February 23, 2023 | Investopaper
Nepal Rastra Bank has tightened restrictions on the dividends distributed by microfinance institutions and the disbursement of loans.
The central bank has taken a strict policy after the complaints of the loan duplication by the microfinance companies.
As per the new provision, the microfinance institutions cannot give loans of more than seven lakh rupees to a single borrower with collateral. Earlier, such limit was up to 15 lakh rupees.
Similarly, NRB has made the provision that the microfinance companies can distribute the annual dividend up to 15 percent. Earlier, such limit was 20 percent.
If a dividend of more than 15 percent is proposed, 50 percent of the excess dividend amount should be kept in the general reserve fund. Likewise, 35 percent of the dividend amount exceeding 15 percent limit should be kept as a customer protection fund. Likewise, 10 percent of the excess dividend should be kept as reseve for corporate social responsibility.