After earthquake, microfinance sector faces daunting challenges

ShareSansar, May 10:

Although exact details have yet to emerge, the losses to the microfinance sector due to the magnitude 7.8 earthquake that rocked the country on April 25 could be staggering.

Microfinance companies have already started carrying out initial assessment of the damages caused by the earthquake to their clients and their businesses. Microfinance Bankers’ Association has already held a first round of meeting to discuss ways to deal with the situation and avert possible risks to the sector.   

Financial Reporter Priyanka Jha of ShareSansar.com spoke to some top officials of the microfinance sector to find out how they plan to address the emerging problems and challenges.    


Tejendra Sharma Lamsal
CEO, Clean Village Bitiya Sanstha Limited

The conditions in the earthquake-hit areas are very scary. Many of our customers have suffered unimaginable losses and many have died. Most of the houses in the affected areas have been destroyed.

Since many of our borrowers are not in a condition to repay their loans because of the devastations, we will seek a grace period of at least 3 months for loan repayment. Since microfinance companies provide loans without collateral, the risks they face daunting challenges to overcome the risks they now face.

The authorities must take measures to save the microfinance companies operating in those areas. They must help microfinance companies come up with soft loans that will enable our clients and affected families to get on with their lives.

The earthquake has even affected our staff. Some of them have lost their family members and houses.


Sudip Dhungel
Manager, ILFCO Micro Finance

Micro Finance Bankers’ Association has already held a meeting to discuss the situation and we have felt that further discussions are necessary before we announce measures on how to deal with the situation.

Since microfinance companies provide collateral-free loans, the sector faces greater risks at times of disaster like this. But we don’t provide huge loans like commercial banks, so things might still be manageable if we take proper measures.

We are still gathering reports on damages suffered by our clients due to the earthquake.

We have floated around 40 lakhs in loans in some pockets of Sindhupalchowk district. In Kathmandu we have extended loans of Rs 9 crore.

In Kathmandu and Banepa there have been minor damages. Our offices in Melchour, Sindhupalchowk have also suffered some damages. Our head office has also been badly hit so currently we are operating from a two room office in Baneshwar. Despite all the problems we have already begun our full operations.


Dharma Raj Pandey
CEO of Grameen Bikas Bank and President of Micro Finance Bankers’ Assocation

We will seek resources and readjustments to loan provisions from Nepal Rastra Bank and the commercial banks who are our lenders.

Given the changed scenario, our clients may not be able to pay their interests in three months, so the provisioning related to this must be changed to give them more time.

As per our initial assessment 8 to 10 of our clients have lost their lives, and the homes of 22 of our employees and 6,700 clients have been destroyed or damaged.

The earthquake has affected 11 districts and microfinance companies have many customers in almost all of those districts. We will be providing small loans at low interest rate. We will also contribute to the relief efforts.

To help our clients get back on their feet as soon as possible we will come up with several loan products.