Case Study

Rural Microfinance Support Project (RMFSP)

Developing microfinance through channelling groups in Iran - A study
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This paper presents an overview of The Rural Micro Finance Support Project (RMFSP) - a joint project of International Enterprise for Development of Rural Micro Finance Services (DRMFS-International) and Bank Keshavarzi (BK), the agricultural bank of Iran.

The paper describes the project:

  • Objective - to expand microfinance services in poor and deprived regions of Iran by leveraging BK's resources and institutional capacity in partnership with civil society organizations;
  • Target group- the rural poor, in general, rural women and youth, in particular;
  • Implementation(phase I ) -
    • DRMFS-International provides technical assistance in the form of development services;
    • BK provides credit and supervision;
    • Local NGOs provide basic social mobilization and group guidance services.
  • Channelling groups -of 10-20 members who guarantee each others' loans;
  • The loans are used for a variety of purposes, but mainly for individual livestock projects;
  • All group members have to open savings accounts, but there are no mandatory savings;
  • Credit is disbursed by the nearest BK branches;
  • Actual accomplishments during phase I have exceeded project targets by a wide margin.

The paper lists the following project:

  • Weaknesses:
    • Lack of a conducive policy environment;
    • Lack of experience in microfinance among governmental and non-governmental organizations in Iran.
  • Strengths:
    • BK's capacity and willingness to expand financial services from its own resources to new market segments in rural areas through mutual guarantee groups.

The paper concludes with recommendations to DRMFS-International for the second phase of RMFSP.

About this Publication

By Seibel, H.
Published