MICROCAPITAL BRIEF: Nepal Sets Microloan Interest Rate Maximum of 18%

The Nepalese central bank, Nepal Rastra Bank, reportedly has capped microloan rates at 18 percent per year following complaints of microfinance institutions (MFIs) “distributing high dividends by charging borrowers, who are often poor people in rural areas, exorbitant rates…as high as 30 percent.” This follows the declaration of a maximum spread of 7 percent between loan rates and MFIs’ cost of funds. Their cost has since been defined to include administrative costs of up to 4 percentage points.

The 12 MFIs reporting data for 2015 and later to the US-based Microfinance Information Exchange (MIX) have an aggregate gross loan portfolio of USD 383 million outstanding to 1 million borrowers and USD 176 million in deposits held for 1.5 million depositors.

Sources and Additional Resources

NRB Caps Microfinance Lending Rates at 18 Percent

Nepal Rastra Bank


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