Requests for Proposals Expanding the outreach of financial services in local units UK aid Sakchyam Access to Finance Programme invites applications from commercial banks operating in Nepal, to expand their footprints and outreach aimed at serving the un/underserved rural population, mobilize local financial resources, SAKCHYAM’S EXPERIENCE channelize central government budgetary Global IME’s Bank’s Extension counter at Jogbudha, Dadeldhura support including social security payments and Jogbudha, Parshuram Municipality is located around 40KM from Budar, a mid-point between Dhangadhi and Dadeldhura. Prior Sakchyam facilitate financial activities of intervention, the locals had to visit either Mahandra Nagar, Dhangadhi or local government and private Dadeldhura for any sizeable financial transactions, remittance & social businesses for the security payments. Also, all the government institutions used to conduct development of local their financial transactions at Dadeldhura. economy, sustainably. After With Sakchyam’s support Global IME Bank Ltd. opened an ‘Extension the government’s decision to counter’ at Jogbudha of Parshuram Municipality on May, 2015. By Dec. 2017, ensure presence of the extension counter has added almost 6,000 customers to the bank, ‘commercial banks’ in all 753 facilitated more than 4,000 remittance payments and helped payment of local units, there still are 113 more than 19,000 social security payments. Amongst a range of benefits local units which have failed that the presence of the Global IME’s touchpoint afforded to local populace, to get adequate interests one was significant reduction in travel time and associated costs for the from the commercial banks. beneficiaries of ‘remittance payment’ and ‘social security payments’ Bellauri Branch, Bank of Kathmandu Ltd. Sakchyam believes presence After the first season of ‘Sugarcane Invoice Discounting’ scheme that BOK of the commercial banks in introduced in partnership with Sakchyam and Mahakali Sugar Mill in 2015, these rural and remote it realised the range and magnitude of financing gaps the locals were locations can be pivotal to facing. Although agriculture and Sugarcane farming was the obvious reinvigorate local economic dominant factor in the local economy but there were also local trading and activities. We are also small businesses which had potential to grow. Local FIs and few other cognizant of the fact that such national level FIs were there but high cost, slow processing time associated branches, especially in their with them, meant individuals/businesses with any sizeable financing needs early years of operation, will had to visit Dhangadhi or Mahendra Nagar (Market centres that were approx. 30KM away and accessible through fair weather roads) face operational issues and difficulties, take up additional After Sakchyam’s support, BOK opened a full-fledged bank branch at costs leading to question on Bellauri on Dec. 2016. Bellauri branch after its operation not only become their long term sustainability. one of the first bank branch to open maximum number of accounts within in 3 months but went on to reach its BEP within first year of its establishment. The branch currently is one of the leading branch of the bank in terms of small ticket loans to agriculture sector. 1 In order to facilitate this joint bid to promote access to financial services in rural and remote local units, Sakchyam invites applications from interested commercial banks to open bank branches in Sakchyam priority regions totaling 58 local units. Details on the specific eligible locations are given in Annex – I. Sakchyam Support: A) Eligible locations & Categorization Category of Local unit locations* Province Districts A B C Total Pyuthan 1 2 3 5 Rolpa 3 1 4 Rukum 2 2 Dailekh 1 1 2 Dolpa 4 4 Humla 3 1 4 Jajarkot 2 2 4 6 Jumla 1 1 2 Kalikot 2 3 1 6 Mugu 2 2 Rukum 1 1 Salyan 4 1 5 Achham 2 2 4 Baitadi 1 1 Bajhang 3 2 5 7 Bajura 4 1 5 Darchula 1 1 Doti 1 1 2 Kailali 1 1 GRAND TOTAL 35 13 10 58 *The categorization of locations from ‘A’ being most difficult to ‘C’ being least difficult is based on Human development Index, access to basic amenities, total population etc. The information should be used only for general reference and for the purpose of this RFP only. B) Criteria & funding limit - Sakchyam funding will be for establishing bank branches in the local units as specified in Annex –I. 2 - Applications that are competitive and are committed to cover higher number of local units (more than 6) will be accorded priority. - Applications from the commercial banks that are committed to introduce downscaling of products and services and committed for further deepening financial services in the proposed/other potential locations will be prioritized. - Bidder should commit to establish and operate the committed branches by 14 July 2018. - Sakchyam CF grant will be for maximum of 2 years and will be capped as following: o Maximum of 40% of the operation cost per branch in case of ‘category A’ locations. o Maximum of 30% of the operation cost per branch in case of ‘category B’ locations. o Maximum of 20% of the operation cost per branch in case of ‘category C’ locations. - Sakchyam will make final decision on funding in the locations that are proposed/preferred by multiple banks, if any. What is not supported by Sakchyam? Sunk costs, investment in land and building and four wheel vehicles, and overheads of existing operations should not be included in the project cost. The activities that the financial service provider will do anyway, without Sakchyam or external support, should not be included as part of project. Beneficiaries: The project should aim to address the market failure situation and should aim to provide financial services to unserved or underserved individuals, especially women, youth and other disadvantaged people, MSMEs and other entities. Eligible bidders: Any commercial banks operating as a going-concern in Nepal and having sufficient funds allocated for investing in the project. In-principle or final approval from the top management/ board of the bidder should be obtained prior to submitting Full Applications. Special approval from the top management should be obtained to timely allocate sufficient resources to effectively implement the project upon approval. Review and Decision on funding > The Independent Assessment Panel members drawn from industry experts and renowned professionals involved in Nepalese financial sector will make the decision on Sakchyam funding and their decision will be final. > Prior the presentation of the application to the IAP, Sakchyam will review them and provide technical feedback to individual bidders for improvement. 3 > Technical assistance from Sakchyam is available to the banks that are interested in downscaling their products and deepen the financial services in the proposed/other potential locations Project duration All the projects should utilize the entire project budget within 2 years. At the same time, projects should attain commercial sustainability within 2 years of operation and the bidders should continue project activities on their own after Sakchyam funding. Bidding process Potential bidders should use standard templates for drafting their proposal. Please download the templates from http://sakchyam.com.np/careers/call-for-proposals/ or register a request by writing an email to [email protected]. Completed full application should be sent electronically to [email protected]. Total size of the electronic file should be less than 10MB. Interested bidders are encouraged to review the Full Application Information Pack before they start drafting the Full Application. The pack is downloadable from Sakchyam website and or can be received by writing a request to [email protected]. Key Dates > Sakchyam will organize one information workshop to answer questions from the potential bidders on 16 March 2018, at 12:30 PM at the office of NBA, Thapathali, Kathmandu. > The last date to submit applications is 6 April 2018. Applications received after this date will not be entertained. > Sakchyam Challenge Fund managers can be contacted for any queries and questions on the RFP by email to [email protected] . In addition, Attachment Annex – I (Details of 58 Local Units Requiring Commercial Bank Presence in Provinces 5, 6 and 7) 4 Annex I: Details of 58 Local Units Requiring Commercial Bank Presence in Provinces 5, 6 and 7 Availability of Available Means of Communication Nearest Road Access Nearest Police Presence Yearly Central Social Security Road distrance Electricity Yearly Social Province Name of the Municipality Head-Quarter of HDI of Population in Government Payment from nearest Categorisation District Security Payments No. / Rural Municipality the Local Unit District the Local Unit Funding Recipients Commercial Bank Mobile Other Main Micro- Location Distance Type of Road Location Distance by Sakchyam (NPR '000) Landline Mobile (NPR '000) (Number) Branch (in kms) Internet Internet Grid Hydro Name (in kms) Name (in kms) Pancheswor Rural Baitadi Aam Chaura 0.416 18,766 237,703 3,001 40,622 21 No Yes Yes No No No Aam Chaura 0 Soil Kalau 5 A Municipality Api Himal Rural Darchula Khandeshori 0.436 6,719 151,657 399 7,654 18 No Yes Yes No No Yes Khandeshowi 0 Soil Khandeshori - B Municipality Mohnyal Rural Kailali Khimdi 0.460 22,053 295,427 2,258 32,666 Not Available No Yes Yes No No No Sukhad 40 Soil Khimadi - C Municipality Aadarsha Rural Kalikasthan 0.407 23,945 284,371 3,333 43,656 23 No