Paschimanchal Grameen Bikas Bank Ltd (PasGBB)

Sources

PasGBB was established as a Regional Rural Development Bank in 1995 through a joint collaboration of the government of Nepal, Nepal Rastra Bank and Commercial Banks, to serve poor and deprived people of the Western Development Region. Modelled on the Grameen Bank methodology, the mission of PasGBB is ‘to generate self-employment through micro-credit to the rural poor at their doorstep to reduce poverty level in the western region of Nepal’.

PasGBB provides savings and loans services to low-income clients, using a Grameen Bank methodology.  The savings schemes include group savings, centre fund, emergency fund, personal saving and child education saving scheme.  Group savings are compulsory savings of 5% of each loan disbursement, with additional contribution of one rupee each week. Group savings can only be accessed by members after five years. The centre fund (one rupee per week) is used to build centre meeting buildings. Personal saving are voluntarily savings that attract a 6% interest rate, while the child education saving scheme is a cumulative saving scheme over seven years, used for education purposes.

The credit products include a microbusiness loan and a microenterprise loan.  The microbusiness loan is provided through groups, using peer guarantee for repayment, and is repayable in 50 weekly instalments. The microenterprise loan is provided to members having graduated from the microbusiness loan, require a collateral, and is repayable in monthly instalments over two years.

PasGBB operates 39 Branches in 13 districts located in the hill and Terai regions in the Western Development region, with a stronger presence in the hills.

PasGBB has focussed on two demographics in order to address poverty: women in remote hill and Terai regions. Through a focus on women, PasGBB have found that financial access has increased financial productivity, and the development of women's financial management abilities and skills have exceeded their male counterparts.

As of July 2003

The criteria used by PasGBB to select its clients are: limited assets, no sources of regular income, no active loan with another microfinance provider and ownership of less than 0.5 hectares of land. The criteria are in place to make sure that the poorest of the poor are eligible to receive direct support from PasGBB. The bank uses Participatory Rural Appraisal (PRA) techniques, employing various demographic measures, to determine whether clients match the criteria or not.

As of July 2003

PasGBB operates mostly in hill regions, which is a more difficult environment for microfinance services. Under a recent restructuring and privatization process, PasGBB, the most profitable RRDB, is transferring NRB’s shareholding to the private sector. As of end of June 2004, 53% of its shares are now held in private hands. The majority of PasGBB shareholding is now held by its clients (33%). The central bank, Nepal Rastra Bank, the original major shareholder, plans to maintain only a 10% stake.

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In the hill region, 14 of its 19 branches have reached Operational Self Sufficiency, while 13 have reached financial Self Sufficiency. In the Terai region, five branches out of 20 have reached OSS, while 3 have reached FSS. The figures below reflect data collated from 39 branches in the Terai and Hill Regions.

As of July 2003

PasGBB services focus on rural women and communities within the hill regions. Providing adequate microfinance services to the hill communities has proved to be a costly exercise, due to limited infrastructure, difficult geographical settlement, low population density, higher operational and service delivery costs, and limited business activities. However, working in the hills has also shown several benefits, such as higher responsibility and motivation among members, easier peer pressure, stronger group solidarity, and higher credit discipline.

The Nepal Rastra Bank (NRB) previously owned 61% of PasGBB. In 2004, NRB had relinquished its participation in PasGBB to allow the institution to become a privatised bank. The participation will be transferred to clients (37%), bank staff (5%), and other microfinance institutions in Nepal (9%). In 2003, PasGBB has posted a profit of Rs. 1,145,000.

• 2004. A Successful Microcredit Programme in the Hill Region, Paschimanchal Grameen Bikas Bank Ltd, Nepal.

• Paschimanchal Grameen Bikas Bank Ltd website: www.grameenbanknepal.org

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