ROLE OF MICROFINANCE INSTITUTIONS IN PROMOTING FINANCIAL INCLUSION IN NEPAL

Abstract

This research study delves into the pivotal role played by Micro Financing Institutions (MFIs) in achieving financial inclusion objectives. Through a descriptive and analytical methodology, the study examines the contribution of microfinance services, specifically micro-credit and savings products, in enhancing financial inclusion in Nepal. The primary objectives encompass exploring the barriers to financial inclusion, assessing how MFIs can surmount these challenges to cater to underserved populations, evaluating the reach and responsiveness of MFIs towards marginalized groups, such as women and racial minorities, and identifying success indicators for MFIs in promoting financial inclusion. Employing a comprehensive array of primary and secondary data sources, the study analyzes notable MFIs including Chhimek Laghubitta Bittiya Sanstha Limited (CLBSL), Janautthan Samudayic Laghubitta Bittiya Sanstha Limited (JSLBSL), Laxmi Laghubitta Bittiya Sanstha Limited (LXLB), Nirdhan Utthan Laghubitta Bittiya Sanstha Limited (NUBL), and Sana Kisan Bikas Laghubitta Bittiya Sanstha Limited (SKBBL). Key findings emanate from correlations drawn between multiple variables. The research uncovers a moderate positive correlation between "Outreach to Underserved Population" and "Geographical Coverage," suggesting a connection between outreach efforts and broader geographic reach. Conversely, "Gender and Marginalized Group" exhibit significant negative correlations with "Savings" and "Credit," implying potential financial disparities among these groups. A significant negative correlation is observed between "Savings" and "Credit," possibly signifying a trade-off between higher savings and lower credit balances. However, the analysis reveals that "Financial Products and Services" exhibit weak and non-significant relationships with other variables, suggesting their limited impact on the overall analysis. Keywords: Microfinance, Financial Inclusion in Nepal, Saving, Credit, Income, Financial Reach in Marginalized Groups, poverty reduction, Marginalized groups