MFIs told to get credit report before lending


    NRBKATHMANDU, MAR 19 – Nepal Rastra Bank (NRB) has directed D class financial institutions to become a member of the Credit Information Bureau (CIB) so that they can access the credit history of their potential borrowers.

    Issuing a directive on Wednesday, the central bank instructed micro finance institutions (MFIs) to join the CIB in a bid to counter the trend of borrowers overextending themselves by taking loans from a number of MFIs and exposing them to risk.

    Earlier, NRB had provisioned that MFIs should exchange information about loans of more than Rs 50,000 with A, B and C class banks and financial institutions located in their working area.

    Likewise, cooperatives and non-governmental organizations licensed by NRB to conduct limited banking have been told to exchange credit information about prospective borrowers of more than Rs 50,000 with similar institutions.

    As per the new directive, D class financial institutions, which means mostly MFIs, cooperatives and NGOs, should inform the CIB about their borrowers with outstanding loans of Rs50,000 or higher. They can submit the details online.

    Likewise, licensed D class financial institutions are required to submit such information every quarter within 15 days of the quarter’s end until the loan has been repaid.

    Similarly, D class financial institutions have been instructed to obtain the credit history of potential borrowers before approving their loan applications. The CIB is required to furnish the details within three working days and it can do so online.

    MFIs do not need to obtain further information from other agencies after they have received the credit history from the CIB. A fee, as determined by the CIB and the Nepal Micro-Finance Bank-ers’ Association, needs to be paid to the CIB for the service.

    The CIB has been allowed to check whether D class financial institutions have submitted or obtained the credit history of borrowers on time. “After the inspection, a report should be submitted to NRB,” states the directive. D class financial institutions are also required to name a contact person for the purpose of sharing the credit history of borrowers.

    Loans up to Rs 50k classed as deprived sector

    KATHMANDU: In a bid to help poor families from hydropower project-affected areas to buy the shares allocated to them, Nepal Rastra Bank on Wednesday directed A, B and C class financial institutions to categorize loans of up to Rs 50,000 issued to them as deprived sector lending. Such loans can be obtained without collateral.

    Source : eKantipur