Panel on microfinance victims gives report to DPM Paudel

By A Staff Reporter,Kathmandu, Aug. 7: A task force formed to submit a report with options for solving the problems of microfinance victims has submitted its report. 

The task force formed under the coordination of Deputy Governor of Nepal Rastra Bank Dr. Neelam Dhungana Timsina submitted the report to Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel on Tuesday.

The report has made suggestions about the works that should be addressed by the government, the Nepal Rastra Bank, the microfinance institutions and the members of the microfinance institutions.

Among the actions to be taken by the government include necessary arrangements to manage the financial transactions of the savings and credit cooperatives in the context of complaints that the borrowers of the microfinance institutions have faced difficulties due to the loans taken from the savings and credit cooperatives and microfinance institutions. 

Similarly, the task force suggested that no other organisations can do business related to microfinance in the name of microfinance programme except from the financial institutions approved by Nepal Rastra Bank.

Regarding the policy arrangements to be made by the NRB, the concerned microfinance financial institutions are instructed to collect the data of their borrowers who are said to be in trouble and default on their loans and submit them to the Nepal Rastra Bank within a maximum of 60 days.

The task force has given suggestions that microfinance institutions should not exert pressure and mental torture on the members who do not pay the principal and interest of loans.

There are suggestions for the members of microfinance financial institutions to follow, to use loans from only one institution, to use the loan only for the purpose for which it was taken, and to pay regular installments from the cash flow from the project.

Receiving the report, Deputy Prime Minister and Finance Minister Paudel said that the government would coordinate with everyone for the implementation of the suggestions given in the report and work by making an action plan after seeing the justification of the suggestions made by the government.

Deputy Governor of NRB Dr. Timsina said that it was necessary to advance the financial literacy programme effectively.

According to the report, there are 55 microfinance institutions till mid-April 2024. Out of them, three are wholesale loan providers and the remaining 52 are microfinance institutions providing retail loans.

The microfinance financial institutions have mobilised funds of Rs. 453.11 billion. The total savings is Rs. 172.66 billion and the amount of credit is Rs. 227.61 billion.

To solve the problem in the microfinance sector, a negotiation committee was formed under the coordination of the head of the Financial Sector Management and Corporation Coordination Division of the Ministry of Finance including the representatives of microfinance and financial institution victims made a 6-point  agreement on March 2, 2024. 

On the same day, a 7-member task force was formed under the coordination of Dr. Timsina.