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The institutions that deliver these services can develop within few years, into
sustainable organizations with steady growing outreach.

Modalities of Nepalese Micro-finance Bittya Sanstha Ltd.
Micro-finance programmes are established and promoted in Nepal with diversified
methods and modalities. Some of the successfully operated models are as follows:
Grameen (Rural) Banking Model
Deprived Sector Lending Model
Rural Self Reliance Fund Model
Small Farmers’ Cooperatives Model
Financial Non-government Organizations Model
Savings and Credit Cooperatives Model
Project Based Micro-credit Model
Wholesale Lending Model
The prudential regulation for Micro-finance Bittya Sanstha Ltd. came into existence in 2003
A.D. This regulation became effective from January 2004 A.D. with some amendments.
Micro-finance Bittya Sanstha Ltd. are classified as “D” class financial institutions under the
Banks and Financial Institutions Act, 2006 A.D. Some of the major regulatory provisions
issued to Micro-finance Bittya Sanstha Ltd. are as follows:

i. To open Micro-finance Bittya Sanstha Ltd. at national level, a minimum paid-up
capital of Rs. 100 million is needed. This kind of banks is supposed to be operated at
regional level excluding Kathmandu valley requires Rs. 60 million as its minimum
paid-up capital. Four to 10 districts excluding Kathmandu valley requires Rs.
20 million as its minimum paid-up capital and to operate in 3 districts excluding
Kathmandu valley require up to Rs. 10 million paid-up capital.
ii. Minimum of 7 promoters are needed to establish a proposed Micro-finance Bittya
Sanstha Ltd.. The promoters can hold up to 70 percent stake. At least 30 percent of
the total share capital should be floated to the general public.

Functions of Micro-finance Bittya Sanstha Ltd.
Following are the functions of Micro-finance Bittya Sanstha Ltd.:
1. It helps to reduce poverty and to facilitate micro-credit to the targeted groups.
2. It also assists in capacity building of participating financial institutions.
3. It helps to improve the socio-economic status of rural women by accessing them to
institutional loan for their productivity.
4. It helps to increase the economic status of the rural and urban women by providing
micro-credit for their micro business.
5. It helps to increase the income, savings and employment of the rural poor by
engaging them in livestock management and productivity.
6. It helps to increase participation of the deprived poor for their socio-economic
upliftment.
7. It helps to increase the agriculture productivity by providing the irrigation facilities
to the deprived community’s farmers.

76 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 77