NRB introducing provision to bar a person from taking loans from multiple microfinance institutions

KATHMANDU: Executive Director of Nepal Rastra Bank (NRB) Revati Prasad Nepal has said that the central bank is going to introduce a provision where one person cannot take loans from multiple microfinance institutions.

Speaking at the interaction program on microfinance, causes and solutions in the crisis organized by Society of Economic Journalists Nepal (SEJON) in Kathmandu on Monday, Nepal said that since there are more than 3.3 million borrowers of microfinance, he cannot see the file of each one and the organization should look into it.

He said that recently, being a member of many microfinance institutions, one person was in trouble by taking loans from all of them, and now preparations are being made to make it stricter through the guidelines.

Nepal mentioned that many problems will be solved only if the dividend distribution to microfinance institutions is strict. He said that due to the lack of financial literacy, the borrowers could not utilize the loans taken.

Similarly, he said that it is necessary to solve the problems seen in microfinance recently. He said that it is necessary for microfinance employees to improve their behavior at the local level, and the problem is increasing at the local level due to loan shark.

Likewise, Nepal asked the employees of the microfinance institution to stop visiting the customer’s house before 10AM and till 11PM and torture them by taking their cattle and putting locks in the house immediately.

Nepal also urged everyone to file a complaint at NRB if any microfinance institution charges more than 15 percent interest. He said that recently 5 to 10 percent of microfinance institutions have done bad work and they must correct themselves or face action.

Nepal also accused some shareholders of corrupting microfinance by entering microfinance recently. He claimed that microfinance has also faced problems due to the coronavirus pandemic and lack of liquidity.

Meanwhile, President of Microfinance Association Nepal, Jagat Pokharel said that there is a problem because there are many microfinances. He said that microfinance institutions should work within the instructions given by NRB and action should be taken if they do not comply.

Pokharel also said that microfinance is concerned with how to invest in rural areas to increase production and manage the market.