Taskforce Submits Report on Microfinance Victims to Government

A taskforce formed to address the issues faced by microfinance victims has submitted its report to the government. The taskforce, coordinated by Deputy Governor of Nepal Rastra Bank (NRB), Dr. Neelam Dhungana Timsina, presented the report to Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel.

The report outlines recommendations for actions to be taken by the government, the NRB, microfinance institutions, and members of these institutions. This comes in response to complaints that borrowers of microfinance institutions are facing difficulties due to loans taken from savings and credit cooperatives and microfinance institutions.

The taskforce recommends that the government implement necessary measures to manage the financial transactions of savings and loan cooperatives. Furthermore, the NRB is advised to ensure that only financial institutions approved by the central bank are allowed to conduct microfinance-related transactions.

One of the key recommendations is for microfinance institutions to collect data on borrowers who are not regular in repaying their loans and are reportedly in trouble. These institutions are to identify borrowers who are deliberately not repaying and those who are genuinely struggling, and submit this data to the NRB within 60 days. The report also suggests that microfinance institutions should avoid pressuring and mentally torturing members who fail to repay loans on time.

Members of microfinance institutions are advised to take loans from only one institution for a specific purpose and to pay installments regularly from the project’s cash flow.

Upon receiving the report, Finance Minister Poudel stated that coordination would be made with all concerned parties for the implementation of the recommendations, and the government would work with an action plan based on the justification of these recommendations.

Deputy Governor Dr. Timsina emphasized the need for the effective implementation of financial literacy programs.

As of mid-April 2024, a total of 55 microfinance institutions are in operation in Nepal, having disbursed a total of Rs 453.11 billion. The formation of the taskforce followed a six-point agreement reached at the Ministry of Finance on March 15, 2024, between the talk committee, representatives of microfinance victims, and financial institutions to resolve the problems in the microfinance sector. The seven-member taskforce was formed to provide a report with alternatives to resolve these issues.

The taskforce’s recommendations are expected to pave the way for improved management and regulation of the microfinance sector, ensuring that the needs of borrowers are met while maintaining financial stability.