Deprived Sector Lending by Nepalese Commercial Banks

Presented by: Sujita Adhikari

Topics to be DiscussedIntroductionLiterature reviewResearch methodologyData presentation and analysisSummary, conclusions and

research implications

Introduction Background of the studyStatement of the problemObjectives of the studySignificance of the studyLimitation of the studyOrganization of the study

Background of the study For the upliftment of the rural people

and economic development of a country as a whole, the government has initiated different priority sector lending programs focusing for poverty alleviation.

Under priority sector, the development of domestic cottage industry, agriculture sector and services of lower income group people are mainly considered.

Statement of the problem

What kind of programs and policies are available in DSL of Nepalese commercial banks?

What practices are really adopted by commercial banks in deprived sector lending?

Does these DSL programs are effective enough to reduce the poverty?

Objectives of the studyTo explore the deprived sector

investment patterns of commercial banks.

To evaluate the programs and practices on deprived sector lending.

To examine issues and challenges faced by commercial banks while lending to deprived sector.

Significance of the studyThis research will be important

for the bankers, planners, policy makers, international donor agencies, economists who have been endeavouring day and night for the alleviation of poverty in Nepal.

Limitations of the studyThis study is based on the data of 10 years

period from FY 2002/2003 to 2010 to 2011, and the conclusion drawn confines to the above period only.

This study is mainly based upon secondary data; primary data is for only subjective study.

This study concentrates on DSL Program launched by sample banks not the whole banking programs.

This study does not analyze the number of borrowers that have been benefited through Deprived Sector Lending of sample bank in relation to the total population of the nation.

Literature reviewConceptual reviewReview of NRB directivesReview of related studies

Research methodologyResearch designPopulation and sampleSources and method of data

collectionData analysis tools

Population & samplingThere are altogether 32

commercial banks functioning in Nepal. Thus 32 commercial banks are taken as the population.

To study the trends of deprived sector investment, i have taken 11 commercial banks as a sample. The banks having 15 years of their operation taken as a sample.

Sources and methods of data collectionSecondary sources of informationAnnual reports of the banks.Published and unpublished bulletins,

reports of the banksPrevious thesis“Banking and Financial statistics”

report of Nepal Rastra Bank“Annual Bank Supervision Report” of

Nepal Rastra Bank etc.

Contd...........Primary sources of information For primary information, I have conducted

structured or personal interview with particular bank’s credit officers.

The study is mainly based on secondary informations, primary informations are used only to find out the current scenario of DS investment.

Where i have prepared interview schedule and ask such types of questions:

Contd.........What is the amount, level, percentage

of investment in Deprived Sector?How banks are supposed to provide

loan in deprived sector?Which sector did you prefer while

lending in Deprived Sector Credit Programs?

What are the issues and challenges faced by your bank with regard to DS lending? Etc.

Data presentation & analysis

This chapter is the major part of the study. Basically, it deals with various aspects of DS these are as follows:

• Evolution concept of DSL• Minimum requirement under NRB

directives• Modalities of Nepalese micro finance

sector• Interest rate structure in DSLP• Poverty reduction through micro-finance

Contd................• Investment pattern on DSL of

commercial banks• Penalty for non-compliance of

DSLP• Primary data analysis

Primary informations are used to find out the current scenario of deprived sector investment.

Summary, conclusion and research implications

Deprived Sector Lending Programme was devised as a banking programme to connect with lower strata of the population and increase their living standard by means of extending credit facilities to the productive activities initiated by them.

The impact of this programs is very appreciated.

Conclusions, Through this study i can find the

true picture of deprived sector investment of commercial banks. How these programs are perceived by banks.

The concept of deprived sector investment is very effective in developing country like Nepal.

The implementation part of this programs is very poor.

Contd.......There is lack of proper mechanism

to monitoring the implement aspect of this programs.

I believe that the effectiveness of this programs is increased if there is proper monitoring mechanism to directed the various aspects of the study.

Research implications• This research study will be help full

for the planners, policy makers to develop appropriate policy to cope with rural areas human resource.

• This research will also provide huge information to bankers, small investors to allocate the proper financial resources in DS.

• This study would be the reference for further research on the same topic.

Thank You!!!