Governance and regulatory issues: microfinance and development of rural communities in Nepal.

Abstract

Microfinance Institutions (MFIs) that have a mission to provide credit to the poorest of the poor appear to be the panacea for rural poverty and hardship and bring forward a promise of better tomorrows. However, MFIs as a means of expanding financial inclusion and competing with the informal financial sector are not such a success story in rural Nepal. The increasing demand for cash to meet social and religious obligations in largely subsistent village economies is increasingly supported by short-term seasonal migration. The removal of working-age males from communities produces a range of unanticipated and not necessarily desirable outcomes. MFIs, it is suggested, could ameliorate the problem and positively contribute to improved sustainable development outcomes