Deposit Assessment in Nepal

This paper surveys the current supply and demand for microdeposit services in Nepal. It examines the macroeconomic environment, legal and regulatory framework and financial Infrastructure, the outreach, methodologies and products of microdeposit service providers and clients needs and preferences. Findings indicate that:

• People in Nepal save in multiple institutions in formal, semi-formal and informal sectors in order to to be eligible to take loans from any one of them and to diversify risk;
• Commercial banks and development banks rarely serve low-income clients;
• Savings and credit cooperatives, microcredit development banks and financial intermediary NGOs are the most relevant players in the formal and semi-formal sectors for microdeposit mobilization;
• Nepal has a large number of informal institutions, with almost every person depositing their money in an array of informal groups;
• Formal institutions are beginning to focus on rural and remote areas and are developing mechanisms, like low balance savings accounts, to serve low income clients.

The paper concludes that regulation and supervision is still an area of concern in microdeposit mobilization in Nepal. It recommends investment in capacity building, system development and technology to scale up microdeposit mobilization in Nepal.