Report with alternatives for addressing issues of microfinance victims submitted

Kathmandu, Aug 6: A taskforce formed to resolve the problems of microfinance victims has submitted its report to the government.     

The taskforce constituted under the coordination of Deputy Governor of the Nepal Rastra Bank, Dr Neelam Dhungana Timsina presented the report to Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel.     

The report has furnished recommendations for the issues to be addressed on part of the government and the actions to be taken by the Nepal Rastra Bank (NRB), microfinance institutions and members of microfinance institutions.     

In the context of complaints that borrowers of microfinance institutions are facing difficulties due to loans taken from savings and credit cooperatives and microfinance institutions, the government is recommended to place necessary arrangements to manage the financial transactions of savings and loan cooperatives.     

The NRB also recommended that no other institution shall be allowed to carry out microfinance-related transactions in the name of microfinance programmes except from financial institutions approved by the central bank.     

The task force report recommended issuing directive to the concerned microfinance institutions to collect the data of their borrowers –not regular in repayment of loan and are said to be in trouble; ascertain those not deliberately repaying loan and those in real trouble and submit it to the NRB within a maximum of 60 days.     

Among the recommended actions for the microfinance institutions included not giving pressure and mental torture in the name of following up the members who do not deposit the principal interest and regular repay the loan on time.     

Similarly, members of microfinance institutions have been recommended to take loans from only one institution purposefully, and to pay installments regularly from the cash flow of the project.     

Receiving the report, Finance Minister Poudel said coordination would be made with all concerned for the implementation of the recommendations made in the report and the government would work with action plan based on the justification of the recommendations.     

Nepal Rastra Bank (NRB) Deputy Governor Dr Timsina stressed the need for effective implementation of financial literacy programme.     

A total of 55 microfinance institutions have been in operation in Nepal as of mid-April 2024. The microfinance institutions have disbursed a total of Rs 453.11 billion. It may be noted that a six-point agreement was reached at the Ministry of Finance on 15 March 2024 between the talk committee formed under the coordination of the Chief of the Financial Sector Management and Institutions Coordination Division of the Ministry of Finance and representatives of the victims of microfinance and financial institutions to resolve the problems surfaced in the microfinance sector. On the same day, the seven-member taskforce was formed to submit a report with alternatives to resolve the problems of microfinance victims. (RSS)