Microfinance Companies Not Allowed to Invest in Shares, Debentures or Mutual Funds

November 24, 2021 | Investopaper

Microfinance companies will not be allowed to invest in shares. Nepal Rastra Bank (NRB) has issued integrated guidelines for Class D financial institutions, prohibiting microfinance companies from investing in shares of any institution, debentures (bonds), and mutual funds schemes. NRB has stated that if such investment is made at present, it should be disinvested by the end of Ashad, 2079 BS.

Similarly, if a microfinance institution has invested in shares and debentures of an organization that has not been listed in the stock exchange, it will have to deposit the same amount in the investment adjustment fund which cannot be used for any other purposes.

Microfinance companies can distribute only 80 percent of the accounted income after keeping 20 percent of the amount in the general reserve.

In addition, microfinance companies are required to prepare financial statements for the fiscal year 2078/79 and beyond in accordance with the Nepal Financial Reporting Standards (NFRS). Annualized Earnings per share should be published in the financial statements.


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