Kiran Kunwar, Chief Executive Officer
Global IME Microfinance Institution
Interview with the media –
1. What are you doing today In addition, the organization’s A.V. How much of the financial target of 2076/77 has been achieved and what are the indicators of financial conditions?
Kunwar: Global IME Microfinance Financial Institution is a national level financial institution with its head office in Vesishahar. It is planned to expand at least 10 branch offices including 3 more districts within the fiscal year 2077/78. We are in a campaign to expand the branch in a phased manner to complete the plan. Four more branches have been opened in Dolakha, Syangja, Rupandehi and Wanke districts this month. The branch network has reached 72 branches in 48 districts and I am conducting feasibility study of 6 more branches.
The financial condition of the organization is satisfactory. According to the annual plan of the Fiscal Year 2076/77, the achievement was achieved as per the target of the second quarter up to the month of Poush. Ninety percent of the work of the microfinance institution is done in the field and it was not possible due to lockdown. The programs of all the branches were partially operational till mid-July.
To date, the organization has collected 1.44 billion savings with 93,847 members. 4 billion 82 million loans have been provided to 48 599 entrepreneurial members. By mid-July 2077 BS, the program has been expanded to 46 districts through 68 branch offices. At present, the program is being implemented through 72 branch offices by expanding 4 branches in 48 districts including 2 more districts.
Despite the special circumstances, the organization has collected savings of Rs 1.31 billion from 92277 members, invested Rs 3.62 billion in loans to 48,800 entrepreneurs and earned a net profit of Rs 779.38 million. The net profit was earned. Also, earnings per share is 30.03 and net worth per share is 155.54.
2.Can you shed some light on the historical background, present and future of this Global IME Microfinance Institution?
Kunwar – Historical Background: To help the poor and low-income sections of the rural society become self-reliant, self-reliant and conscious, to increase the living standards of their members with the goals of human development such as economic, social and cultural, to help reduce poverty and strengthen the country’s economy. This Global IME Microfinance Financial Institution Ltd. (Savik’s Reliable Microfinance Financial Institution Ltd.) under the Companies Act 2063/2069 with the vision of increasing the income level of the low-income poor and making them self-reliant and reducing poverty and helping to strengthen and strengthen the country’s economy Financial transactions were started by establishing a central office in Besishahar of Lamjung on 2070-02-05 after obtaining a license from Nepal Rastra Bank as a class D financial institution established on 11/24 and covering 10 districts on 2070/02/01. It was the second financial institution established at that time. The scope of the organization has been expanded from 10 districts to 15 districts and 45 districts respectively. In order to increase the income level by creating self-employment opportunities through microfinance programs for the general public who do not have access to finance, this financial institution has been emphasizing on income-generating work through skill and technical services by providing loan services as collateral without collateral and collateral as directed by NRB.
Current Status: To date, the organization has collected 1.44 billion savings with 93,847 members. 4 billion 82 million loans have been provided to 48 599 entrepreneurial members. By mid-July 2077 BS, the program has been expanded to 46 districts through 68 branch offices. At present, the program is being implemented through 72 branch offices by expanding 4 branches in 48 districts including 2 more districts.
Future Goal: This financial institution aims to expand its branch network to 77 districts, provide access to financial services to its customers through digital system while using existing high technology. With the aim of increasing the reach of the business network of the organization and increasing the size of the organization, we have set a target to make it the best financial institution in Nepal within five years by acquiring other state level financial institutions.
3.At present, the coronavirus (Covid 19) epidemic is having a direct impact on the economy in the world and in Nepal. How do you feel this has affected the microfinance sector?
Due to the direct impact of the Kunwar-Corona virus (COVID-19) epidemic on the overall economy, microfinance programs have naturally been completely affected. Ninety percent of microfinance work is done in the field. The microfinance program is a group focused program. One group is formed with a minimum of 5 women and a center with at least 2 groups or 10 members and a maximum of 6 groups i.e. 30 women. A meeting is held every month in the center and all the work of collecting savings and entrepreneurial members who want to start an enterprise, business and profession will be done at the center. The ongoing lockdown has completely affected the central meetings, as a result of which the installments have not been collected. Members are not able to pay the installments at once. Due to non-receipt of regular installments, provision has to be made as per the rules of the regulatory body and there is an effect of declining profit margin and the effect can be seen in the first quarter.
4.How much impact did the lockdown have on the overall economy, how much impact did you see on customer members and what kind of support did you get from the organization?
It is a fact that the coronavirus (Covid-19) epidemic has had a direct impact on the overall economy. The ongoing lockdown from April 26 to mid-July 2018 has created famine among the people. People were more terrified by hunger than by disease. When all the businesses were closed, there was no environment for those who had savings in the bank to spend their savings and the situation of daily wage earners was deteriorating. Unable to cope with the hunger, Namlo was even seen in the stomach. Humanitarian personalities and organizations were very helpful. We contacted all the branches regularly and went to Coronavat to give advice. You suggested that the members affected by the business profession should be given a day to understand their plight and not be able to pay the installment. There was more fear and panic in the members than the effects of corona disease. We encouraged him to stay calm and not panic and to recover from the treatment even if he felt it. We distributed masks, sanitizers, gloves and medicines through 15 branches. We transferred Rs. 500,000 to the Corona Control Fund set up by the government.
5.How long will the condition affected by Corona last and how will it affect the organization?
Kunwar: The number of corona affected in Nepal is increasing by 2,000 to 3,000 per day. At present, the number of infected people has reached more than 150,000 and the number of deaths has reached more than 1,000. It seems that the government should issue a lockdown for some time and make arrangements to identify and treat the infected and prevent further spread. If this pace continues, it will have a big impact for a year and will have a greater impact on the economy.
In the field of poverty alleviation, microfinance has tried to boost the economic activities of the villages, but they charge higher interest rates than the banks. Has happened
Kunwar: MFIs help the customer members of the organization to increase their productivity by providing income and self-employment oriented activities as well as skill-based and micro-enterprise business by going to the doorsteps of the customers on collective guarantee or acceptable collateral. It also builds capital by collecting small savings that go to waste by providing opportunities to accumulate savings and distributes that capital to those in need. Microfinance institutions only invest in micro loans without collateral. But banks do not have access to rural areas for small loans and banks do not believe without collateral. The role played by microfinance institutions in the economic, social and women empowerment development of rural areas is contributing to the economic development of the country. Microfinance is meeting the financial needs of the people by reaching out to the villages. But the exploitative feudal lords of the village do not like this work, because the practice of taking 2 to 3 hundred rupees as well as eating ghee and taking lump sum and interest has not been eradicated. Our microfinance institutions have already started investing up to 12 percent. This interest rate is the same as the bank rate. Interest is not expensive. Expensive is for the person who does not do any venture business. The availability of capital is paramount and interest is secondary for skill and professional knowledge. One thing they need to understand here is that the cost of investing in group guarantees is more expensive than investing in bulk loans. Banks can invest Rs 10 million to a single trader with good collateral, but to invest Rs 10 million in microfinance, even if Rs 50,000 is invested per member, it has to be distributed to 200 members, which is cumbersome and costly.
The question is, there is some truth in the statement that some people have become a little harsh when raising their investments. In fact, since group investment is only for the purpose of increasing income, if the loan taken from a microfinance institution is spent in vain instead of creating wealth, there will be no possibility of income. However, considering the problems of the members, while analyzing their debts, we have emphasized on managing the time frame and installment amount on the basis of income level and ability to pay.
6.Why is the MFI program focused only on women’s groups? Can’t men be included in the group and run the program?
Kunwar: It’s not just a program focused on women like you and the general public. There is an arrangement in the organization to run the program by forming a group of men as well. Men’s groups are also operating in some of our branches. I would like to inform that entrepreneurial women and men who are not members of the group have also invested with acceptable collateral. Prof. of Bangladesh. Mohammad Yunus has started small savings collection and loan investment programs by focusing on women only. I would like to tell an interesting real story based on the question of why the women-centered program took place. Prof. Yunus was a professor at the University of Chittagong, Bangladesh. At that time, there was a state of widespread famine in Bangladesh on the one hand and on the other hand, even though it was a country like Nepal, its population was five times that of Nepal. He was a professor of economics. He was walking down the street one day on his way to university to teach. A woman was begging while her baby was sleeping in the street. When Yunus approached, the woman told him that her baby had been sick for several days and had not received any food for a week. Jonah’s mind became heavy and he became sensitive to the situation in the country. He stepped towards the university with all his money in his coat pocket. A few years after the incident, the woman went to Chittagong University to meet Yunus. She didn’t know Yunus’ name because of the large amount of money she gave him, so she didn’t even know where the man worked. She did not go there because she remembered the shape of her face and believed that it could be identified by her body shape and beard. He told the university staff that he had come to see Yunus, but could not determine who he was trying to meet. Coincidentally, at the same time, the woman did not recognize Yunus as he was coming the same way. She met Yunus and tried to remind him of the previous incident. Yunus hoped that I would help him. The woman has come to thank you for your help and I have come to pay the principal and current interest of your financial assistance and requested you to take back this amount. Yunus is surprised that I don’t remember how much I donated at that time. That was many years ago. I did not donate for the purpose of taking back. I don’t need you to keep everything. If you need this money, but the woman did not agree. After some skill, he said, “I don’t need interest.” I forgot. I will take only the amount that I had given, but I would like to know how you came to this situation from yesterday’s situation. She told everything like the story of a movie. Some of the money donated was used to treat the baby and the rest of the money was used for a small naked shop She said that as the business has developed and expanded and now she is running a good business in her own house, she has come to return the donation in the form of capital and loan. After hearing all that, the light went on in UNU’s mind. Even poor women seem to be honest. He formed a group of women like her and provided interest-free loans to some groups for one year at a rate of Rs.
7.How do you confirm the need and justification of a microfinance institution?
Kunwar: Nepal is a landlocked nation. 90 percent of Nepal’s people live in rural areas and 80 percent depend on agriculture. Still, 68 percent of the population lacks access to finance, and more than 20 percent live below the poverty line. Due to the lack of physical infrastructure for development, commercial banks were only city-centric at that time. Financial access to various parts of the country was negligible. Recognizing that financial services should be provided to the remotest parts of the country in which Nepal does not have access to finance in this dire situation. Around the year 2049, Dr. Harihardev Pant (then retired Deputy Governor of Nepal Rastra Bank) said that according to the model of Grameen Bank of Bangladesh, there is a need for micro-banking program in Nepal to increase the income capacity of skilled but lacking customers and those with capital but not skilled. I would like to remind the people here about the concept of microfinance.
This financial institution provides quality, reliable microfinance services based on the needs of the poor and builds and expands economically prosperous members through their economic and social development. It has been proven to be a powerful tool to reduce poverty. In addition, microfinance institutions place special emphasis on the following. As it works for the economic prosperity of the members, the changes brought by microfinance in the society are as follows.
- The habit of saving has been developed by providing door-to-door service to the customer members. 2. There is a growing awareness of borrowing only for wasteful ventures and income generation, not for wasteful spending.
- The number of self-employed is increasing day by day due to the motivation of the members to become entrepreneurs. 4. Necessary skills and technology have been made available to raise the economic living standard of the members.
- The group members have gained skills in commercial agriculture, animal husbandry and poultry through training and tour programs provided by microfinance. 6. Even the poor and needy can save. The belief that even the poor are honest and can do financial transactions has been proven.
- Since saving is the basis for creating a happy future for the future, saving can only be achieved through sacrifice. The purpose of becoming an entrepreneur and earning income is to take loans. There is a growing perception that credit is a powerful means of meeting current financial needs. 7. The provision of 1 percent of the net profit of the microfinance institution for customer welfare work and 1 percent for social service development has increased the social responsibility of the institution and accelerated the social welfare works.
Microfinance is an effective tool for poverty reduction.
- Microfinance helps the poor to take advantage of the opportunities currently available. 2. It creates self-employment.
- It develops micro-enterprises. 4. It increases the income of the poor.
- It increases the self-confidence and self-esteem of the poor.
8.Intimate – What are the main objectives of Global IME Microfinance?
Kunwar: The following are the main objectives of establishing Global IME Microfinance Institution.
1) Financial institutions will provide quality and reliable microfinance related services to the general public through healthy competition. 2) Accepting deposits from the public and making payments with the approval of Nepal Rastra Bank.
3) To mobilize the necessary microfinance related resources from internal and external sources for the establishment, development, expansion and capacity building of agriculture, industry, services, trade and other commercially viable productive businesses to help accelerate the development of the country’s industrial, commercial and agricultural sectors. To come
4) To establish, operate, develop, expand and promote production and employment oriented business in rural and urban areas by mobilizing the available skills, labor and capital properly and to alleviate poverty by providing necessary financial resources, technical and managerial consultancy services, training and technology. To be actively involved and supportive.
5) To help in the liberalization of the microfinance sector by reducing the risk in the services related to microfinance and to help in strengthening and strengthening the economy of the country. 6) To help to increase the credibility of the general public towards the overall financial system of the country.
9.What are the reasons for making such good progress in such a short period of time and who is to be credited for it?
Kunwar: It has been in operation for the eighth year since June 19, 2077 BS and in the short period of its establishment, the programs of this financial institution are becoming popular among the members. In the field of microfinance, we are emphasizing on conducting programs in different ways. The approach to running our program is different and superior to others. We are operating savings and loan services based on the needs of the members. At the heart of every business is the customer base. He is considered the king or god of business. The goal of a successful business organization should be to make the customer happy by giving him respect and honor by considering him as God.
As a student of marketing, I understand that you should produce what you sell, rather than focusing on selling what you produce. If you ask what happens to sales, my answer is, if you study customers and produce what they demand, there will be sales.
Talking about the progress made by the organization in a short period of time, see that the organization should take certain goals and those goals should also be smart. In order to achieve these smart goals, a long-term plan of at least 5 years should be prepared and an annual plan should be prepared to achieve it. In order to achieve that plan, the Board of Directors should prepare the necessary policies and guidelines and make them available to the management. Employees need to be very honest, disciplined and conscientious. I believe that the organization has made a leap forward in a short period of time only through the combination and coordination of these tasks. I would like to give credit for this success to all the employees who are responsible for bringing the organization to its present state by fighting and coping with various situations, teaching long term thinking and business strategy and formulating policy guidelines as per the need.
10.How did you dream of establishing a place like Lamjung and expanding your branch network in most parts of the country?
Kunwar: We have succeeded in conducting a national level program for a financial institution with 10 districts under its jurisdiction by establishing a central office in Lamjung district. When he entered the financial institution as the Chief Executive Officer on April 3, 2071 BS, the institution had a paid up capital of 14 million rupees, 8,000 members, 15.1 million savings and 140 million loans. There were 8 branches in 6 districts. The jurisdiction of the organization was mostly in the Himalayan districts and remote areas. It was very difficult to expand the business. Despite that, we carried out the business expansion campaign in a planned manner. V.S. Six members were killed in the April 2072 earthquake. The houses of more than 5,000 members from all walks of life were completely and partially damaged. In this situation, we have written off the debts of 700,000 members who have suffered humanitarian losses and have distributed relief worth Rs 3.6 million to 5,000 members. Not to be distracted from such a situation, we continued to expand the program. Today, we have been able to reach the national level by expanding the scope of work of the organization in a phased manner.
11.What are the differences between cooperatives, microfinance and banks? Explain in a way that the general public can understand?
Kunwar: At a glance, cooperatives, microfinance and the name of the bank and looking at the work of the same institutions. There are many differences between them. I would like to summarize these differences.
Cooperatives: Cooperatives are fully democratic business organizations that have been set up with the common objective of living in a certain geographical area and the people with the same goal to work together and operate in a systematic way for mutual economic and social development. It is a collective business cooperative owned by people who cannot stand alone with a small investment in each other. One of the major features of a cooperative is the system of owning and owning customers. At the same time, the principle of self-help applies to cooperatives through a spirit of unity for everyone, for everyone and for each other. Cooperatives are a democratic business organization or enterprise governed by members, for members, for members.
Bank: An institution is an organization that conducts money transactions according to the prevailing law. In other words, a bank is a business or institution that allows the general public to withdraw money at any time and pay a fixed interest rate and keep a purposeful loan at interest. The present time is the epoch-making age. Banks are considered to be a large institution providing a wide range of financial services with an emphasis on Cashless Digital Service, taking into account the risks involved in cash transactions and the possibility of black money inflows.
Microfinance Cycle –
Microcredit: Small Loans to Small Entrepreneurs and Entrepreneurs –
Microfinance – Micro loans and micro savings.
Integrated Services – Micro Insurance, Micro Remittances, Utilization of Local Resources, Micro Social and Community Services, Development of Awareness and Leadership.
From the point of view of cooperatives, microfinance and banks, the principle of operation of the institution, autonomy and independence, general meeting, jurisdiction, members and customers, voting rights, limited and unlimited dividends, single and triple development and investor concerns, etc. We can find the above differences.
There was a lot of talk yesterday that Lamjung was established and operated by the bank, but today the situation of the people of the district to be proud of the merger has been erased.
Kunwar: The economy of any country depends on the monetary policy of that country. The monetary policy of Nepal Rastra Bank changes from time to time. As the country’s economy is guided by monetary policy, laws, rules and policies are being amended accordingly. At that time in Lamjung district, Pacific Development Bank Ltd. was established in Lamjung district with the cooperation of various traders, industrialists and social workers. The bank had also made good economic progress. The Nepal Rastra Bank had made an arrangement to open a development bank with one district working area at that time even with a paid up capital of Rs 10 million. There was an arrangement for small entrepreneurs, businessmen and social workers in the district to become the owners of the bank by investing a small amount of money. Nepal Rastra Bank has increased the working capital of the banks by Rs. 400 million in one district and according to the decision of the shareholders of the then bank not to increase the working capital, the existence of the bank has come to an end. Time is precious, because time does not come back. With the professional development and expansion of the institutions established in one place over time, they move from the district to the center. It is the demand and need of the time. It is not only the establishment of the organization in the district that matters, but also the extent to which the program is spread. Global IME Microfinance is the second largest tax payer from Lamjung district at that time after the Pacific Development Bank. I would also like to inform here that this financial institution is paying the highest tax revenue annually after merging with Pacific Global IME Bank. However, no association of government and business organizations has recognized and appreciated the interest and contribution of the organization in this regard in the district. In this sense, the organization established in the district should always be limited to the district and should not be proud of it.
12.There are many voices saying that microfinance institutions are exploiting women in rural areas and taking loans at cheap interest rates. What is your opinion in this regard?
Kunwar: This is a completely misunderstanding and prejudice. The microfinance institution is feeding the women of the village, not exploiting them. It has provided an opportunity to save at home. People who lack capital have been inspired to become entrepreneurs by giving small loans. I have also given awareness to the women of the villages that we should do something through skill training and travel programs and not always expect my husband’s earnings. We should earn our own income and meet our needs. There is unity in the group. Joining the group has strengthened the self-confidence that progress will be made through the support and consultation of the group. At the center, women have developed the art and skill of speaking and have been elected as representatives in local and state level elections. In the case of our organization, there are more than two dozen women members who have become mayors, vice mayors and vice chairpersons, and ward chairpersons and members. These activities have not only exploited women through microfinance programs but also made them more struggling to cope with problems.
13.At this time, rumors of merger are being spread among cooperatives and banks. Is there a need for merger even among microfinance institutions? The point here?
Kunwar: Merger is not just a rumor but a reality and a necessity. There are more institutions than needed in the same area. Although Nepal Rastra Bank increased its paid up capital to Rs 8 billion to bring the number of commercial banks to 14,15, this policy was not successful. The merger policy was only partially successful as commercial banks increased their paid-up capital by merging development banks and finance companies and distributing bonus shares. Similarly, the number of savings and credit cooperatives is more than 17,000. There are 30-40 cooperatives operating in the same municipality. Most of the cooperatives are not able to operate on cooperative values and beliefs. There is a lack of government regulation. Members have duplication and duplication. A maximum of 5 cooperatives are sufficient within a municipality. Therefore, the only option to run a more efficient, sustainable and effective cooperative is to merge the cooperatives of the same sector.
Similarly, unofficial ideas are emerging to make the total 92 microfinance institutions licensed by the Nepal Rastra Bank into 30,35 as per the merger policy of class D microfinance. Out of 92 microfinance institutions, 20, 21 microfinance institutions have gone through mergers and acquisitions. Sooner or later, small and new microfinance will not dry up without a merger.
14.What policies do you see the government focusing on for the development of microfinance institutions?
Kunwar: Nepal Rastra Bank is the guardian and regulatory body of microfinance institutions. NRB has been making significant contribution in the establishment, development and expansion of Class D microfinance institutions. According to him, it is his responsibility to provide for the self-born institution. Accordingly, the necessary financial resources for microfinance institutions have been met through the policy arrangement issued by Nepal Rastra Bank. In addition to the financial resources available from the said arrangement, if the general public of the microfinance branch sector could also collect deposits up to a certain limit, internal financial resources would be created. In addition, the regulatory body has tightened the provision of periodic savings from the members of microfinance institutions. We request that this be reconsidered. Microfinance is a type of public company business. The shareholders who invest in it also invest in the hope of a certain return. A microfinance institution is a company business as well as a social institution. The government of the country is running programs by microfinance institutions in places where no development infrastructure is available. That is, they are also representing the government. Due to geographical remoteness, lack of transportation, lack of information technology of current technology, lack of security among the employees, etc., microfinance institutions are not able to provide services more effectively. The operating cost of the branches of microfinance institutions is higher than that of all banks. Institutions emphasizing social work, like banks, have to pay 30 percent income tax. Therefore, we are of the view that the government should make a policy arrangement to pay only 20 percent income tax to microfinance institutions like cooperatives or if that is not possible.
15.Nepal Rastra Bank has set interest rate limit for loan investment through directives and circulars under FY 2077/78. What is your opinion on whether the interest rate limit of this type of loan will adversely affect the operation of the institution or not?
Kunwar: Nepal Rastra Bank (NRB) has issued circulars and directives at various times to fix the maximum interest rate of 15 percent. It seems that the regulatory body has taken the strategy of fixing the interest rate of loans in microfinance institutions by fixing the base rate and not exceeding it. Last year’s maximum interest rate was 18 percent, but when borrowing 13 percent and investing in 18 percent, the difference was 5 percent. Even if the operating expenses were considered as 4 percent, the income was reduced to 2 percent, but now the maximum limit interest rate of 15 percent has been maintained and the interest rate charged by banks has come down due to the current high liquidity. At present, the interest rate system is favorable for microfinance operations, but this situation will not last forever. We believe that banks can raise interest rates if liquidity is eased tomorrow.
16.In the monetary policy of FY 2077/78 issued by Nepal Rastra Bank, emphasis seems to be given to the merger of microfinance institutions with facilities. How do you take it and plan to merge with any organization in the future?
Kunwar: We have understood in a positive sense that the monetary policy of FY 2077/78 issued by Nepal Rastra Bank has emphasized on merger / acquisition with facilities to improve the microfinance institutions. I understand that the increase in capital, the use of high technology, the reduction in operating costs, etc. are the positive aspects after the merger / acquisition. Newly established microfinance institutions have been further affected by the current Corona disaster. It is difficult to keep the profit of the institution even in the first quarter financial statements of the microfinance institutions which have seen profit till mid-July 2077 BS. In this situation, one or more microfinance institutions have to go for mutual merger / acquisition. On the other hand, due to the restriction on the right shares by the regulatory body, it is not possible to expand the business in case of insufficient capital fund. We have also emphasized on the acquisition of the Sparsh Microfinance Financial Institution based in Vijaypur, Kaski, Pokhara. I would like to convey the message that we are in the process of becoming the best financial institution in the country by including other institutions in the future.
17.How do you see the future of microfinance?
Kunwar: The programs of MFIs have proved to be effective in reducing poverty up to the rural level. Microfinance Bowing programs are proving to be the most effective way to make the poor who have no collateral but have skills, talents and knowledge entrepreneurs and increase productivity. As banks do not reach out to rural areas and do not invest without collateral, unsecured people are far from access to finance. If the future is bright, these programs seem to be becoming more effective. This is because Nepal Rastra Bank has envisioned only a system of commercial banks and microfinance institutions in the near future and this has been presented through various forums and programs.