•      Fri Jun 21 2024

Microfinance loanees denied of interest grant, says NMBA

Nepal Rastra Bank (file photo)

Kathmandu: As many as 90 microfinance organizations have made investment of Rs 2.56 billion through their 3,861 branches in rural nooks and corners of the country.

At a press conference organized by Nepal Microfinance Bankers’ Association (NMBA) in Bharatpur, Chitwan, today, it was shared that the microfinance institutions have disbursed loan to 2.85 million disadvantaged people to support their entrepreneurial pursuits. 

On the occasion, NMBA chair Basanta Raj Lamsal shared the microfinance institutions have invested more than half of its loan portfolio in the area of agriculture sector but the agro farmers have been denied of receiving grants.

He further noted though the big farmers have been receiving five percent grants on the interest of millions of loan amount, the small farmers involved in agro production after obtaining loan from microfinance institutions are not receiving grants anymore.

Lamsal, also the Chief Executive Officer of Vijaya Laghubitta Bittiya Sanstha (VLBS), shared the small farmers are also being deprived of accessing 45 percent grant the government provides on agro insurance.

“The farmers receiving loan from microfinance institutions have been deprived of obtaining subsidy on loan and grants on insurance payment despite their right and entitlement to that end”, he stated. As of now microfinance institutions have accumulated savings amounting to Rs 98.75 billion in Nepal. Total share amount of the institutions have expanded to Rs 25 billion, Lamsal informed, adding the microfinance organizations managed remaining amount of investment taking loan from other banks on higher interest rates.

“Higher interest rates of the microfinance institutions are obvious”, he asserted, adding the institutions now are taking loan from banks at the rate up to 13 percent and are investing to beneficiaries at 18 percent. However, the interest rates the microfinance banks are charging here is lower than that of microfinance institutions operational in other countries across the globe, Lamsal claimed.

NMBA general secretary Ram Bahadur Yadav complained that the microfinance institutions are not receiving subsidized amount from Rastra Bank. “It is a rumour that microfinance institutions receive money at two percent and channelize amount to rural groups in exorbitant rates”.

Yadav further noted that the microfinance institutions are facing several problems such as duplication of loan, waning loan quality, inadequacy of loan sources, higher and fluctuating interest rates.

On the occasion, NMBA said its serious attention has been drawn over the acts meant to defame microfinance and devaluate their contributions citing the reference of nominal microfinance organizations and employees of bad repute.

It may be noted that the microfinance institutions of Nepal has been providing services to around 4.55 million service seekers. Its access has been expanded in all 77 districts, shared NMBA vice-chair Bhesh Raj Panthee.