Nepal, Aug. 23 -- Microfinance was once celebrated as Asia's tool to lift people out of poverty. From Bangladesh to India, Cambodia and the Philippines, the promise was simple: provide small loans to low-income households, help them start businesses, increase income and escape poverty.

Pioneered in the 1970s, microfinance was designed to provide financial services to low income people typically excluded from traditional banking.

Small loans, usually between US$200 and US$500 were particularly targeted at empowering women to start businesses and support their families. According to the World Bank, more than 1.7 billion people do not have access to banking.

Yet decades of experience suggest that credit alone has not delivered the transfo...