Microfinance Services and Poverty Level of Rural Farmers of Syangja District of Nepal

Abstract

Poverty is associated with income and its distribution, which remains the core concern even today.As the data of Economy Survey 2015/2016 done by Ministry of Finance shows, that, the number of people living below poverty line has dropped to 21.6 percent in 2016 AD from 42 percent of 1995 AD. Microfinance is a form of monetary development that has first and foremost focused on alleviating poverty through giving financial services to the poor. The study was conducted with aim to identify the contribution of microfinance services to reduce the status of poverty level of rural farmers of Syangja district of Nepal. The study had used the standard poverty score card developed to measure the poverty in Nepal. The score card has ten simple questions; each question has option of response having with different score. As the national standard of Nepal, out of 100 score, who can earn more than 59 is known as non-poor whereas from the international standards it needs more than 64 to be non-poor. The result shows that Out of 385 respondents, 140 (36.4%) were found poor and 245 (63.3%) were non-poor on the national level standard of poverty. 190 (49.4%) were found poor and 195 (50.63%) were non-poor on the international level standard of poverty. The data of poverty line is significantly higher than the national level. Therefore, there was need of serious concern form the concerned authority of Nepal government to address the poverty issue of Syangja district.

Literature review on effect of microfinance institutions on poverty in South Asian countries and their sustainability

“…Microfinance received recognition as a poverty alleviation tool in the Sixth Five-Year Plan (1981)(1982)(1983)(1984)(1985), although it began in the 1950s (Dhakal, 2007). The Nepalese Government had believed that microfinance would prove to be a successful poverty alleviation tool (Dhakal, 2007).…”

“…Microfinance received recognition as a poverty alleviation tool in the Sixth Five-Year Plan (1981)(1982)(1983)(1984)(1985), although it began in the 1950s (Dhakal, 2007). The Nepalese Government had believed that microfinance would prove to be a successful poverty alleviation tool (Dhakal, 2007). The Government-initiated efforts during 1974 included directing its central bank to invest 5% of their deposits into small scale finance under the "prathmik chhetra karja karyakram".…”

“…Poverty alleviation is the prime reason for the recognition of MFIs (Pati, 2017; Chowdhury and Mukhopadhaya, 2012; Razzaque, 2010; Vasimalai and Narender, 2007; Roodman and Morduch, 2005; Dhakal, 2007). According to the Asian Development Bank [4] and Beisland et al (2018), MFIs provide financial services to low-income families to fulfil their financial requisites.…”

Empowering Women Self Help Groups Through Microfinance During Covid-19: A Case Study of Women SHG

“…The Self-help group has developed confidence and provided continuous support to the poor rural women. The self-help group created many women entrepreneurs at the village level and developed leadership skills among the rural women (Dhakal & Nepal, 2017;Kalu & Attamah, 2021). The government of India through a microfinance scheme has supported these SHG so that it could continue the journey to elevate the poverty in rural areas.…”

Barriers to Financial Inclusion: An Ism Micmac Analysis

“…Determinants of borrowing from formal sources have been identified, and being male, having a bank account, and higher educational qualifications are positively correlated with the likelihood of formal borrowing (Mukhopadhyay2016). Role of Microfinance and its role in poverty eradication can be a parameter in the study (Dhakal & Nepal, 2017;Iheduru & Okoro, 2018).The regulator has to create a suitable regulatory environment to keep the interest of all the stakeholders (Garg & Agarwal, 2014). Under the Financial Inclusion initiative, the performances of the bank are also measured (Thyagarajan & Nair, 2016).…”