Question 1

What is Forward Microfinance?

Accepted Answer

Forward Microfinance is a national-level microfinance institution in Nepal that specializes in providing financial services to low-income families and economically disadvantaged communities. Licensed as a Class 'D' financial institution by Nepal Rastra Bank (the Central Bank of Nepal), Forward Microfinance focuses on poverty alleviation through inclusive financial services.

The institution operates under the tagline "the microfinance for upliftment of the poor" and serves rural and underserved populations across Nepal. It is listed on the Nepal Stock Exchange, making it a publicly traded microfinance company.

Question 2

When was Forward Microfinance founded?

Accepted Answer

Forward Microfinance was formally established in September 2012 as a company under the Company Act of Nepal 2006. Nepal Rastra Bank granted it a license in March 2013 to undertake financing activities under the Bank and Financial Institution Act 2006, and it began formal operations in May 2013.

However, the institution's origins trace back further. The microfinance operations are a continuation of services provided by an NGO called "FORWARD" (Forum for Rural Women Ardency Development), which had been operating since January 2003. The NGO was founded following a 2002 visit by Ms. Bhagbati Chaudhary to Grameen Bank in Bangladesh, which inspired the launch of a microfinance program in Nepal.

In October 2013, the FORWARD NGO transferred all its microfinance programs, including staff, assets, and liabilities, to the newly formed Forward Microfinance company, transforming from an NGO-based operation into a regulated financial institution.

Question 3

Where is Forward Microfinance headquartered?

Accepted Answer

Forward Microfinance has its central office located in Duhabi-2, Inaruwa, Sunsari district in the eastern region of Nepal. The institution maintains a network of branch offices throughout the country to deliver services to its widespread client base.

Question 4

Where does Forward Microfinance operate?

Accepted Answer

Forward Microfinance operates as a national-level microfinance institution throughout Nepal. The institution has established a presence across all seven provinces of Nepal:

Koshi Province - Operations in the eastern region including Sunsari district where the head office is located.

Madhesh Province - Services provided through provincial offices with dedicated provincial leadership.

Bagmati/Gandaki Province - Coverage in central Nepal's key economic regions.

Lumbini/Karnali Province - Extending financial services to western and mid-western regions.

Sudurpashchim Province - Reaching the far-western areas of Nepal.

The institution's branch network is designed to reach rural and underserved communities across Nepal's diverse geography, from accessible areas to more remote districts.

Question 5

What services does Forward Microfinance offer?

Accepted Answer

Forward Microfinance provides a comprehensive range of microfinance services tailored to low-income families:

Lending Services - The institution offers both group-based and individual lending programs. Group lending follows the Grameen Bank model from Bangladesh, while individual loans are provided through its proprietary non-group lending methodology.

Deposit Services - Savings accounts and deposit products designed for low-income households to build financial resilience.

Micro-Insurance - Insurance products that protect clients from unexpected financial shocks and health-related expenses.

Remittance Services - Money transfer services that facilitate domestic and international remittances, particularly important for families receiving funds from abroad.

The institution delivers these services through its network of branch offices across Nepal, ensuring accessibility for its target clientele.

Question 6

What makes Forward Microfinance unique?

Accepted Answer

Forward Microfinance distinguishes itself through its dual-methodology approach to lending. It employs both the internationally recognized Grameen Bank group-lending model and its own proprietary individual lending system, allowing it to serve a broader range of client needs and preferences.

The institution's transformation from an NGO to a regulated financial institution represents a strategic evolution aimed at sustainability and scale. By becoming a licensed financial institution under Nepal Rastra Bank supervision, Forward Microfinance gained access to diverse funding sources, enhanced credibility with clients, and the ability to offer a wider range of financial products including collateral-based loans.

The institution's commitment to social mission is evident in its focus on serving economically and socially disadvantaged populations, with particular emphasis on providing continuous financial services rather than project-based interventions. Its public listing on the Nepal Stock Exchange also sets it apart, providing transparency and accountability to stakeholders.

Question 7

What type of financial institution is Forward Microfinance?

Accepted Answer

Forward Microfinance is classified as a Class 'D' Microfinance Institution (Laghubitta Bittiya Sanstha) under Nepal's banking regulatory framework. This is Nepal's designated category for microfinance institutions that focus on financial inclusion for low-income and underserved populations.

Class 'D' institutions in Nepal are regulated by Nepal Rastra Bank under the Bank and Financial Institution Act 2073 (2016). These institutions must maintain minimum paid-up capital requirements - NPR 100 million for national-level operations - and a Capital Adequacy Ratio (CAR) of at least 15% of risk-weighted assets. Forward Microfinance operates at the national level, distinguishing it from regional or district-level microfinance institutions.

As a microfinance institution, Forward Microfinance is specifically mandated to provide financial services to populations traditionally excluded from mainstream banking, playing a crucial role in Nepal's poverty reduction and economic empowerment initiatives.

Question 8

How did Forward Microfinance evolve from an NGO to a regulated institution?

Accepted Answer

The transition from FORWARD NGO to Forward Microfinance as a licensed financial institution was driven by several strategic considerations. As an NGO, FORWARD had limited resources and capacity to meet the growing demand for microfinance services across Nepal. NGOs also faced annual renewal requirements from district administration offices, creating uncertainty.

By establishing a regulated financial institution, Forward Microfinance gained several advantages: supervision and regulation by the Central Bank ensuring banking standards; access to diverse funding sources to satisfy financial needs of low-income households; ability to serve a wider range of clients including those seeking individual loans with collateral; and the capacity to provide continuous financial services as an ongoing concern.

This transformation in 2013 marked a significant milestone in Nepal's microfinance sector, demonstrating how successful NGO microfinance programs can scale up into sustainable, regulated financial institutions while maintaining their social mission.

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