The traditional activities of banks include the collection of savings, the distribution of loans and the provision of means of payment. In the inclusive finance sector, credit products (also called micro-credits) were first developed. Indeed, more profitable for the service provider, the loan has long been the one and only product offered, while savings also offer many advantages. For vulnerable, excluded and low-income populations, savings make it possible to secure a cash inflow and help to cope with hardships and other unforeseen events. For these target populations, it allows a certain empowerment by offering more secure (and reassuring) and long-term financial management. The risks are minimal for the service provider, savings offering a guarantee. Recognizing these benefits, financial and non-financial service providers have set up savings programs to complement their activities.
The European Microfinance Prize 2020, won by Muktinath Bikas Bank Ltd., a bank based in Nepal, constitutes the recognition and consecration of their expertise in savings.
Muktinath serves low-income households and women in rural areas through a department dedicated to this target population. It has designed for this clientele a tailor-made model of collective and solidarity savings collected at home or at the workplace. It offers, among other things, retirement savings products, insurance and savings dedicated to migrant workers and their families who have remained in Nepal. Muktinath has also developed training in financial education and management of household budgets supported by theatrical skits and a specially produced film entitled Paribartan (which means transformation in French).
In the context of inclusive finance as a tool in the fight against poverty, savings are essential and are all the more crucial in the context of the current crisis. HRH the Grand Duchess, President of the Grand Jury of the Prize, emphasizes that “microfinance establishments do extraordinary work. The savings solutions implemented are formidable and essential levers to mitigate the risk of falling into extreme poverty. for millions of vulnerable people, who must today face the unprecedented upheavals that we are currently experiencing. The theme of savings is therefore timely this year because it promotes autonomy, secures, helps development and gives ways, especially for women, to become architects of change. As such, I would like to congratulate the three finalists for their inspiring initiatives!”
Through the European Microfinance Prize, Muktinath Bikas Bank receives 100,000 euros from the Department of Cooperation and Humanitarian Action of the Ministry of Foreign and European Affairs. Franz Fayot, Minister for Cooperation and Humanitarian Action, said: “During this year, savings have proven essential in creating resilience among millions of people. Families and businesses have faced financial pressures due to the disruption of economic activities. In these difficult times, inclusive savings helps to mitigate the impact of the pandemic. I am convinced that this year’s European Microfinance Award will draw attention to the value of savings as an essential financial service, and will create momentum that will encourage its use, especially for the empowerment of women.”
Organized in and by Luxembourg since 2005, the European Microfinance Prize rewards innovative projects in inclusive finance and pursues two objectives: to reward excellence and to list and disseminate the most relevant practices for application by others. . This Prize is jointly organized by the Ministry of Foreign and European Affairs – Directorate for Development Cooperation and Humanitarian Action, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu) .
Communicated by: Ministry of Foreign and European Affairs / Directorate for Development Cooperation and Humanitarian Action / Inclusive Finance Network Luxembourg / European Microfinance Platform