MICROCAPITAL BRIEF: Microfinance Institutions (MFIs) in Nepal Request Establishment of Credit Bureau

As borrowers in Nepal reportedly have begun receiving loans from multiple microfinance institutions (MFIs), MFIs in the country have requested that a credit information bureau be created to allow them to share information on potential clients to avoid duplicative lending. One unnamed official was quoted as stating, “we have found one person getting credit from as many as 10 institutions, while another borrower was found getting a credit of as much as NPR 1.2 million (USD 15,000) from various institutions.” [1]

Many MFIs are concerned about borrowers receiving credit from multiple institutions, because of the increased chances of clients defaulting. As of October 2011, 21 microfinance and rural banks in the country report total overdue loans of NPR 297.9 million (USD 3.77 million). As of 2010, according to the Microfinance Information Exchange (MIX), the US-based data provider, 41 MFIs in Nepal report an aggregate gross loan portfolio totaling USD 153 million and 718,870 active borrowers.

By Cameron Milani, Research Associate

Sources and Additional Resources:

[1] Republica, “Microcredit Firms Ask for Separate Credit Info Bureau,” http://www.myrepublica.com/portal/index.php?action=news_details&news_id=37706

MicroCapital Article, October 26, 2011: “MICROCAPITAL BRIEF: Nepalese Government Plans to Introduce Microinsurance Program in 10 Rural Districts,”https://www.microcapital.org/microcapital-brief-nepalese-government-plans

MicroCapital Article, August 16, 2011: “MICROCAPITAL BRIEF: Microfinance Banks, Other Institutions Facilitate Financial Inclusion in Nepal; 54% of Households Now Within 30 Minutes Walk of Cooperative,” https://www.microcapital.org/microcapital-brief-microfinance-banks-other-

MicroCapital Article, July 14, 2011: “MICROCAPITAL BRIEF: Credit Information Bureau India Limited (CIBIL) to Launch Credit Reporting System for Microfinance,” https://www.microcapital.org/microcapital-brief-credit-information-bureau

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