Individuals Allowed to Borrow from Two Microfinance Institutions
July 29, 2024 | Investopaper
Microfinance borrowers can now take loans from a maximum of two institutions. Nepal Rastra Bank (NRB) implemented this regulation through an integrated directive issued on Sunday. Previously, individuals were prohibited from borrowing from more than one microfinance institution.
The directive states, “When providing collateral-free microloans under group guarantees or secured by collateral, the total loan amount must not exceed the prescribed limit, and a borrower can receive loans from a maximum of two microfinance institutions.” NRB has also mandated that microfinance institutions are not allowed to use any humiliating or harsh methods for loan recovery.
Borrowers who have taken loans from Class A, B, and C banks and financial institutions are not eligible to borrow from microfinance institutions.
For this purpose, borrowers must provide a self-declaration regarding loans taken or not taken from other banks and financial institutions. Additionally, microfinance institutions must verify this information based on loan records to ensure that no loans have been taken from other banks and financial institutions, including microfinance institutions.
