Partnership for Prosperity
Prabhu Bank in association with Idea Studio Nepal (ISN) initiated a COVID-19 relief loan scheme with the aim to support small businesses and professionals facing financial crises. The financial literacy integrated loan scheme was developed to offer a seamless no collateral loan process with a minimal interest rate to the loan applicants. In addition to this, as a part of the partnership, Idea Studio Nepal (ISN) along with the Professors of Kathmandu University School Of Management also conducted research on the ‘Socio-Economic Impact of COVID-19 and Customer Attitude Towards New Product and Technology Adoption’. As a part of the research, the behavior of tempo drivers, street vendors, teachers, and salons/parlors was assessed to suggest a new loan product of Prabhu Bank to be targeted at micro-enterprises and professionals.
A total of NRs. 16.475 million was disbursed to women safa tempo drivers, teachers, and trekking guides through this project.
Prabhu Bank and Idea Studio Nepal partnered for the project with an aim to restore the human dignity of the working class people amidst the pandemic and encourage them to get back to their work by reducing financial hardship through subsidized loans with no collateral. The product developed for this project is one of a kind. There were not any loan products offered during the pandemic catering to women tempo drivers, teachers, or trekking guides.
Project Achievements and Outcomes
With three decades of Microfinance experience in Nepal, Banks are yet to provide services to the targeted group at full capacity. Through this project, one of the major objectives of Microfinance was fulfilled:
- To increase the economic status of the rural & urban women by providing micro-credit for their micro businesses the project , which was launched on 15 December 1993: This objective was achieved by providing subsidized loans to women safa tempo drivers and women entrepreneurs who are involved in the trekking business from Lukla.
The major impact of the project is to provide immediate financial relief to loan applicants, which enabled them to get back to their work with ease amidst the pandemic. In addition, the following are the direct and indirect impacts created by the project:
- Financial Relief: Prabhu Bank provided financial relief to the women tempo drivers, and school/college teachers by providing subsidized loans with no collateral during the peak of COVID-19 when many micro-businesses were closing down and daily wage workers were jobless. During that time, the combination of government lockdowns and fear of contracting and spreading the virus had completely shut down the income source of both the tempo drivers and teachers. This was increasing their expenses with no source of income to fulfill the expenses. Amid such crises, the project provided financial relief to the clients, so that they could focus on ways of getting back to work.
- Financial Inclusion: Through this project, many women tempo drivers opened their first-ever bank account and came to know about banking services. By taking a loan, the women got access to an ATM card for the first time in their life. This project also enabled Prabhu Bank to disburse the loan by visiting the clients in their villages and understanding their situation and needs firsthand.
- Restoring Human Dignity: The pandemic created a financial crisis in almost all occupations. Teachers, who are regarded as one of the most respected professions, also experienced a financial crisis where they had not been paid for almost 6-8 months. Tempo drivers, who make a daily transaction of Rs 1000 to Rs 1500 per day, made zero transactions for almost 5-6 months. And the trekking industry, which was considered the booming industry of 2020 was massively impacted leading to the unemployment of thousands of trekking guides for more than a year. None of these occupations received any other subsidy during the pandemic. This project helped Prabhu Bank acknowledge the hard work of these individuals, who work tirelessly by providing a subsidy loan.
- Increase the economic status of women by providing micro-credit: Through this loan, 79 women received subsidy loans including all the women tempo drivers, teachers, and entrepreneurs involved in the trekking business.
You can view research on the ‘Socio-Economic Impact of COVID-19 and Customer Attitude Towards New Product and Technology Adoption’ here.