MICROCAPITAL BRIEF: Governor Yuba Raj Khatiwada of Nepal Rastra Bank Cites Multiple Lending and Low Outreach to Poor People by Microfinance Sector

Governor Yuba Raj Khatiwada of the Nepal Rastra Bank (NRB), the central banking authority of the country, reportedly expressed concern that “the growing tendency of lending money to people who have already taken a loan from other financial institutions might expose the microfinance sector to risk.” According to Governor Khatiwada, microfinance institutions (MFIs) involved in such practices should be penalized. Governor Khatiwada also expressed doubts regarding the microfinance industry’s stated outreach, mentioning that while “statistics show poor families have been covered by MFIs [. . .] this is not happening in practice.”

As of 2011, the 47 microfinance institutions in Nepal reporting financial data to the US-based nonprofit Microfinance Information Exchange (MIX) held loan portfolios totaling USD 201 million, served approximately 807,000 active borrowers and held deposits of USD 86.5 million from 1.4 million depositors.

By Brendan Millan, Research Associate

About Nepal Rastra Bank (NRB)
Established in 1956, NRB is Nepal’s central bank. NRB formulates and monitors the nation’s monetary and fiscal policy and regulates the nation’s banking and financial sectors. For the year 2011, NRB reported total assets of NPR 299 billion (USD 3.67 billion).

Sources and Additional Resources:

[1] Republica: “MFIs Themselves Putting Microfinance Sector into Risk: Governor” by Ramesh Kumar Poudel, http://www.myrepublica.com/portal/index.php?action=news_details&news_id=49762

MicroCapital.org story, January 8, 2013, “Nepal to Require Non-Life Insurance Companies to Introduce Agriculture, Livestock Insurance”, https://www.microcapital.org/microcapital-brief-nepal-to-require-non-life-insurance-companies-to-introduce-agriculture-livestock-insurance/

MicroCapital.org story, June 18, 2012, “Nepal Rastra Bank (NRB) Limits Microloan Interest Rate Changes, Adjusts Provisions for ‘Deprived-Sector’ Lending”, https://www.microcapital.org/microcapital-brief-nepal-rastra-bank-nrb-limits-microloan-interest-rate-changes-adjusts-provisions-for-deprived-sector-lending/

MicroCapital.org story, April 5, 2012, “Nepal Rastra Bank (NRB) to Increase Number of Bank Branches in Remote Areas”, https://www.microcapital.org/microcapital-brief-nepal-rastra-bank-nrb-to-increase-number-of-bank-branches-in-remote-areas/

MicroCapital Universe Profile: Nepal Rastra Bank (NRB), http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Nepal+Rastra+Bank+%28NRB%29

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