The investigations were conducted in Kaski and Lamjung. [break]
During the course of onsite inspection, officials of the YSESF found that a few microfinance institutions that had received funds from Small Farmers Development Bank (SFDB), a wholesale lender, had asked borrowers to pawn land or other valuables before sanctioning the loan amount.
These incidents were reported in at least three village development committees (VDCs) of Kaski, namely Begnas, Majhthana and Nirmal Pokhari, the report stated, without disclosing names of institutions and loan amounts that were issued by violating the norms set by the YSESF.
“We have come to know they had done this despite knowing that they should sanction loans without asking for collateral,” an official, who headed the investigation, told Republica on condition of anonymity. “We are discussing on possible actions that can be taken against them.”
The YSESF was established by the government of the UCPN (Maoist) three years ago as a vehicle to provide collateral-free low-interest loans of up to Rs 200,000 to promote entrepreneurship among jobless youths. In March, it had entered into an agreement with the SFDB, under which the bank had received a sum of Rs 1 billion in three installments.
Of this amount, SFDB has already disbursed Rs 73.41 million among 525 households in 15 districts, including Kaski and Lamjung. In these two districts, 83 families have so far benefited from the programs launched by the YSESF. These families have used the money to start farming activities or set up small restaurants and dairy farms, and are earning a net profit of up to Rs 15,000 per month, the report said.
“We are also happy, borrowers so far have not defaulted on installment payment,” the official said.
Despite this encouraging trend, the official acknowledged, discontent among people may grow if they come to know they are being duped into pawing land or other valuables to get loans that were supposed to be collateral-free.
“We will soon conduct similar investigations in other districts as well, and find out if other institutions are also issuing credit by going against the norms set by the YSESF,” Punya Prasad Regmi, vice-chairman of the YSESF, told Republica.
The YSESF has so far distributed Rs 335.9 million among various banks and financial institutions while extending benefits to more than 1,870 people, who have used this money to start vegetable farming at commercial level, open small dairy and agricultural industries and set-up small restaurants and animal husbandry units, among others.
Related story
Govt plans to provide loans without collateral to migrant worke...
