Kathmandu, September 6

Nepal Rastra Bank has urged microfinance institutions (MFIs) to opt for merger citing the exponential growth of MFIs in the country.

There are 67 MFIs in operation in the country and additional 24 financial intermediaries’ non-governmental organisations (FINGO) will be turned into MFIs as per the central bank’s rule. Likewise, 20 to 21 MFIs are in the process of getting licence to operate in remote districts after ‘fit and proper test’ of the central bank.

“The licence applications are pending since long, which is why we are mulling over granting licence to applicants based on the ‘fit and proper test’,” said Chinta Mani Siwakoti, deputy governor of Nepal Rastra Bank. “There is no alternative to merger for sustainability as the market is already overcrowded with MFIs.”

Speaking in a programme organised in the memory of Harihar Dev Pant — founder of Nirdhan Utthan Bank, a microcredit institution established for poverty alleviation through access to finance — Deputy Governor Siwakoti further informed that NRB has allowed commercial banks to lend even below the base rate to the deprived sector through MFIs so that the deprived sector would not have to suffer due to high lending rates. The base rate of commercial banks has skyrocketed due to lack of loanable funds. “Commercial banks, development banks and finance companies have to lend five per cent of their total loan portfolio to the deprived sector, and if they fail to do so, they can be penalised by the central bank.”

To control high lending rates of MFIs, the central bank has capped the lending rate at 18 per cent, according to Siwakoti. Stating that multiple borrowing is a major challenge for MFIs, he informed that the central bank has provisioned MFIs to provide the information of borrowers to the Credit Information Bureau to control such ill-practices.

Harihar Dev Pant Foundation awarded the best performer community organisations working in the economic empowerment of rural poor through access to finance from each of the seven provinces with the Harihar Dev Pant Micro Enterprise Award. The award recipients included Chanda Kurungwang of Terhathum from Province 1, Sumintri Devi Paswan of Bara district (Province 2), Butti Maya Tamang of Rasuwa district (Province 3), Sima Saru of Syangja (Province 4), Moti Tharu of Rupandehi (Province 5), Hira Bhandari of Surkhet district (Province 6) and Kumar Chaudhary of Kailali (Province 7). Each of them also received cash prize of Rs 20,000 and appreciation letter from the foundation.

Likewise, the best students of economics and rural development from Tribhuvan University masters degree programme in 2013-14, Roshan Karmacharya (economics) and Bishika Parajuli (rural development) bagged the Harihar Dev Pant Academic Excellence Award. Both students also received Rs 50,000 each.

Similarly, Gokarna Raj Awasthi, business editor of Kantipur Daily, received Harihar Dev Pant Economic Journalism Award.