KATHMANDU, Jan 20: Microfinance financial institutions have been allowed to provide assistance to the families of clients affected by natural disasters and accidents using funds from the Customer Protection Fund.
Issuing a circular on Friday, Nepal Rastra Bank (NRB) stated that the fund may be spent only on support for the families of clients affected by natural disasters or accidents, clients’ education and capacity development, and school-level education, health, and nutrition programs for clients’ children.
Previously, the fund was allowed to be used for activities serving the collective interests of client members, business protection and rehabilitation of borrowers facing difficulties, as well as clients’ education and capacity development and school-level education, health, and nutrition programs for clients’ children.
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Microfinance institutions that do not mobilize deposits from the general public are now required to maintain liquid assets equivalent to 2.5 percent of their total savings liabilities of the previous month. In the case of savings and fixed deposits held in banks and financial institutions, up to 90 percent of such deposits may be counted as liquid assets.
Earlier, only deposits maintained in commercial banks were allowed to be shown as liquid assets.
The circular also states that microfinance institutions must disclose in their accounting policies any interest receivable on loans classified under the performing category when reflecting such amounts in financial statements. NRB has directed institutions to follow accrual-based accounting, recognizing income and expenses when they are earned or incurred, rather than when cash is received or paid.
