Productive sector makes big chunk of microfinance loans

Published On: December 31, 2016 09:22 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 31: A majority of microfinance loans mobilized were to productive sectors, according to a report.

“Microfinance loans were mobilized in the productive sectors like agriculture (51 percent), SMEs (15 percent) and micro-enterprises (18 percent),” the Centre for Microfinance (CMF), Nepal, said in its Nepal Social Performance Country Report 2016 published on Thursday. 

The number of branches in rural areas (59 percent) is also higher than in urban centers while 28 percent of the branches are concentrated in areas with poor and excluded populations, the report says.

“Empowerment of clients and employees through training and educational programs is growing and digital finance, green finance and insurance products are expected to grow in the near future,” it says.

The report was made public at a function attended by representatives of Nepal Rastra Bank, microfinance institutions, commercial banks, financial intermediary non-government organizations (FINGO), NGO/INGOs, cooperatives, associations, and research organizations were also present, according to CMF. A workshop was also held.

The function, chaired by CMF, Nepal, chief executive Harihar Acharya, had Upendra Kumar Paudel, Executive Director, Microfinance Promotion and Supervision Department of Nepal Rastra Bank, and CMF, Nepal, chairperson Ganesh Bahadur Thapa, who is also a former governor of Nepal Rastra Bank, as chief guests.

Talking at the function, Paudel emphasized the importance of social performance management (SPM) and its place in country’s monetary policy. He said he appreciated the concern about SPM expressed by stakeholders and assured that NRB would be happy to adopt constructive recommendations made in the report and the workshop. 

On the occasion, Naresh Nepal, DECO, CMF, introduced six dimensions of SPM and highlighted its evolution, globally and in Nepal. 

Participants of the workshop asked several questions and provided feedback expressing their concerns on issues like over-indebtedness, the interest spread of 7 percent set by NRB, the recent provision of 2 percent direct-lending by commercial banks, and multiple burrowing. 

Concluding the event, its chair Acharya emphasized the need for developing a culture of research, database maintenance, documentation, sharing of innovations, capability enhancement, and human values in order to tackle problems confronted by microfinance companies.

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