KATHMANDU, July 26: The Nepal Rastra Bank (NRB) has decided to review the interest rate for loans to be issued by microfinance companies.
Unveiling the monetary policy for the fiscal year 2024/2025, the NRB made the regulatory arrangements related to interest rates and service charges will be timely reviewed.
Revised interest rate corridor system introduced
Currently, the maximum interest rate for microfinance loans is 15 percent. However, NRB Governor Mahaprasad Adhikari did not mention whether to increase or decrease the microfinance loan interest rate while announcing the decision to review loan’s rate.
At a time when there are growing complaints that the microfinance beneficiaries are compelled to pay excessive service charges and exorbitant interest rates, the central bank has come up with the provision.
The monetary policy has also introduced a policy arrangement to encourage mergers and acquisitions between microfinance and branches. The monetary policy has brought necessary regulatory arrangements based on international best practices to protect the interests of microfinance clients.
In order to give respite to the borrowers of microfinance, the monetary policy has taken flexibility allowing the companies concerned to reschedule debt settlement deadlines. The provision can be implemented if the borrowers pay a certain portion of their liabilities within the maturity period of their debt repayment.
