Prime Minister KP Sharma Oli addresses the opening ceremony of 2nd National Microfinance Members’ Summit in Kathmandu on Saturday. Photo Courtesy: Sejon
KATHMANDU, Dec 2: Prime Minister KP Sharma Oli has urged microfinance institutions to determine their interest rates in a way that does not put high financial burden on the poor people.
Speaking at the inaugural ceremony of two-day 'Second National Microfinance Members' Summit' on Saturday, Prime Minister Oli said that the microfinance institutions should not charge exorbitant interest rates to their borrowers who represent poor, marginalized and underprivileged groups.
“Though the interest rates of microfinance institutions in Nepal are cheaper compared to other countries, many are still charging high rates. This should not be the case especially if they are in the urban areas or inside Ring Road,” said Oli, stating that the 18 percent ceiling on the interest rates for loans of microfinance institutions was fixed by considering the high operating cost in rural areas.
Prime Minister Oli also urged members of microfinance institutions to borrow money as per their repayment capacity.
Also speaking at the inaugural ceremony, Minister for Land Management, Cooperatives and Poverty Alleviation, Padma Aryal, said the microfinance institutions and their investment on poor people were instrumental in reducing poverty in the country.
Nepal Rastra Bank (NRB) Deputy Governor Chintamani Shiwakoti warned supervisory intervention if various anomalies including duplication in borrowing in microfinance institutions are not corrected. He also said that the NRB has been encouraging merger and acquisition amid rise in the number of microfinance institutions in recent years.
The summit that will conclude on Sunday is bringing together over 700 participants from across the country, mainly to discuss about the overall situation of microfinance sector, achievements, prospect, problems and challenges faced by microfinance service providers and beneficiaries.
Shankar Man Shrestha from the Center for Self-help Development (CSD) said that the summit aimed to provide a forum not only for microfinance service providers or members of microfinance institutions, but also the beneficiaries to make their voices heard to the policymakers.