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From Informal to Formal Finance: The Transformation of an Indigenous Institution in Nepal

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  • Seibel, Hans Dieter
  • Schrader, Heiko

Abstract

Rotating savings and credit associations (RoSCAs) are, next to moneylenders, the most prevalent type of informal finance around the world. In 1988, Seibel & Shrestha traced the evolution of the dhikuti, as RoSCAs are called in Nepal, and published the results under the title Dhikuti: The Small Businessman?s Informal Self-Help Bank in Nepal in Savings and Development (XII, 2:183-200). Ten years later, a remarkable institutional innovation had occurred, benefiting from a change in the legal framework: the transformation of an organization of dhikuti origins into the Himalaya Finance & Savings Company. No subsidy or technical assistance was involved. HFSC provides doorstep savings collection services to low-income people throughout the country, shifting at the same time from group to individual technology. Matching assets and liabilities, it combines two categories of term finance: medium-term savings contracts and medium-term loans. Continuing its morphogenesis, HFSC is now ready to transform itself into a bank and to pursue an even more vigorous course of internal resource mobilization.

Suggested Citation

  • Seibel, Hans Dieter & Schrader, Heiko, 1999. "From Informal to Formal Finance: The Transformation of an Indigenous Institution in Nepal," Working Papers 1999,1, University of Cologne, Development Research Center.
    • Handle: RePEc:zbw:uocaef:19991
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    File URL: https://www.econstor.eu/bitstream/10419/23676/1/1999-1_S_B04_Working_Paper-RoSCA_Dhikuti_.pdf
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    Cited by:

    1. Ashraf Nava & Karlan Dean & Yin Wesley, 2006. "Deposit Collectors," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-24, March.
    2. Muhammad Saqib & Sajjad Ahmad & Naila Nazir, 2017. "Informal Saving Organizations in Pakistan," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(8), pages 388-397, August.
    3. Abbi Kedir & Gamal Ibrahim, 2011. "ROSCAs in Urban Ethiopia: Are the Characteristics of the Institutions More Important than those of Members?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(7), pages 998-1016.

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