NRB Directs Regional Microfinance To Operate In Only One Province

September 24, 2020 | Investopaper

Microfinance institutions have to operate in only one state until they meet the prescribed paid-up capital and upgrade to the national level.

The directive issued on Thursday by the Nepal Rastra Bank to the ‘D’ class licensed institution,with amendments, modifications and additional provisions on the directive 2076, mentions that the entire working area should be limited to one state by selling, closing or transferring.

The provincial level organizations will not be allowed to expand new branches in the districts under their jurisdiction until they have completed the process of sale, closure or relocation of branch offices in the provinces outside their jurisdiction. The minimum paid-up capital of an institution that deals only in national level wholesale loans has been fixed at Rs 600 million. The directive states that the collateral of the loan and the project / business should be within its geographical area of ​​jurisdiction when the loan is disbursed with the collateral of real estate.

As mentioned in the Monetary Policy of the Fiscal Year 2074 BS, the National Level Wholesale Micro-Financial Institution licensed by the Nepal Rastra Bank (NRB) should have a minimum paid up capital of Rs. 60 crores.

The directive also stipulates that microfinance financial institutions will not be allowed to provide banking services through electronic means. Earlier in the Unified Directive, the provision related to electronic banking (e-banking) services has been removed in the integrated directive of this year’s microfinance financial institution.

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