbalika Samrachhan Sangh, Saptari 292 NDRC, Pokhara 293 Neighbourhood Society Services Center (NSSC), Kathmandu 294 Nepal Mahila Samudayik Sewa Kendra, Dang 295 Nepal Mahila Utthan Kendra, Kathamndu 296 Nepal Rural Development Organization (NERUDO), Kathmandu 297 Nepal Rural Development Society Center (NRDSC), Biratnagar 298 Nepal Sikara Grameen Bikas Sanstha, Chitwan 299 NESDO, Parbat 300 Patan Business & Professional Women, Patan 301 Project Approach Team for Rural Organization (PATRON), Dhankuta 302 RADAR, Parbat 303 Rural Awareness Forum (RAF), Baglung 304 Rural Reconstruction Nepal (RRN), Kathmandu 305 Sajhedari Nepal, Kathmandu 306 Samaj Kalyan Samiti, Surkhet 307 Sarbodaya Development Organization, Saptari 308 SERSOC, Besisahar, Lamjung 309 Social Welfare Action Nepal (SWAN), Dang 310 Society for Local Volunteers Effort (SOLVE), Dhankuta 311 Srijana Bikas Kendra, Pokhara 312 Srijana Samudayik Bikas Kendra, Siraha 313 Super, Tulsipur, Dang 314 Tarun Club (STC), Nepal, Dang 315 Tharu & Razi Women Society, Kailali 316 United Youth Club, Bardia 317 Women Awareness Center, Kavre 318 Women Entrepreneurs Association of Nepal (WEAN), Lalitpur 319 Women s Self-Reliant Society, Chitwan 72

86 ANNEX II Annual Training Progress of RMDC FY A. MFIs Officials and Staff Training Programs S.N. Name of the Programs Target Group 1 Interaction Program for Small Farmers Cooperatives Ltd. No. of Participants No. of Programs Chairman, board member, managers Interaction Program for Cooperatives Chairman, board member, managers Micro Business Simulation Workshop CEOs Regional Annual Review Workshop Chairman, board member, CEO On-site Training Program Board members & Manager Seminar on Microfinance & Social Grameen Bank Officials, CNI Officials, MF Business Practitioners, Partner MFIs & Bankers Revisiting Nepal Microfinance Vision MF Practitioners, Policy makers, Partner MFIs & Bankers 8 Credit Appraisal Training Managers Internal Audit Training Loan Committee Members 20 1 Total 1, B. International Level Programs S.N. Name of the Programs Target Group No. of Participants No. of Programs 1 Exposure Visit to IDF, Bangladesh Board members of Pos & RMDC officials Exposure Visit Program of Officials from Bangladesh Officials from PKSF & their Pos Exposure Visit to MICRA, Indonesia CEOs & Managers 8 1 Total

87 C. MFIs In-house Staff Training Programs S.N. Name of the Programs Target Group No. of Participants No. of Programs 1 Training on Branch Management Branch Managers SWOT Analysis Board, Sr. Managers, Branch Managers, Field Staffs & Clients 3 One-day Training for Field Staffs & Branch Managers/ Review of Microfinance Field Staffs & Branch Managers Training on Monitoring & Supervision 5 One Day Orientation Program under YUWAccess Project Board Members, Advisory Committee, Sr. Officers 21 1 Staff of Bhimeshwor MP Coop Interaction with MFI on SME CEOs of RMDC s POs Leadership Development & Account Board Members & Managers 41 1 Management Training 8 Interaction Program Board Members & Managers Interaction with Branch Managers CEO, Board members & branch managers Interaction with MF Management CEO, Board members & branch managers Basic of Microfinance Officers 15 1 Total 1, D. MFIs In-house Clients Training Programs S.N. Name of the Programs Target Group No. of Participants No. of Programs 1 Inter-Group Training Center Chiefs, Members Pre-Group Training Member/Client Refresher Training Member/Client Center Chief Workshop Centerchiefs Skills Dev. Workshop (Pickle Making) Member/Client Exchange Visit of Center Chiefs Center Chiefs 6 1 Total 66,947 2,439 74

88 ANNEX III RMDC Loan Portfolio with POs As of y 15, 2013 S.N. Partner's Name Approved Amount (Rs.) Disbursed Amount (Rs.) (Rs. In 000) Outstanding Balance (Rs.) 1 Nirdhan Utthan Bank Ltd., Kathmandu 530, ,000 41,250 2 Centre for Selfhelp Development (CSD), Kathmandu 270, ,000-3 Bindhabasini saving and Credit Cooperative Ltd., Banepa, Kavre 18,000 18,000 15,000 4 Nepal Rural Development Society Centre (NRDSC), Biratnagar 144, ,755-5 Sahara Nepal saving and Credit Cooperative Ltd., Charpane, Jhapa 741, , ,650 6 National Educational and Social Development Organization (NESDO), Parbat 306, ,755 95,345 7 Chartare Yuwa Club (CYC), Baglung 290, ,425 98,130 8 Society of Local Volunteers' Effort (SOLVE), Dhankuta 105,990 98,000 46,273 9 Rural Awareness Forum (RAF), Baglung 2,000 1, haulagiri Community Resources Development Centre (DCRDC), Baglung 37,000 27, Community Women Development Centre (CWDEC), Rajbiraj, Saptari 76,695 58, Mahuli Community Development Centre (MCDC), Mahuli, Saptari 315, , , Deprosc Laghubitta Bikas Bank Ltd., Bharatpur, Chitwan 85,000 85,000 5, Paschimanchal Grameen Bikas Bank Ltd., Butwal 40,000 40, UNYC Nepal, Bardiya 179, ,950 86, Chhimek Laghubitta Bikas Bank Ltd., Kathmandu 499, ,590 62, Madhyamanchal Grameen Bikas Bank Ltd., Janakpur 40,000 40, Swabalamban Laghubitta Bikas Bank Ltd., Kathmandu 451, ,000 20, Manushi, Gyaneswor, Kathmandu 150, ,000 27, Nepal Mahila Utthan Kendra, Lalitpur 44,520 44, Jeevan Bikash Samaj, Amahibariyati, Morang 783, , , Forum for Rural Women Ardency Development (FORWARD), Sunsari 762, , , Mahila Sahayogi Saving and Credit Cooperative Ltd., Balaju, Kathmandu 116,020 91,020 28, Srijana Samudaik Bikas Kendra, Choharwa, Siraha 276, , , Nepal Mahila Samudayik Sewa Kendra (NMSSK), Ghorahi, Dang 141, ,200 27,900 75

89 S.N. Partner's Name Approved Amount (Rs.) Disbursed Amount (Rs.) Outstanding Balance (Rs.) 26 Srijana Bikash Kendra, Pokahra 120, ,800 18, Women Entrepreneurs' Association of Nepal (WEAN), Kathmandu 14,000 10, Royal Saving and Credit Cooperative Ltd., Syangja 6,435 5, Social Welfare Action Nepal (SWAN), Dang 3, Social Up grade in Progress of Educational Region (SUPER) 3,000 3, Grameen Mahila Bikas Sanstha, Dang 2, Nawapratibha saving ans Credit Cooperative Ltd., Nawalparasi 96,900 96,900 28, Grameen Mahila Utthan Kendra, Dang 128,590 78,590 32, Karnali saving and Credit Cooperative Ltd., Jhapa 55,600 55,600 2, Sewa saving and Credit Cooperative Ltd., Itahari 19,700 19, Gorkha Gharelu saving and Credit Cooperative Ltd., Gorkha Shramjivi saving and Credit Cooperative Ltd., Lahan, Siraha 84,800 82,800 2, Indragram Punarmilan saving and Credit Cooperative Ltd., Narayanghat 25,400 25,400 2, Ideal Saving and Credit Cooperative Ltd., Rajbiraj, Saptari 4,400 4, Navodaya Multipurpose Cooperative Ltd., Topgachhi, Jhapa 77,000 67,000 24, Bouddha Grameen saving and Credit Cooperative Ltd., Surkhet 146, ,700 63, Batawaran Sudhar Multipurpose Cooperative Ltd., Surkhet 169, ,225 76, Kalika Multipurpose Cooperative Ltd.,Rasuwa 23,400 22,400 6, Gaurishankar Development Bank Ltd., Nawalparasi 20,000 5, Mahila Upkar Manch, Kohalpur, Banke 69,200 49,200 23, Triveni Bikas Bank Ltd., Narayanghat 20,000 20, Palpa Rara saving and Credit Cooperative Ltd., Palpa 3,800 3, Krishak Jagaran Cooperative Ltd., Lamjung 39,800 39, Udayadev Multipurpose Cooperative Ltd., Mahendranagar, Kanchanpur 93,650 47,150 27, Palung Multipurpose Cooperative Ltd., Palung, Makwanpur 12,200 12, Karnali Bikas Bank Ltd., Nepalganj, Banke 10, Excel Development Bank Ltd., Birtamod, Jhapa 16,000 1, Patan Business and Professional Women, Pulchowk, Lalitpur 3, Chameli saving and Credit Cooperative Ltd., Lalbandi, Sarlahi 4, Gangamala saving and Credit Cooperative Ltd., Chhinchu, Surkhet 59,600 24,600 7, Bageswori Dev.Bank Ltd., Nepalganj, Banke 10,000 6, Maitri Multipurpose Cooperative Ltd., Tamghas, Gulmi 31,425 31,425 18,124 76

90 S.N. Partner's Name Approved Amount (Rs.) Disbursed Amount (Rs.) Outstanding Balance (Rs.) 58 Siddhartha Dev.Bank Ltd., Butwal, Rupandehi 20,000 20, Andhakar Mukti saving and Credit Cooperative Ltd., Rampur, Palpa 71,000 67,000 38, Nerude Laghubitta Bikas Bank Ltd., Biratnagar 820, , , Silsila Multipurpose Cooperative Ltd., Argakhachi 2, Digo Kosh Shanchalan saving and Credit Cooperative Ltd., Rolpa 1, Himchuli Bikas Bank Ltd., Pokhara, Kaski 20,000 6, Kisan Multipurpose Cooperative Ltd., Lamki, Kailali 182, ,000 85, Pashminchal Development Bank Ltd. Butwal, Rupandehi 20,000 20, Sana Kisan Agriculture Cooperative Ltd., Dumbarwana, Bara 130,000 90,000 41, Digre Saikumari saving and Credit Cooperative Ltd., Khalanga, Rukum 8,000 3, Biswasilo saving and Credit Cooperative Ltd., Thakurdwara, Bardiya 32,500 15,500 10, Pragati saving and Credit Cooperative Ltd., Tharamare, Salyan 11,800 11,800 7, Samudayik saving and Credit Cooperative Ltd., Khalanga, Rukum 3, Muktinath Bikas Bank Ltd., Prithvichowk, Pokhara 430, , , Kalyankari saving and Credit Cooperative Ltd., Lubhu, Lalitpur 12,000 6, Kola Samaiji Mahila Bikas Multipurpose Cooperative Ltd., Samaiji, Dadeldhura Nayapati saving and Credit Cooperative Ltd., Nayapati, Kathmandu 35,000 35,000 15, Deurali Multipurpose Cooperative Ltd., Ishaneswor, Lamjung 27,000 24,000 13, Sana Kisan Agriculture Cooperative Ltd., Semlar 66,000 46,000 25, Sana Kisan Agriculture Cooperative Ltd., Parroha 49,000 44,000 21, Janahitkari saving and Credit Cooperative Ltd., Birendranagar, Surkhet 2,500 2, Shreejana Cooperative Ltd., Kohalpur, Banke 1, Kasturi Multipurpose Cooperative Ltd., Khalanga, Jajarkot Himchuli Agriculture Cooperative Ltd., Manma, Kalikot Hatemalo saving and Credit Cooperative Ltd., Binayek, Accham Bhimkul saving and Credit Cooperative Ltd., Borlang, Gorkha 2,500 2, Laliguras Multipurpose Cooperative Ltd., Byas, Tanahu 2,500 2, Shuvakamana Multipurpose Cooperative Ltd., Dulegauda, Tanahu 5, Lalima Multipurpose Cooperative Ltd., Bhalbari, Rupandehi 12,000 9,000 7, Manakamana Mai Multipurpose Cooperative Ltd., Abukhairani, Tanahu 4, Arthik Bikas Saving and Credit Cooperative Ltd., Panchkhal, Kavre 3,000 3,000 2, Bikas Multipurpose Cooperative Ltd., Butwal, Rupandehi 45,000 20,000 16,280 77

91 S.N. Partner's Name Approved Amount (Rs.) Disbursed Amount (Rs.) Outstanding Balance (Rs.) 90 Kedarnath Saving and Credit Cooperative Ltd., Dhari-5, Darchula 5,700 5,700 4, Jana Kalika Saving and Credit Cooperative Ltd., Dehimandu, Baitadi Mahila Kalyan Saving and Credit Cooperative Ltd., Chainpur-1, Bajhang Marshyandhi Multipurpose community Cooperative Ltd., Abukhairani, Tanahu 3,000 3, Shreejanshil Saving and Credit Cooperative Ltd., Jhalari, Kanchanpur 13,000 13,000 9, Sana Kisan Agriculture Cooperative Ltd., Triveni, Nawalparasi 5, Mahila Kalyan Saving and Credit Cooperative Ltd., Aambhanjyang, Makawanpur 3,000 3,000 2, Kawaswoti Social Entrepreneur Women Cooperative Ltd., Kawaswoti, Nawalparasi 3,500 3,500 2, Shantikunj Social Entrepreneur Women Cooperative Ltd., Ratnanagar, Nawalparasi 2,500 2,500 1, Agyauli Samajik Uddhyami Mahila Cooperative Ltd., Danda, Nawalparasi 2,000 2,000 1, Sana Kisan Agriculture Cooperative Ltd., Khadawabangai, Rupandehi 15,000 9,000 7, Bishazari Samajik Uddhyami Mahila Cooperative Ltd., Geetanagar, Chitwan 2,500 1, Unnati Saving and Credit Cooperative Ltd., Pokhara, Kaski 40,000 25,000 21, Mahila Jagaran Saving and Credit Cooperative Ltd., Gadhi, Makwanpur 3,000 1, Sana Kisan Agriculture Cooperative Ltd., Khairahani, Chitwan 15,000 10,000 8, Sana Kisan Agriculture Cooperative Ltd., Birendranagar, Chitwan 20,000 20,000 18, Sana Kisan Agriculture Cooperative Ltd., Devdaha, Rupandehi 30, Taplejung Multipurpose Cooperative Ltd., Fungling, Taplejung 10,000 5,000 4, Api Saipal Saving and Credit Cooperative Ltd., Geta, Kailali 5,000 4,000 3, Kanchanjanga Samudayik Multipurpose Cooperative Ltd., Fungling, Taplejung 5,000 3,000 2, Sana Kisan Agriculture Cooperative Ltd., Kumroj, Chitwan 30,000 24,000 21, Bhimeshwor Multipurpose Cooperative Ltd., Bhirkot, Dolakha 10,000 8,000 7, Sambriddhi Bikas Bank Ltd., Gajuri, Dhading 10,000 10,000 9, Jaleshwor Multipurpose Cooperative Ltd., Uttarganga, Surkhet 5,000 3,000 2, Hatemalo saving and Credit Cooperative Ltd., Besisahar, Lamjung 15,000 11,000 10, Siddheshwori Mahila Saving and Credit Cooperative Ltd., Urahari, Dang 4,500 3,000 2, Indreni Multipurpose Cooperative Ltd., Butwal, Rupandehi 10,000 7,000 6, Namaste Saving and Credit Cooperative Ltd., Dhangadi, kailali 10,000 10,000 9, Parichit Saving and Credit Cooperative Ltd., Makrahar, Rupandehi 10,000 3,000 3, Bhadrakali Multipurpose Cooperative Ltd., Semlar, Rupandehi 10,000 5,000 5, Pragatisil Mahila Bikas Multipurpose Cooperative Ltd., Makrahar, Rupandehi 10,000 3,000 3, Jana Sahayogi Saving and Credit Cooperative Ltd., Mali, Dolakha 3,000 1,000 1,000 78

92 S.N. Partner's Name Approved Amount (Rs.) Disbursed Amount (Rs.) Outstanding Balance (Rs.) 122 Chhinchu Mahila Sana Kisan Agri. Cooperative Ltd., Chhinchu, Surkhet 4, Kaligandaki Saving and Credit Cooperative Ltd., Bharatpur, Chitwan 10,000 2,500 2, Bageswari Women Saving and Credit Cooperative Ltd., Hetauda, Makwanpur 6, Batabaran Samrakshyan Multipurpose Cooperative Ltd., Masuriya, Kailali 4, Surma Saipal Saving and Credit Cooperative Ltd., Dhangadi, Kailali 8, Deurali Multipurpose Cooperative Ltd., Fidim, Panchthar 10, New Kanchanjungha Agri. Cooperative Ltd., Fungling, Taplejung 4, Mahila Shreejana Multipurpose Cooperative Ltd., Fikkal, Ilam 5, Om Saving and Credit Cooperative Ltd., Inarbari, Rautahat 3, Krishi Cooperative Ltd., Itahara, Morang 5, Jankalyan Multipurpose Cooperative Ltd., Sunwal, Nawalparasi 6, Mahila Utthan Saving and Credit Cooperative Ltd., Urlabari Morang 5, Janhit Cooperative Ltd., Charikot, Dolakha 5, Bhagyadaya Mahila Saving and Credit Cooperative Ltd., Letang Morang 2, Balmiki Saving and Credit Cooperative Ltd., Gopigunj, Nawalparasi 10, Total 10,202,675 8,849,672 2,332,400 79

93 Year-wise Loan Portfolio of RMDC ANNEX IV (Rs. in Million) Fiscal Year Loan Approved Loan Disbursed Loan Recovered Loan Outstanding , , , , , , , , , , , , , , , , , ,332.4 Total 10, , ,

94 Status of Partner Organizations (Provisional) ANNEX V As at y 15, 2013 Savings / Outstanding Loan Arrears Rate Savings Balance per Member Outstanding Loan per Borrower Borrowers / Members Overdue Loan Outstanding Loan Savings Balance Borrowers Members Total Staff Branches Districts S.N Microfinance Institutions No. No. No. No. No. Rs. in '000 Rs. in '000 Rs. in '000 % Rs. Rs. % % 1 Nirdhan Utthan Bank Ltd., Kathmandu , ,122 1,318,232 3,638,027 33,603 69% 28,618 7, % 36% 2 Chhimek Laghubitta Bikas Bank Ltd., Kathmandu , ,205 2,418,246 3,218,943 1,533 79% 23,461 13, % 75% 3 Swablamban Laghubitta Bikas Bank Ltd, Kathmandu , ,946 1,192,141 2,554,116 54,838 67% 23,444 7, % 47% 4 Jeevan Bikas Samaj, Morang ,401 76, ,327 1,591,213 1,570 72% 20,855 9, % 61% 5 FORWARD, Sunsari (*) ,199 66, ,287 1,205,613 7,412 69% 18,246 5, % 46% 6 Deprosc Laghubitta Bikas Bank Ltd., Chitwan ,358 58, ,533 1,482,775 7,186 75% 25,338 5, % 29% 7 Nerude Laghubitta Bikas Bank Ltd., Biratnagar ,094 52, , ,892 8,273 77% 17,892 5, % 41% 8 Paschimanchal Grameen Bikas Bank Ltd., Butwal ,707 39, ,390 1,088,065 38,852 60% 27,835 5, % 31% 9 Sahara Nepal Saving and Credit Cooperative Ltd., Jhapa ,164 43, , ,544 8,460 74% 20,028 9, % 62% 10 Muktinath Bikas Bank Ltd., Pokhara ,812 32, , ,630 2,570 67% 21,658 11, % 79% ,280 27, , , % 19,090 5, % 51% 11 National Educational and Social Development Organization (NESDO), Pokhara 12 Madhyamanchal Grameen Bikas Bank Ltd., Janakpur ,468 36, , ,760 95,820 97% 21,041 7, % 37% 13 Mahuli Community Development Centre, Saptari ,978 20, , ,158 2,546 65% 15,711 5, % 53% 14 UNYC Nepal, Bardia ,291 14, , , % 13,750 5, % 72% 15 Chartare Yuwa Club, Baglung ,781 12, , ,449 1,165 52% 20,389 4, % 44% 16 Shrijana Samudayik Bikas Kendra, Siraha ,243 12,377 77, ,894 3,942 61% 21,160 3, % 30% 17 Shramjivi Saving and Credit Cooperative Ltd., Lahan ,281 9,943 91, , % 16,241 4, % 57% 18 Shreejana Bikas Kendra, Pokhara ,435 10, , ,136 1,216 60% 16,238 6, % 61% * Include data of Forward Laghubitta Bikas Bank also.

95 Savings / Outstanding Loan Arrears Rate Savings Balance per Member Outstanding Loan per Borrower Borrowers / Members Overdue Loan Outstanding Loan Savings Balance Borrowers Members Total Staff Branches Districts S.N Microfinance Institutions No. No. No. No. No. Rs. in '000 Rs. in '000 Rs. in '000 % Rs. Rs. % % 19 Manushi, Kathmandu ,548 10, , ,473 1,180 69% 16,281 7, % 65% 21 Navaprativa Saving and Credit Cooperative Ltd., Nawalparasi ,512 7,960 74, ,477-55% 17,899 5, % 52% 22 Nepal Mahila Samudayik Sewa Kendra, Dang ,250 9,575 88, ,294-67% 15,174 6, % 61% 23 Bouddha Grameen Saving and Credit Cooperative Ltd., Surkhet ,723 9,640 66, , % 13,253 4, % 52% 24 Batawaran Sudhar Multipurpose Cooperative Ltd., Surkhet ,131 11,749 64, ,444-89% 12,464 4, % 44% 25 Kisan Multipurpose Coop Ltd., Kailali ,596 5,918 46, ,105-47% 18,943 3, % 42% 26 SOLVE Nepal, Dhankuta ,107 7,548 48, , % 17,443 4, % 37% 27 Mahila Upkar Manch, Banke ,450 5,275 50,027 79, % 15,085 4, % 63% 28 Community Women Development Centre (CWDEC), Saptari ,647 6,060 54,554 71,726 1,118 70% 11,836 6, % 76% 29 Women Support Cooperative Ltd., Kathmandu ,355 6,729 76, , % 18,513 9, % 61% 30 Karnali Saving and Credit Cooperative Ltd., Jhapa ,263 6,642 80, ,171 1,962 80% 26,524 9, % 46% 31 Bindhabasini Saving and Credit Cooperative Ltd., Kavre ,323 3,999 70,912 62,812-55% 15,707 9, % 113% 32 Udayadev Multipurpose Coop Ltd., Mahendranagar ,166 2,712 27,258 46, % 17,158 4, % 59% 33 Sana Kisan Ag. Coop Ltd., Bara ,084 3, , , % 95,838 38, % 63% 34 Maitri Multipurpose Coop Ltd., Gulmi ,619 2,249 16,750 32,568-49% 14,481 3, % 51% 35 Sewa Saving and Credit Cooperative Ltd., Sunsari ,600 3,531 36,707 54, % 15,435 7, % 67% 36 Navodaya Saving and Credit Cooperative Ltd., Jhapa ,007 2,827 22,948 57, % 20,501 5, % 40% 37 Andhakar Mukti Saving and Credit Cooperative Ltd., Palpa ,905 2,435 19,535 39, % 16,376 5, % 49% 38 Palung Multipurpose Coop Ltd., Makawanpur ,769 1,677 28,724 40, % 23,938 10, % 72% 39 Gangamala Saving and Credit Cooperative Ltd., Surkhet ,672 1,421 9,336 16,330-53% 11,492 3, % 57% 40 Biswasilo Saving and Credit Cooperative Ltd., Bardiya ,570 1,311 8,044 15,929-51% 12,150 3, % 51% Annual Report 41 Unnati Saving & credit Cooperative Ltd., Pokhara, Kaski , ,315 57, % 151,912 14, % 58% 42 Nayapati Saving and Credit Cooperative Ltd., Kathmandu ,177 1,106 14,449 26, % 23,608 6, % 55% ,030 1,483 21,129 29, % 20,157 10, % 71% 43 Pragatisil Mahila Bikas Multipurpose Cooperative Ltd., Makrahar, Rupandehi

96 Savings / Outstanding Loan Arrears Rate Savings Balance per Member Outstanding Loan per Borrower Borrowers / Members Overdue Loan Outstanding Loan Savings Balance Borrowers Members Total Staff Branches Districts S.N Microfinance Institutions No. No. No. No. No. Rs. in '000 Rs. in '000 Rs. in '000 % Rs. Rs. % % 44 Hatemalo Saving and Credit Cooperative Ltd., Besisahar, Lamjung ,901 1,149 52,446 78, % 68,205 27, % 67% 45 Sana Kisan Agriculture Coop. Ltd., Khairahani, Chitwan ,741 1,148 35,377 64,991-66% 56,612 20, % 54% 46 Indragram Punarmilan Saving and Credit Cooperative Ltd., Chitwan ,606 1,291 13,698 22,568-80% 17,481 8, % 61% 47 Sana Kisan Agriculture Coop. Ltd., Kumroj, Chitwan , , , % 156,540 32, % 42% 48 Palpa Rara Saving and Credit Cooperative Ltd., Palpa , ,937 15,263-63% 15,833 9, % 91% 49 Sana Kisan Semlar Agr. Cooperative Ltd., Rupandehi ,490 1,010 74, ,430-68% 134,089 49, % 55% 50 Sana Kisan Parroha Agr. Cooperative Ltd., Rupandehi , ,204 92,733 2,688 43% 145,349 33, % 53% 51 Taplejung Multipurpose Cooperative Ltd., Fungling, Taplejung , ,377 45, % 66,169 24, % 78% 52 Kalika Multipurpose Cooperative Ltd., Rasuwa , ,892 13, % 16,878 4, % 42% 53 Pragati Saving and Credit Cooperative Ltd., Salyan ,385 1,127 2,779 11,747-81% 10,423 2, % 24% 54 Deurali Multipurpose Cooperative Ltd., Lamjung , ,248 42, % 70,899 24, % 81% 55 Shreejanshil Saving and Credit Cooperative Ltd., Kanchanpur , ,724 24, % 46,095 7, % 40% , ,142 11, % 31,641 6, % 72% 56 Mahila Kalyan Saving and Credit Cooperative Ltd., Chainpur-1, Bajhang 57 Lalima Multipurpose Cooperative Ltd. Bhalpari, Rupandehi , ,139 28,361-17% 149,266 15, % 60% 58 Parichit Saving and Credit Cooperative Ltd., Makrahar, Rupandehi , ,740 12, % 21,667 7, % 62% 59 Digre Saikumari Saving and Credit Cooperative Ltd., Rukum , ,161 11, % 13,611 6, % 63% 60 Chameli Saving and Credit Cooperative Ltd., Sarlahi , ,986 11,975-83% 14,022 3, % 33% 61 Kedarnath Saving and Credit Cooperative Ltd., Darchula ,777 13,760-27% 52,521 5, % 42% 62 Indreni Multipurpose Cooperative Ltd., Butwal, Rupandehi , ,770-89% 214, , % 80% ,807 45,344-52% 99,438 23, % 46% 63 Sana Kisan Agriculture Cooperative. Ltd., Khadawabangai, Rupandehi ,830 25,470-42% 71,344 17, % 58% 64 Kanchanjanga Samudayik Multipurpose Cooperative Ltd., Fungling, Taplejung

97 Savings / Outstanding Loan Arrears Rate Savings Balance per Member Outstanding Loan per Borrower Borrowers / Members Overdue Loan Outstanding Loan Savings Balance Borrowers Members Total Staff Branches Districts S.N Microfinance Institutions No. No. No. No. No. Rs. in '000 Rs. in '000 Rs. in '000 % Rs. Rs. % % 65 Bhadrakali Multipurpose Cooperative Ltd., Semlar, Rupandehi ,438 28,633-27% 141,051 28, % 75% 66 Janakalyan Multipurpose Cooperative Ltd., Sunwal, Nawalparasi ,069 30,392-62% 76,942 44, % 92% 67 Api Saipal Saving & Credit Cooperative Ltd., Geta, Kailali ,723 13,254-72% 30,054 17, % 81% 68 Jaleshwor Multipurpose Cooperative Ltd., Uttarganga, Surkhet ,849 22,224 1,146 32% 119,483 29, % 76% ,316 8,881-52% 30,518 13, % 82% 69 Bishazari Samajik Uddhyami Mahila Cooperative Ltd., Geetanagar, Chitwan 70 Siddheshwori Mahila Saving and Credit Cooperative Ltd., Urahari, Dang ,640 5,336-61% 17,103 3, % 31% 71 Shantikunj Social Entrepreneur Women Cooperative. Ltd., Nawalparasi ,757 6,226-75% 18,152 8, % 60% 72 Namaste Saving and Credit Cooperative Ltd., Dhangadi, kailali ,983 32,448 1,196 63% 119,295 50, % 68% 73 Kawaswoti Social Entrepreneur Women Cooperative. Ltd., Nawalparasi ,443 5, % 28,039 7, % 48% 74 Kaligandaki Saving and Credit Cooperative Ltd., Bharatpur, Chitwan ,087 14,523-38% 133,242 24, % 49% 75 Agyauli Samajik Uddhyami Mahila Cooperative Ltd., Danda, Nawalparasi ,183 3,568-47% 29,484 8, % 61% Total 67 * 876 4,757 1,492,947 1,027,924 12,014,694 23,465, ,158 69% 22,828 8, % 51% * More than one MFIs are working in one district. Annual Report

98 ANNEX VI Staff Biographies Mr. Shankar Man Shrestha, 67, has been working as the Chief Executive Officer of RMDC since August Prior to joining RMDC, he was the founder Executive Director of CSD, a national level microfinance NGO, from August 1991 to y He had worked with the Agricultural Development Bank of Nepal (ADBN) for 25 years in various capacities such as Deputy General Manager, the Director of Agricultural Credit Training Institute, Chief of Loan Department Regional Manager in various development region. His academic qualification is Master of Arts in Economics from Tribhuvan University (TU) Nepal. He has completed a special study in Agriculture Economics from Texas A. and M. University, USA. He has also studied farm credit systems of the U.S.A, rural finance in the Philippines, cooperative credit system in the Netherlands and Germany, and microcredit system in Bangladesh, the Philippines and Indonesia. He has participated in numerous training, workshops, seminars and conferences organized by national and international agencies such as ADB, Rabobank of Holland, APRACA, APDC, USAID, JICA, and Microcredit Summit Secretariat U.S.A, Grameen Bank, Grameen Trust on areas such as rural development, agriculture banking, microfinance, small farmer credit, etc. He also participated as consultant in the project missions of ADB, IFAD, JICA and IDRC. While in ADBN, he was involved in the implementation of the Agriculture Credit Project of ADB, the Small Farmer Development Project of ADB and IFAD, and the other projects supported by GTZ, KFW, World Bank, USAID, CIDA, etc. Mr. Shrestha has also been writing on issues of microfinance for long and are published in journals/magazines within the country and abroad. He has also presented a number of papers and participated as a speaker/panelist/resource person in different international conferences on microfinance held in Bangladesh, China, Turkey, Pakistan, India, USA, Canada, the Philippines, Indonesia, Ivory Coast. Mr. Megh Raj Gajurel, 59, is chief of the Financial Management Department of RMDC. He joined the organization as a Manager in November Before joining RMDC, he worked for ADBN for 21 years and for the Nepal Credit and Commerce Bank (then Nepal Bank of Ceylon Ltd.) for more than 2 years. His academic qualification is Master in Public Administration from TU, Kathmandu. He is accredited as fully certified trainer of the Microfinance Training of Trainers, a distance learning course jointly organized by ADBI, World Bank TDLC and UNCDF. The major trainings he has acquired are: i) Loan Appraisal, organized by MAC Consultants, ii) Cooperative Society Management, organized by CICTAB in India, iii) Project Appraisal, organized by ADB/N, iv) Financial Analysis and Delinquency Management, organized by EDA Rural Systems in Hyderabad, v) Effective Management of Microfinance Institutions, organized at ILO International Training Centre, Italy, vi) study visit to PKSF, Grameen Bank, ASA, IDF of Bangladesh, vii) Credit Appraisal of Microfinance Institutions, organized by EDA Rural Systems Pvt. Ltd. Delhi, viii) ToT on Quality Training for MFIs organized jointly by Asian Institute of Management & Citigroup in the Philippines, ix)managing Customer Complaints, organized by Kathmandu University, x) Workshop on Auditing of MFIs, organized by Grameen Trust Bangladesh, xii) Developing Project Proposals conducted by ELD Lalitpur and xiv) Study visit to German Savings Banks Finance Group organized by Savings Banks Foundation for International Cooperation (SBFIC), Germany. Besides, he has participated in the Asia Pacific Region Microcredit Summit held in Dhaka in 2005 and presented a paper on Challenges in Microfinance Both in Agriculture and in the areas with low density of population in the summit held in Bali, Indonesia in 2008.

99 Mr. Tirtha Ratna Konajo, 56, is chief of the Planning and Research Department of RMDC. He joined the organization as a Manager in November Before joining RMDC, he worked with the Nepal Bank Limited for 14.5 years and Himalayan Bank Ltd. for more than 3.5 years. His academic qualification is Master in Business Administration from TU, Kathmandu. The major trainings he has acquired are: i) Commercial Banking Management, conducted by Nepal Rastra Bank, ii) Financial Statement Analysis, conducted by Ernst and Young, Singapore in Kathmandu, iii) Credit Recovery and Management, conducted by Booze Allen & Hamilton, U.S.A Group in Kathmandu, iv) Faculty Development Program, conducted by Reserve Bank of India in Bombay, v) Study Visit to PKSF, Grameen Bank, ASA and IDF in Bangladesh, vi) Financial Analysis and Delinquency Management, conducted by EDA Rural System in Hyderabad, vii) Business Planning with Microfin, conducted by EDA Rural System in Delhi, viii) Community-Based Micro- Finance and Income Generation Management for Poverty Alleviation, organized in Bangkok, Thailand, ix) Management Information System for MFIs, organized by EDA Rural Pvt. Ltd, x) Training of Trainers Course on Financial Analysis for MFIs, conducted by EDA Rural Pvt. Ltd.,India, xi) Reporting Skills and Professional Writing, conducted by ELD, Lalitpur xii) Microfinance Training of Trainers Blended Learning Course, jointly organized by ADB, Institute, African Development Bank and Tokyo Development Learning Centre, The World bank and accredited as fully certified trainer of the microfinance distance learning course xiii) Commercial Micro Banking Training organized by Frankfurt school of Finance and Management, Frankfurt, Germany and ix) Study visit of MFIs of Indonesia in coordination with Microfinance Innovation Center for Resources and Alternatives (MICRA), Indonesia. Besides, he has participated in several other workshops, seminars and exposures related to microfinance and wholesale financing and is experienced trainer of Financial Analysis and Delinquency Management training. Mr. Ram Dayal Rajbanshi, 53, is chief of the Microfinance Service Department of RMDC. He joined the organization as a Manager in October Before joining RMDC, he worked with GTZ as an Economic Promotion Specialist for a poverty alleviation project for 20 months; with Deprosc as Project Managers for the Community-Based Economic Development Project, Dadeldhura and Micro-credit Project, Morang for 20 months; with Bank of Maldives Ltd., the Republic of Maldives as a UNV Specialist (Development Banking) for 2 years; with ADBN as a Credit Officer for about 7 years; and with Agriculture Extension and Research Project as an Agricuture Training Officer for 3 years. He holds M.A. in International & Development Economics from the University of San Francisco, USA and M.Sc. in Rural Regional Planning from AIT, Thailand. He has been awarded with the University Vice-Chancellor Gold Medal for having stood first in the examination of Bachelor degree in The major trainings he has acquired are: i) Training of Trainers Course on Financial Analysis for MFIs, conducted by EDA Rural P. Ltd.,India, ii) Quality Training for Microfinance Institutitons, conducted by Citigroup/AIM, Manila, iii) Middle Management Program, conducted by IIM, Ahmedabad, iv) study visit to PKSF, Grameen Bank, ASA and BRAC in Bangladesh, v) Training of Trainers Course on Delinquency Management & Interest Rate Setting, conducted by EDA Rural Pvt. Ltd., India, vi) Microfinance Donor Seminar: From Donations to Investments, conducted by UNCDF/CGAP in Phnom Penh, vii) Accountancy course conducted by MAC Consultants Pvt. Ltd. Kathmandu, viii) Non-Formal Education, conducted at the Center for International Education, Massachusetts, USA, ix) Boulder Microfinance Training, Turin, Italy and x) Program in Computer Applications Development, AIT, Bangkok.

100 Mr. Pritha Bahadur Thapa, 43, is a Manager at the Microfinance Service Department of RMDC. He joined the organization as an Officer in June Just before joining RMDC, he worked with CSD as Chief of Rural Finance Sector of CBED project, Jumla for 30 months and as Program Supervisor of Self-help Banking Program for 6 months. His academic qualification is Master in Business Administration from TU, Nepal. The major trainings he has acquired are: i) Grameen Generalized System, organized at Grameen Trust, Bangladesh ii) Financial Analysis and Delinquency Management, conducted by EDA Rural System in Hyderabad, iii) Audit of MFIs, conducted by Grameen Bank, Bangladesh, iv) Training of Trainers Course, organized by CECI, Kathmandu, v) Facilitation Skill, conducted by ICA, Kathmandu vi) Institutional Development of Savings and Credit Organization, organized by CECI, vii) Operational Procedures, Supervision and Monitoring System of MFIs, organized at PKSF, Bangladesh, viii) Credit Appraisal of Microfinance Institutions, organized by EDA Rural Systems Pvt. Ltd., India ix) Study visit to PKSF, Grameen Bank, ASA and IDF of Bangladesh, (x) Credit and Risk Management, organized by the Citigroup and the Asian Institute of Management (AIM) in Manila, the Philippines (xi) Training of Trainers organized by RMDC, Kathmandu, (xii) Microfinance Training of Trainers Blended Learning course, jointly organized ADB, Institute, African Development Bank and Tokyo Development Learning Centre, The World Bank and accredited as fully certified trainer of the microfinance distance learning course, xiii) Participated in SAARC Finance Seminar Targeted Credit Program in SAARC Region organized by Central Bank of Nepal, xiv) Participated in Asia Microfinance Forum 2010, Colombo, Srilanka, xv) Exposure visit to German Savings Banks Finance Group organized by Savings Banks Foundation for International Cooperation (SBFIC), Germany and xvi) Participated in 3rd International Trainers Training Program organized by Indian Institute of Banking & Finance (IIBF), Mumbai, India. Besides, he has expertise in facilitating microfinance workshops, trainings and preparing business plan for MFIs. Ms. Annapurna Shrestha, 43, is chief of the Institutional & Social Development Department and Human Resource Management Department of RMDC. She joined the organization as an Officer in June Before joining RMDC, she worked with the CSD, Kathmandu for four years. Her academic qualification is Bachelor of Arts from TU, Kathmandu. The major trainings she has acquired are: i) Operational Procedures, Supervision and Monitoring System of MFIs, organized at PKSF, Bangladesh, ii) Disbursement and Project Management, conducted by ADB in Kathmandu, iii) Training of Trainers, conducted by Institute of Cultural Affairs (ICA), Kathmandu, iv) Facilitation Skill, conducted by ICA, Kathmandu, v) Grameen Management Training on Grameen Banker International, conducted at Grameen Bank, Bangladesh, vi) Participatory Monitoring and Evaluation, conducted by ELD, Kathmandu, vii) study visit to the Grameen Bank, ASA and IDF in Bangladesh, viii) Financial Analysis and Delinquency Management organized by RMDC, ix) Credit and Risk Management, organized by the Citigroup and AIM in Manila, x) Training on Developing Assertiveness organized by the Kathmandu University xi) Prudential Banking Regulations, organized by MAC Consultants (P.) Ltd. xii) The Boulder Microfinance Training in Turin, Italy organized by The Boulder Institute of Microfinance & The International Training Centre of the ILO, xiii) Workshop on Gender Entrepreneurship and Economic Empowerment to South Asia organized by Asian Development Bank, xiv) Second National HR Conference organized by NBTI, Kathmandu xv) Study visit to German Savings Banks Finance Group organized by Savings Banks Foundation for International Cooperation (SBFIC), Germany and xvi) Study visit of MFIs of Indonesia in coordination with Microfinance Innovation Center for Resources and Alternatives (MICRA), Indonesia. Besides, she has expertise in organizing study visits, workshops, conferences, national & international training programs.

101 Mr. Roop Bahadur Khadka, 47, is chief of the Internal Audit and Supervision Department of RMDC. He joined the organization as an Officer in June Before joining RMDC, he worked with the Far Western Rural Development Bank, Dhangadhi for six years. His academic qualification is Bachelor of Commerce (Audit) from Bombay University, India. The major trainings he has acquired are: i) Operational Procedures, Supervision and Monitoring System of MFIs, organized at PKSF, Bangladesh, ii) Disbursement and Project Management, conducted by ADB, Kathmandu iii) Training of Trainer s Course on Supervision of MFIs under Second-Tier Institution, organized by NRB, Kathmandu, iv) Audit of MFI, conducted by Grameen Bank, Bangladesh, v) Financial Analysis and Delinquency Management, organized by RMDC, vi) Visual Basic 6 Programming, conducted by CSE, Kathmandu, vii) Credit Appraisal of Microfinance Institutions, organized by EDA Rural Systems Pvt. Ltd., India, viii) Review Workshop on Tax Act, 2058, organized by MAC Consultants, Kathmandu, ix) Monitoring & Supervision of MFIs, conducted by PKSF, Bangladesh, x) Participatory Monitoring & Evaluation, conducted by ELD, Kathmandu, xi) Study visit to Grameen Bank, ASA and IDF, organized by IDF, Bangladesh xii) Internal Audit of MFIs, conducted by EDA Rural Pvt. Ltd. Delhi xiii) Training of Trainers conducted by ELD, Kathmandu, xiv) Anti-Money Laundering Workshop, organized by Nepal Rastra Bank xv) Training on International Financial Reporting Standards (IFRS), conducted by Accounting Standard Board (ADB) Kathmandu, xvi) Operational Management of Microfinance focusing on Non- interest based microfinance, organized by Colombo Plan, Govt. of Indonesia & NAM CSSTC, Indonesia, xvii) National HR Conference 2011, organized by NBTI, Kathmandu and xviii) Observation visit to German Savings Banks Finance Group organized by Savings Banks Foundation for International Cooperation (SBFIC), Germany. Besides, he has expertise in accounting, supervising and auditing of MFIs, and facilitating training programs on the topics such as microfinance operation, branch management, internal audit, risk management, motivation and leadership. Mr. Basu Dev Lamichhane, 45, is a Senior Officer at the Supervision Department of RMDC. He joined the organization on 16th y Before joining RMDC, he worked with the Rastriya Banijya Bank Ltd. (particularly for the Priority Sector Credit Program) for 17 years as Senior Assistant. His academic qualification is MBA from TU, Nepal. The major trainings he has acquired are: i) Training on Production Credit for Rural Women, organized by Women Development Training Centre, Kathmandu, ii) Priority Sector Credit Program, organized by Nepal Rastra Bank, iii) Small Business Consultancy Course, organized by SBPP/GTZ, iv) Management Development Program, organized by RMDC, v) Credit Appraisal of MFIs, conducted by EDA Rural Pvt. Ltd. Delhi, India vi) Trainer Development Program, organized by RMDC, vii) Financial Analysis and Delinquency Management, organized by RMDC viii) Training on Grameen Generalized System, jointly organized by the Grameen Trust, Bangladesh and RMDC, Nepal ix) Training on Facilitation and Presentation Skills organized by ELD, Lalitpur and x) Training on Sri Lankan off-grid Micro-Hydro Financing System, Sri Lanka, organized by ESAP/AEPC.

102 Mr. Bhola Nath Regmi, 39, is a Senior Officer at the Microfinance Service Department of RMDC. He joined the organization as an Officer on 1st September Before joining RMDC, he worked with the Nepal Commerce Campus, Minbhawan as an Assistant Lecturer for five years and with National Human Rights Commission of Nepal as an Accountant for 5 months. His academic qualification is MBA (Financial Management) and MA (Rural Development) from TU, Nepal. The major trainings he has acquired are : i) Management Development Program, organized by the Ministry of Local Development, ii) Financial Analysis and Delinquency Management, organized by Sana Kisan Bikas Bank Ltd, iii) Credit Appraisal of MFIs, organized by EDA Rural System Pvt. Ltd. Delhi, iv) Training on Grameen Generalized System, conducted jointly by RMDC & Grameen Trust, Bangladesh, v) Study Visit to Grameen Bank, ASA and IDF of Bangladesh, vi) Trainer Development Program, organized by RMDC vii) Training on Gender organized by the Department of Livestock, Nepal, viii) Training on Facilitation and Presentation Skills conducted by ELD, Lalitpur, ix) Training of Trainers (ToT) conducted by ELD, Lalitpur, x) Training on Business Planning conducted by RMDC, xi) Training of Trainers (ToT) organized by RMDC and xii) Microfinance Training of Trainers Blended Learning course, jointly organized ADB, Institute, African Development Bank and Tokyo Development Learning Centre, The World Bank and accredited as fully certified trainer of the microfinance distance learning course. Mr. Anil Krishna Joshi, 44, is a Senior Officer at the Human Resource Management Department of RMDC. He also works as a Company Sectretary of RMDC. He joined RMDC in October 1999 as a Senior Assistant. Before joining RMDC, he worked with the Institute for Integrated Development Studies (IIDS), Kathmandu for 6 years as a Data Processor. His academic qualification is Masters in Business Administration (Financial Management) from TU, Nepal. The major trainings he has acquired are: i) Auditing & Supervision of Partner MFIs, conducted by PKSF, Bangladesh, ii) Organization Behavior, conducted by Nepal Rastra Bank, Kathmandu, iii) Accounting Training, conducted by Chartered Academics International, Kathmandu, iv) Credit Appraisal of MFIs, conducted by EDA Rural Pvt. Ltd. Delhi, v) Training Program for Company Secretary, conducted by Institute for Law and Development, Kathmandu, and vi) Training of Trainers organized by RMDC, Kathmandu. Ms. Gyanu Maya Bhandari, 35, is a Senior Officer at the Planning and Research Department of RMDC. She joined the organization as an Officer on 1st September Before joining RMDC, she worked with P.L. Shrestha & Co., Chartered Accountants (member of HLB international) for 1 year as an Audit Officer. Her qualification is CA Intermediate from The Institute of Chartered Accountants of Nepal. The major trainings she has acquired are: i) Basic Computer Training, conducted by Oxford Computer Institute, Kathmandu, ii) Accountancy, conducted by MAC Consultants Pvt. Ltd, Kathmandu, iii) Financial Analysis and Delinquency Management, organized by RMDC, iv) Credit Appraisal of Microfinance Institutes, conducted by EDA Rural Pvt. Ltd. Delhi, v) Trainer Development Program, organized by RMDC, vi) Training of Trainers (ToT) conducted by RMDC, Kathmandu, vii) Reporting skills and Professional writing Training conducted by ELD, Lalitpur, viii) Training on Design and Development of Training Material, jointly organized by InM Bangladesh and AIT Thailand in Bangladesh and ix) Study Visit to Grameen Bank, ASA and IDF of Bangladesh.

103 Mr. Pradeep Kumar Poudel, 35, is an Officer at the Microfinance Service Department of RMDC. He Joined RMDC on June 15, 2006 as an Assistant and since then he has been working under the department. His academic qualification is Bachelors Degree in Management from TU, Nepal. The major training he has acquired are: i) Advanced Accounting Training, Conducted by MAC Consultants, Kathmandu, ii) Secretarial Training, conducted by MMSI, Kathmandu, iii) Data Base Programming, conducted by Computer Point Nepal, iv) Study visit to Grameen Bank, ASA, and IDF of Bangladesh v) Training of Trainers (ToT) conducted by ELD, Lalitpur and vi) Financial Analysis & Delinquency Management conducted by RMDC. Mr. Jaya Ram Khadka, 35, is an officer at Microfinance Service Department of RMDC. He joined the organization as an officer on 15th April His academic qualification is Masters in Business Studies (MBS) from Tribhuwan University, Nepal. The major trainings he acquired are: i) Financial Analysis and Delinquency Management conducted by RMDC ii) Professional Accountant Training conducted by Chartered Academics International iii) Advanced Diploma in Software Technology (ADST) conducted by Computer Point Nepal, iv) Business Planning Training conducted by RMDC, v) Training on Design and Development of Training Material, jointly organized by InM Bangladesh and AIT Thailand, vi) Training on Case Study Writing conducted by ELD, Lalitpur, vii) Clean Energy Business Planning Training organized by clean start programme in Lucknow, India and viii) Microfinance Training of Trainers Blended Learning course, jointly organized ADB, Institute, African Development Bank and Tokyo Development Learning Centre, The World Bank and accredited as fully certified trainer of the microfinance distance learning course. Mr. Gobinda Prasad Poudel, 30 is an officer at the Financial Management Department of RMDC. He joined RMDC as an officer on 15 April Before joining RMDC, he worked with the Valley College of Technical Sciences, Kathmandu as an Accountant for one year and with P & P Associates (Insurance Loss Assessor), Kathmandu as an Assistant Loss Assesor for 2 years. His academic qualification is Master in Business Studies from TU. The major trainings he has acquired are: i) Accounting Application Using Computer, conducted by ECTA Management Academy, Putalisadak. ii) Diploma in computer Application, conducted by Public Computer and Language Pvt. Ltd., Palpa, iii) Financial Analysis and Delinquency Management, conducted by RMDC, iv)training on Finance Budget 2070, conducted by C-MAC, Kathmandu and v) Study visit to Grameen Bank, ASA and IDF of Bangladesh.

104 Mr. Bharat Kumar Singh, 38, is an officer at Supervision Department of RMDC. He joined the organization as an officer on 13 June His academic qualification is Masters in Rural Development from Tribhuwan University, Nepal. He has worked in Nirdhan Utthan Bank Ltd for 6 years. The major trainings he acquired are: i) Training of trainers program on Information, education & communication conducted by Nirdhan Plan capacity building program ii) Training of trainer s course on micro enterprise creation & development conducted by IEDC, iii) Management training program conducted by KUSOM, iv) Rural credit challenges for micro financial Institutions Conducted by NIRD, India v) Financial Analysis and Delinquency Management training conducted by RMDC vii) Internal Audit Training conducted by RMDC, viii) Monitoring and supervision Training conducted by RMDC and ix) Study visit to Grameen Bank, ASA and IDF of Bangladesh. Ms. Sweta Shrestha, 29, is a Junior Officer at CEO s office of RMDC. She joined RMDC on October 27, 2007 as a Senior Assistant. Her academic qualification is Masters Degree in Business Economic (Marketing) from Wigan & Leigh College, Nepal. Before joining RMDC, she has worked with the Rising Nepal as a Reporter and the Gorkhapatra Sansthan as a photo journalist as an intern. She had also volunteered for the United Nations Women s Organizations (UNWO) as an Associate Editor. The major trainings she has acquired are Beginners level Accounting course and Advance level Accounting course.

105 RMDC FAMILY