The article below is provided by USAID/Nepal’s NEAT Project.
Branchless Banking in Nepal
Despite the vast and untapped market in low-income and rural areas, banks and financial institutions avoid opening branches there due to the high operating costs and associated risks. Even the ATM, a basic financial service, is rare. With a growing population using mobile phones, branchless banking offers a compelling solution to this logistical problem.
Krishna Prasad Bhattarai, for instance, a farmer in the Bardia district of Nepal, calls his daughter in Kathmandu to tell her that he has just transferred money to her bank account, an effortless financial transaction that would have taken 25 kilometers and a day’s travel before branchless banking. He carries out this type of transaction using Hello Paisa, a branchless banking service. “The system has saved my time and also eliminated the risk of carrying money in my pocket to deposit in the bank,” he said. “Not only me, many people here have benefited from this prompt financial service.”
Bhattarai’s Hello Paisa agent is Ramesh Kumar Chaudhari, a local shopkeeper—Bhattarai calls him a human ATM. Hello Paisa works by appointing well-known community figures, like Chaudhari, as agents that can accept deposits and provide money withdrawal services for a small commission. They do this through a bank-managed Hello Paisa Mobile Account, up to the amount they have deposited with the bank. The bank provides agents with a simple phone they use to connect directly to the bank to verify customer identification numbers and record transactions. The key is that the customer’s money is never technically with the agent; the agent is only the medium for deposits and withdrawals.
Chaudhari, who was appointed as an agent seven months ago, said that he has been conducting financial transactions worth $1,145 to $2,330 daily and has more than 160 clients, most of whom are farmers groups. “Although the system is in its infancy, its penetration will gradually increase in rural areas because it is the best financial access to create financial inclusion for all,” said Chemonics’ Phillip Broughton, who leads the project. With funding from USAID, the Nepal Economic, Agriculture and Trade Activity, called NEAT, promotes economic growth and helps reduce poverty in the country.