A Case Study of Successful MFI Branch Operation in the Hills of Ilam District

This study documents 21 months of progress of two MFI branches operating in different modalities under the Expanding Access to Finance in the hills of Eastern Nepal project implemented jointly by Mercy Corps Nepal and Nirdhan Utthan Bank Limited.

The project aimed to provide microfinance services to under-served areas and communities through the Grameen model and Self Reliant Group (SRG) model. The Ilam branch used a modified version of the Grameen model and the Fikkal Branch used the SRG model. The study compares the progress of two branches to analyze potential microfinance modalities suitable for the hills. Study findings include:

• Both branches indicated positive trends and growth perspectives;
• Some indicators were in favor of Fikkal branch, indicating that the SRG modality might be a better fit in hilly operating environments;
• MFIs using the SRG modality need to invest more funds, reach more clients and wait longer to earn profit equivalent to that of a branch operating under Grameen modality.

Finally, a similar study of the two branches after 26 to 30 months would help to draw conclusions about the modality more reliable for replication.