The government on 12th August 2000 announced to establish a Micro-Finance Bank to lend credit to the country's millions of the poor. The Bank is the culmination of government's initiatives to counter poverty on sustainable basis through provision of lending and savings facilities to the one-third segment of country's population living below the poverty line. The following are the main objectives of Micro-Finance Bank:

to provide credit with or without collateral security, in cash or in kind to poor persons for all types of economic activities including housing but excluding business in foreign exchange transactions;

to undertake the management, control and supervision of any organization, enterprise, scheme, trust fund or endowment fund for the benefit and advancement of poor persons;

to buy, sell and supply of credit to poor persons for industrial and agricultural inputs, livestock, machinery, implements, equipment and industrial raw materials, and to act as agent for any organization for the sale of such goods or livestock;

to carry out survey and research, and to issue publication and maintain statistics
relating to the improvement of economic condition of poor persons;

to provide professional advice to poor persons regarding investments in small business and cottage industries;

to encourage investments in such cottage industries and income-generating projects
for poor persons

Since the Bank is a common man's bank, its name has been proposed in national language as Khushali Bank meaning Prosperity Bank. Asian Development Bank provided US$150 million loan on soft term at 1.0 percent to 1.5 percent mark-up with repayment period of 33 years. The Bank plans to extend credit of Rs 5,000 to Rs 30,000 to people in smaller communities to be used for income generating activities. It is established in essence for a revolutionary social movement to empower the under-privileged communities and give them self-respect, rights and money to feed themselves and their families. The Bank would operate on non-profitable and on cost recovery basis and give credit to around 100,000 poor persons by December 2001. The overall lending program will cover 30 percent women and beneficiaries will directly get the loans.