KATHMANDU, March 15: A six-point agreement was reached between the government and microfinance victims on Friday.
Narayan Prasad Risal, coordinator of the government talks team, and Punaram (Maniram) Gyawali on behalf of the protesting side signed the agreement on behalf of the government and the microfinance victims, respectively.
With the agreement, the protesting microfinance victims have postponed their protest programs.
Here are the six agreements:
1. As the microfinance financial institutions are registered and operating in accordance with the company law, they have developed as profit-oriented rather than service-oriented institutions, and there is a demand from the agitating party that they should be made service-oriented. A recommendation for the Nepal Rastra Bank (NRB), through the Government of Nepal and the Ministry of Finance, involves conducting a study on international practices and laws. This study should aim to provide guidance on the appropriate policy and legal adjustments needed for these institutions to operate with a greater focus on service.
NRB makes stricter rules for microfinance loans
2. Discussing the work done so far by the NRB on solving the problems seen in the field of Microfinance Financial Institutions, arranging for timely reforms and effective implementation of the following issues and bringing the Microfinance Financial Institutions that do not follow the said legal and policy provisions and instructions of the central bank under the scope of action in accordance with the prevailing law.
a) According to the instructions of the NRB, strictly implement the provision that microfinance financial institutions can charge only the specified maximum interest rate and service fee from borrowers.
b) Effective implementation of the provision of non-granting of collective loans beyond the specified credit limit and taking action to the fullest extent according to the law to the institutions that violate it.
c) Effective implementation of the provision that one borrower cannot take and give loans from more than one microfinance financial institution.
d) To control actions such as deducting a certain percentage amount and depositing the amount in the savings account without the borrower's permission or by influencing the borrower at the time of taking the loan, and forcing the installment amount to be deposited in advance at the same time as the loan is being invested.
e) Taking action against microfinance financial institutions that act against the instructions of the NRB regarding rescheduling and restructuring of loans in accordance with the prevailing laws.
3. The NRB should make arrangements for the related institutions to compulsorily follow the system of providing loans by microfinance financial institutions only by providing financial literacy and awareness to the borrowers.
4. Regarding the demand from the agitating party to maintain a single digit interest rate and 1 percent service charge, the government of Nepal will request the NRB through Finance Ministry to study and submit a report regarding the policy arrangement to be adopted to reduce such interest rate and service charge and make it timely, as well as to reduce the difference between the interest rate of savings and the interest rate of loans in microfinance financial institutions.
5. A task force should be formed with experts from the relevant field and three from the protesting party to submit a report within 60 days of the commencement of the work on the issues demanded by the agitating party to address the issues such as loan waivers of real victims who have no basis for rehabilitation and loan payment (injured, disabled, chronically ill), due to the earthquake of 2015, the blockade and the COVID-19 pandemic and the microfinance financial institutions have acted contrary to the procedures and instructions to be followed in lending and recovery, the principal, interest, fees, fines, blacklist and mortgage release of the borrowers who are unable to pay the installments on time. Based on the recommendations of the working group's report, the necessary policy and legal reforms should be carried out for the regulation and reform of microfinance financial institutions.
6. To suspend the programs of the agitation on behalf of the protesting struggle committee.
Earlier, around 3000 microfinance and financial victims from across the nation converged in Kathmandu on February 18 to demand government attention. On February 26, the victims staged a demonstration on the premises of the Federal Parliament Building in New Baneshwor.
