DEPROSC Development Bank and DEPROSC NGO

Sources

Since 1993, the NGO DEPROSC (Development Project Service Centre) aims at ‘empowering rural people for self-sustaining socio-economic upliftment’. It started its microfinance activities in 1995 in the Central region and transferred its microfinance portfolio to DEPROSC Development Bank in 2001. DEPROSC Development Bank is a rural microfinance development bank operating under the Development Bank Act and Company Act. Promoted by the NGO DEPROSC, which retains part ownership, equity participation is shared between the Agricultural Development Bank, Nepal Bank, Nabil Bank, NGO CEAPRED and other microfinance practitioners.

DEPROSC Development Bank’s core activity is microfinance.

The bank provides direct lending services as a retail lender in the Terai region, and indirect lending in the hills as a wholesale lender to community based savings and credit organizations. These community-based organisations have been promoted by the NGO DEPROSC, which has supported the creation of more than 150 cooperatives so far, comprising 25,000 members.

With its direct lending program, the bank adapts the Grameen Bank model to lend to homogenous groups, organised in centres, which provide additional peer solidarity and pressure to ensure credit discipline. DEPROSC Development Bank also provides larger loans, ‘microenterprise loans’, which is restricted to a 25% share of its portfolio, with a Rs.100,000 loan size maximum per loan, as instructed by the central bank. Moreover, savings are an integral part of the bank’s program. The bank integrates its microfinance activities into a broader strategy of microenterprise development, which is implemented in collaboration with other agencies.

DEPROSC Development Bank is licensed to work in ten districts of the Central region, and operates in five of them, Chitwan, Bara, Parsa, Rauthat, Sarlahi. In addition, the NGO DEPROSC continues to provide microfinance services in the Easter Region, in the district of Jhapa, Sunsari and Morang, serving approximately 8,000 clients.

DEPROSC Development Bank was established to provide financial services to poor rural households. DEPROSC Development Bank aims to empower rural women by giving opportunities for access and control over resources and role in decision-making through their participation in the microfinance program. The bank serves exclusively rural women, especially widows, scheduled caste and disadvantaged groups.

As of Mid-July 2003, for DEPROSC Development Bank only.

DEPROSC Development Bank and DEPROSC NGO provide services to families living below the poverty line, defined as having a thatch house, owning less than 0.5 hector of irrigated land or less than 1 hector of irrigated land per family and having less than Rs.4,500 per capita income.

As of Mid-July 2003, for DEPROSC Development Bank only.

The bank places importance on action-research in order to study the impact of its microfinance services. The bank has a training department, which organizes training, workshops and seminars to enable information sharing among microfinance institutions.

DEPROSC Development Bank operates the Community Ground Water Irrigation Sector Project, in which it forms water users’ groups and provides funding for boring, wells and pumps. The Asian Development Bank provides loans through Nepal Rastra Bank, of which 80% is used for soft loans provided to partner financial institutions, committed to disburse 90% of loans to the water users’ groups. CIDA, through the Canadian Center for International Studies and Cooperation (CECI) supports the social mobilization of groups and partnering with NGO such as DEPROSC. DEPROSC Development Bank manages the financial intermediation of the groups.

As of July 2003, the bank posted a Rs.1,153,000 operating income before tax. Loans in arrears were 2.75 % while cost per unit of money lent was very low at 0.13.

As of mid July 2003 for DEPROSC Development Bank only

DEPROSC Development Bank has difficulties in accessing long-term, institutional lending as commercial banks are phasing out their lending under the priority sector requirement. RMDC only offers retail lending conditions (short term, frequent repayment). Moreover, DEPROSC Development Bank would be interested in being able to accept public deposits. The bank has modified its methodology to adapt to the conflict situation, with more clients going to branches for financial transactions, instead of bank officers going to them.

DEPROSC Development Bank borrows from Nepal Rastra Bank and some commercial banks such as Nabil Bank Limited, Everest Bank Limited, Kumari Bank Limited and Lumbini Bank Limited. Diverse Banks and financial institutions hold 48.4% of DEPROSC Development Bank, which plans to raise additional capital through a public share issue of Rs.3,180,000. DEPROSC Development Bank plans to have more public capital than private in the long run.

• Second Annual Report for financial year 2002/2003 DEPROSC Development Bank

• Experience of DEPROSC- Nepal in Poverty Alleviation Programs (Including Women Empowerment Programs), January 2004

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