Role of Microfinance Services on Living Standard (A Case Study of Phalewas Municipality at Parbat)

Abstract

Microfinance is not a new development.It provides the collateral free loans to poor people, especially in rural areas, at full-cost interest rates that are repayable in frequent installments. Mfs is now being considered as one of the most important and an effective mechanism for poverty alleviation through which to disseminate precious information on ways to improve the health, education, legal rights, sanitation and other living standards, which are of relevant concerns for the poor. Likewise, many micro-credit programs have targeted one of the most vulnerable groups in society – women, who live in households with little or almost no assets. By providing opportunities for self-employment, many studies have concluded that these programs have significantly improved women's security, autonomy, self confidence and status within the household. Several microfinance institutions are working in Parbat district, but NirdhanUthhanBikash Bank and NESDO Nepal are chosen for the study . These institutions are working tremendously to the empowerment, poverty reduction and improvement of living standards for the poor people in Phalewas Municipality at Parbat district. They are not only working in Parbat district but also providing help and support, and are the source of motivation to other MFIs around the whole Nepal. The study has chosen random sampling technique and has interviewed the people who are already involved in microfinance activities. Therefore, the accuracy of the analysis heavily relies on the data provided by the people, interviewed. From the analysis of data, thestudy found that microfinance has the positive impact on the standard of living of the poor people and on their life style. It has not only helped the poor people to come over the poverty line, but has also helped them to empower themselves. There is an argument that the interest rate of MFIs is high. In spite of the debate about higher interest rate, MFIs are contributing not only in alleviating the poverty and improving the living standards of the poor people,also offering extensive human development programs in Nepal.