Microfinance in Nepal: Same same, but different

The introduction of Grameen model microfinance in Nepal was a neoliberal strategy that employed the perceived efficiency of women to distribute credit to rural households. Microfinance mitigated state-directed rural development finance outreach failures of subsidized credit capture by elites and use of funds for political patronage. Yet the very poor in Nepal are still not reached by microfinance. Nepal retained targeted lending through the Deprived Sector Lending Program, resulting in excess liquidity and low efficiency in microfinance institutions. The number of microfinance institutions has grown exponentially, yet microfinance still does not reach the remote hills and mountain areas. Dalits, the poorest caste group, are negligibly included in microfinance cooperatives. Women have gained valued access to credit through microfinance, but research about empowerment is inconclusive. Greater transparency and increased assessment of microfinance institutions, including social performance measurement, is required. There is no systematic research showing that microfinance in Nepal reduces poverty.