The RENEW’s Microfinance Institute (MFI) has created many positive impacts especially among women with more than 15,000 clients in nine districts, according to the impact assessment study carried out this year.
The impact assessment study was presented at the Respect, Educate, Nurture and Empower Women (RENEW) microfinance conference held in Thimphu yesterday.
The study was conducted by a team from iDruk Consultancy with microfinance expert from Belgium for three months in five districts.
The districts are Samtse, Tsirang and Punakha, where some RENEW’s MFI clients are based and two non-clients districts of Chhukha and Trashi Yangtse.This was done to learn about the difference in socio-economic status of microfinance clients and non-clients.
As per the research findings, more than 6,000 clients received loans since 2012.
The Chief Executive Officer of iDruk Consultancy, Sonam Phuntsho said the positive benefits are visible looking at the change in social and economic conditions and livelihood of women in these client districts.
“Most of the clients are aware that the interest rates are high but they still prefer RENEW’s MFI because they come right to their doorstep and the expenses of going to the banks actually far outweighs the interest rate that the MFI is charging.”
Apart from giving loans, RENEW’s microfinance also imparts financial literary knowledge in remote areas. Through this, people are able to keep track of their income and expenses including maintaining of their bank accounts.
The study says women in the rural areas are able to make informed decisions on how and where to make use of the loan.
However, the findings recommended more time required for the loan repayment and expansion of loan ceiling from Nu 120,000 to 200,000.
“The biggest challenge would be the high-interest rate and the short duration of loan repayment. But since it is based in groups, the risk has been spread across the members,” Sonam Phuntsho said.
“All of them are confident in repaying their loans. In fact, they are planning to take the next instalment of loans from RENEW’s MFI. So it clearly shows that these group mechanisms, as well as the field staff going all the way to the villages, are working.”
The loan services are available only for the members of the RENEW. The clients, in their MFI’s account, need at least 10 per cent of the total amount of the loans they are planning to process. For instance, one needs to have a minimum of Nu 4,000 for a loan amount of Nu 40,000.
A client will then be eligible for a collateral free loan after forming a group of five members.
The interest rate ranges from 18 to 24 per cent per annum depending on the types of loans.
RENEW’s MFI was started as a project in 2011 with an aim to improve the living standard of women and their families, especially those living under extreme circumstances. It provides assistance such as savings opportunities and insurance services among others.
Today there are five registered microfinance institutions in the country.
