Kathmandu. The Nepal Rastra BankTAG_CLOSE_span_8, which has been regulating andTAG_OPEN_span_8 monitoring microfinance institutions in Nepal, has taken action against 14 microfinance institutions for violating the rules. According to the central bank, the financial statements and supervision reports up to the second quarter of the current fiscal year have been found that these institutions have not complied with various regulatory provisions.
According to the Nepal Rastra Bank, the microfinance institutions that were taken into action had shown weaknesses such as keeping the capital fund below the prescribed minimum limit, not giving the minimum interest rate to the savers, and not sending the necessary details and reports to the regulatory body on time.TAG_OPEN_p_13 The central bank has taken necessary steps to take such weaknesses as a serious violation against financial discipline.
According to central bank officials, the failure of microfinance institutions to maintain a fixed capital fund will increase the risk to the financial stability of the institution, which may ultimately adversely affect the interests of the savers.TAG_OPEN_p_12 Similarly, not giving the minimum interest rate to savers runs the risk of affecting the goal of financial inclusion and eroding the confidence of the customers. Such activities have been taken seriously as not sending the necessary details on time would hamper the regulatory and monitoring process.
The Nepal Rastra Bank (NRB) has warned to warn these institutions, impose fines, instruct them for reforms and take further stringent steps if necessary.TAG_OPEN_p_11 The central bank has also urged all microfinance institutions (MFIs) to strictly adhere to regulatory standards, maintain financial transparency and protect the interest of the customers.
According to experts, such weaknesses seen in the microfinance sector in recent times can affect the overall financial system, so timely reforms are needed.TAG_OPEN_p_10 As microfinance institutions are an important means of extending financial access to rural and disadvantaged people, the active role of the regulatory body is considered indispensable to maintain their credibility and stability.
This incident indicates that financial discipline, transparency and accountability within the microfinance sector will be further strengthened.TAG_OPEN_p_9 In addition, the central bank is expected to tighten monitoring and adopt a zero-tolerance policy on institutions violating the rules in the coming days.
