Financial Technology of Small Farmer Co-Operatives Ltd. (SFCLs): Products and Innovations

This report investigates financial technology, outreach and profitability by looking into the financial technology employed by selected Small Farmer Co-operatives Ltd. (SFCLs) in Nepal. Places special emphasis upon the design of savings and loan products, and the savings mobilisation and credit delivery processes of these member-based grassroots organisations. Finds that co-operative microfinance institutions have achieved astonishing performance due to

• Local ownership;
• Incentives for member borrowers ensuring a timely repayment of loans by rewards and penalties;
• Effective management through clustered structures of SFCLs;
• Using the advantages of being multi-service co-operatives while business lines are strictly separated, organised as profit centres yet remaining complementary;
• Targeted lending with stipulations regarding specific loan uses;
• Strong support system by the ADBN and GTZ provides the necessary training and facilitates mutual exchange.

Notes that future challenges are likely to be self-sufficiency, computerisation, new insurance and savings products, reducing red tape and maintaining stability.